Organizational Structure

Organizational Structure
 Organizational Structure
An organizational structure is the formal
framework by which job tasks are divided,
grouped, and coordinated.
 What Is An Organizational Structure?

 An organizational structure is a framework

that demonstrates how decisions are made,
how work flows between teams and team
members, and what the hierarchy of
leadership looks like within a group or
company.
 Why is organizational structure important?

 Organizational structures are important

because they improve efficiency, reduce
confusion and miscommunication, and help
employees gain clarity on their roles and
responsibilities.
 Organizational charts

 is a diagram that visually displays your

company’s structure.
 it provides different important information
regarding:
 who reports to whom,
chain of command.
Span of control
 Cont…
Channels of formal communication
Activities in each position
The hierarchy of decision making
authority relationships
Limitation of Organizational Chart
 Does not indicate informal communication
channel
 Does not indicate Informal relationship among
workers
 Does not indicate Degree of authority hold by
individuals
Example of Organizational chart

Figure 8
 ORGANIZATIONAL DESIGN( OD)
• OD is the process of improving organization
by increasing organizational and /or employee
effectiveness
• Developing or changing an organizational
structure is called engaging in organizational
design.

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 Elements Of An Organizational
Structure
 To determine which organizational structure is
best for your business, you’ll want to consider
the following key elements:
1. Work Specialization
2. Departmentalization
3. Chain of Command
4. Span of Control
5. Centralization/Decentralization
6. Formalization
 1. Work Specialization

• Work specialization to describe the degree to which tasks in

an organization are divided into separate jobs.
• An entire job is not done by one individual but instead is
broken down into steps, and each step is completed by a
different person.
• Individual employees specialize in doing part of an activity
rather than the entire activity.

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 2. Departmentalization
is the process of grouping activities into departments. Every
Organization has its own way of classifying and grouping
work activities.
• It aims at achieving unity of direction, effective
communication, coordination and control.
• There are five common types of departmentalization(BASES)
– Functional departmentalization
– • Product departmentalization
– Customer departmentalization
– Geographic departmentalization
– Process departmentalization
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 3. Chain of Command
• The chain of command is the continuous line of authority
that extends from upper organizational levels to the lowest
levels and clarifies, who reports to whom.

• It can also be defined as : A system in which authority passes

down from the top through a series of executive positions or
ranks in which each is accountable to the direct superior.

• It helps employees answer questions such as "Who do I go to

if I have a problem?" or "To whom am I responsible?"

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4. Span of management (span of control)
• means the number of subordinates a manager has control
over.
• Span of control also tells the number of levels and managers
of an organization.
• No fixed number of subordinates is there to be supervised by
a single manger,
• the number depends on different action which include the
following.
– Complexity and variety of subordinates job
– Ability and competence of mangers
– managers willing near to delegate authority
– The geographic location of organizational departments.
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 5. Centralization and Decentralization
• Centralization The degree to which decision-making is
concentrated at a single point in the organizations.
• Organizations in which top managers make all the
decisions and lower-level employees simply carry out
those orders.

• Decentralization in which decision-making is pushed

down to the managers who are closest to the activities.
• It is considered that decentralization provides
opportunity for employee empowerment.

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 6. Formalization

• The degree to which jobs within the organization are

standardized and the extent to which employee behavior is
guided by rules and procedures.

• Highly formalized jobs offer little power over what is to be

done.
• Low formalization means fewer restriction on how employees
do their work.

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 Types of OS

1, Hierarchy Organization structure

2, Functional Organization structure
3, Flat Organization structure
4, Divisional Organization structure
5, Team-based Organization structure
6, Matrix Organization structure
7, Network Organization structure
 Hierarchy Organization structure

A hierarchal organization structure Contains a

direct chain of command goes from the top of
organization to the bottom .
i,e the CEO or manager down low-level
employees, and each employee has a
supervisor.
 Advantage
 Clearly defined authority and responsibility.
 Shows who each person reports to or who to
talk to about specific projects.
 Motivates employees with clear career paths
and chances for promotion.
 Gives each employee a specialty
 Disadvantage

 Can slow down innovation or important

changes due to increased bureaucracy.
 Can cause employees to act in interest of the
department instead of the company as a
whole.
 Poor Communication
 Slow decision-making
 Functional Structure
A functional organizational structure is a
business structure that groups employees by
specialty , skill , educational background or
related roles.
The functional organizational structure works
best for larger companies that employ multiple
people with similar roles.
 Advantages
 Allows employees to focus on their role
 Increased productivity
 Skill development
 Clarity
 Minimized cost of operation.
 Is easily scalable in any sized company
 Encourages specialization
 Disadvantage
 Competition between departments
 Narrow scope
 Flat Organization structure

 An organizational model with relatively few or

no levels of middle mgt between the excutives
and the frontline employees.
 A horizontal or flat organizational structure fits
companies with few levels between upper
management and staff-level employees.
 Popular in the tech and many start-up
businesses.
 Advantage
 Lower operating cost
 Improve communication
 Increase employees motivation and
Satisfaction.
 Disadvantage
 Difficult for large organizations.

 Create power struggles

 3. Divisional Organization structure

 A divisional structure is one in which the

company is organized into many smaller
functional structures.
 For example, each division within a divisional
structure might have its own IT department,
marketing, sales, etc.
 Types of Divisional OS
 Market-based divisional structure-Divisions are
separated by market, industry, or customer type.
 Product-based divisional structure-Divisions are
separated by product line

 Geographic-base divisional structure-Divisions

are separated by region, territories, or districts,
offering more effective localization and logistics.
 Advantage
 Helps large companies stay flexible
 Allows for a quicker response to industry
changes or customer needs
 Promotes independence, autonomy, and a
customized approach
 Disadvantage
 Can easily lead to duplicate resources
 insufficient communication between the
headquarters and its divisions
 Can result in a company competing with itself
 Costs more to operate
 Matrix Structure
 A matrix organization is company structure
where teams report to multiple leaders.
 The characteristics of matrix organization
include multiple chain of command , a
collaboration between different departments,
and sharing of skilled resources.
Advantage Disadvantage
 Learn new skill  Lack of clarity
 Improve Internal  Higher organizational
communication complexity
 Better resource  Managerial Conflict
management  Managerial cost