CHAPTER 15

FOUNDATIONS OF
FOUNDATIONS OF
ORGANIZATION STRUCTURE
ORGANIZATION STRUCTURE
Essentials of Organizational Behavior

BOQUIREN, JOHN ALEC

GULBE, CARYL JANE
LEGASPI, JHUNE ROBERT
 LEARNING OBJECTIVES
15.1 Identify seven elements of an organization’s structure.
15.2 Identify the characteristics of the simple structure, bureaucracy, and the matrix
structure.
15.3 Identify the characteristics of the virtual structure, the team structure, and the
circular structure.
15.4 Describe the effects of downsizing on organizational structures and employees.
15.5 Contrast the reasons for mechanistic and organic structural models.
15.6 Analyze the behavioral implications of different organizational designs.
• What is organization structure?
• Key Design Questions and Answers for
Designing the Proper Organizational
Structure
• Work Specialization
• Economies and Diseconomies of Work
Specialization
• Departmentalization
• Chain of Command
• Span Control

PRESENTED BY
 ORGANIZATIONAL STRUCTURE
defines how job tasks are formally divided, grouped, and coordinated

Key elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
• Boundary spanning
 Key Design Questions and Answers for
Designing the Proper Organizational Structure
 WORK SPECIALIZATION
Work specialization: describes the degree to which activities in the
organization are subdivided into separate jobs

Also known as division of labor

Benefits
• Greater efficiency and lower costs

Costs
• Human costs when carried too far
• Job enlargement as a solution
Economies and Diseconomies of Work
Specialization
 Departmentalization
• Departmentalization: basis by which jobs are grouped together
so that common tasks can be coordinated

Common bases:
• Functional
• Product or service
• Geography
• Process and customer
 Chain of Command
unbroken line of authority that extends from the top of the
organization to the lowest echelon and clarifies who reports to
whom

Authority: positional rights

Unity of command: one boss

• Fewer organizations find this is relevant

 Span of Control
the number of employees a manager is expected to effectively
and efficiently direct

Determines the number of levels and managers an organization has:

• Trend is toward wider spans of control
• Wider span depends on knowledgeable employees
• Affects speed of communication and decision making
Contrasting Spans of Control
 Centralization and
Centralization and
Decentralization
Decentralization
&&
Formalization
Formalization
&&
Boundary Spanning
Boundary Spanning
Centralization and Decentralization
degree to which decision making is concentrated at a single point
in the organization

• Only includes formal authority: positional rights

• Highly centralized when top managers make all the decisions
• Decentralized when front line employees and supervisors make
decisions
 Formalization
degree to which jobs within the organization are standardized

• High formalization: minimum discretion over what is to be done,

when it is done, and how
• Low formalization: freedom to act is necessary
 Boundary Spanning
when individuals form relationships outside their formally
assigned groups

• Liaison roles
• Development activities
Job rotations
• Organizational goals and shared identity
 Frameworks and
Frameworks and
Structures
Structures
&&
Alternate Design
Alternate Design Option
Option
&&
AAVirtual
Virtual Organization
Organization
 Common Organizational
Frameworks and Structures
Three common organizational frameworks:
1. Simple structure
2. Bureaucracy
3. Matrix structure
 Simple Structure
• Low degree of departmentalization
• Wide spans of control
• Authority centralized in a single person
• Little formalization
• Difficult to maintain in anything other than small organizations
 Bureaucracy
Highly routine operating tasks achieved through specialization
• Formal rules and regulations
• Centralized authority
• Narrow spans of control
• Decision making follows the chain of command
Matrix Structure for a College of
Business Administration
 Alternate Design Options
Virtual Structure: a small core organization that outsources its major
business functions

• Highly centralized with little or no departmentalization

• Provides maximum flexibility while concentrating on what the
organization does best
• Reduced control over key parts of the business
A Virtual Organization
 Team Structure
Team Structure
&&
The Circular
The Circular Structure
Structure
&&
The Leaner
The Leaner Organization:
Organization:
Downsizing
Downsizing
PRESENTED BY GULBE
 The Team Structure
Team structure:
• Eliminates the chain of command
• Has limitless spans of control
• Replaces departments with empowered teams
• Breaks down geographical barriers
 The Circular Structure
Circular structure: top management is at the center of the
organization with its vision spreading outward in rings grouped by
function

• May be confusing for employees

• May be used to spread CSR initiatives
 The Leaner Organization: Downsizing

Downsizing: a systematic effort to make an organization leaner by

selling off business units, closing locations, or reducing staff

• Controversial because of the negative impact on employees

• Impact on organizational performance has been very controversial
• Mechanistic versus Organic Models
• The Strategy-Structure Relationship
• Determinants of Structure
• The Environment
• Organizational Designs and Employee
Behavior
• Implications for Managers

PRESENTED BY
Mechanistic versus Organic Models
The Strategy-Structure Relationship
 More Determinants of Structure
Organization Size – move toward mechanistic structure as size
increases

Technology – routine activities prefer mechanistic structures, non-

routine prefer organic structures

Environment
• Capacity
• Volatility
• Complexity

Institutions – guidelines for appropriate behavior

The Environment
 Organizational Designs and Employee
Behavior
Cannot generalize any link between structure and performance

Consider employee preferences for:

• Span of control
• Centralization
• Predictability versus autonomy

National culture
High power distance cultures accept mechanistic structures
 Implications for Managers

• Your structure should be purpose driven.

• Consider the design features that relate to specialization,
departmentalization, authority, formalization, and boundary
spanning to implement your strategy.
• Match your structure decision to your strategy.
• Downsize only if necessary.
• Aim for an organic structure if your strategy prioritizes
innovation, a mechanistic structure if your strategy prioritizes
cost minimization, and a combination of the two if your
strategy prioritizes imitation.
THAT’S ALL,
THAT’S ALL, THANK
THANK
YOU!
YOU!