PA 213- MANAGEMENT AND PLANNING CONTROL

ORGANIZATIONAL
DESIGN
Reporter: CYRIL L. DE JUAN
 Content
1 ORGANIZATION

2 ESSENTIAL OF ORGANIZATION
ORGANIZATION AS A MANAGEMENT
3 PROCESS
4 ORGANIZATION AS A STRUCTURE
TYPES OF ORGANIZATIONAL
5 STRUCTURE

6 CENTRALIZATION

7 DECENTRALIZATION

8 FORMALIZATION

9 CHAIN OF COMMAND
 ACTIVITY
PUZZLE ME!
O R G A N I Z AT I O N
 O R G A N I Z AT I O N
Organization is closely linked to management. In fact, it is the
backbone of management. It is the function of management, yet is
it also referred as the framework of management.

Organization has been called “system of communication” and has

been defined as “coordination”.

Organization is the act of putting into systematic relationship

those elements and activities essential to the satisfaction of the
purpose.
 O R G A N I Z AT I O N
Organization serves as a facilitating agency in the achievement of
the purpose.

Organization is a mechanism or structure that enables living things

to work effectively together

Organization are social units (human groupings) deliberately

constructed and reconstructed to seek specific goals
 ESSENTIAL
OF
ORGANIZ ATION
E S S E N T I A L O F O R G A N I Z AT I O N

Division of labor, authority, and communication responsibilities. Such divisions

are the result of a deliberate plan designed to enhance the realization of the
specific goals.

The presence of one or more authority centers which control the concerted
efforts of the organization and direct them towards its goals; these power center
must review continuously the organization's performance and re-pattern its
structure, where necessary, to increase its efficiency.

Substitution of personnel; that is unsatisfactory persons can be removed and

others assigned their tasks. The organization can also recombine its personnel
through transfer and promotion.
THE ORGANIZ ATION AS
A MANAGEMENT
 T H E ORGANIZAT ION AS A MA N A G E M E N T

This aspect of organization refers to the process

of building for any enterprise a structure that will
provide for the separation of activities to be
performed and for the arrangement of these
activities in a framework which indicates their
hierarchical importance and function association.
 T H E O R G A N I Z AT I O N A S A M A N A G E M E N T

T H E P R O C E S S I N VO LV E S T H E F O L L O W I N G S T E P S :

Identification and definition of basic task.

Delegation.

Establishing Relationship.
O R G A N I Z AT I O N A S
A STRUCTURE
 O R G A N I Z AT I O N A S A S T R U C T U R E

Refers to how the work of individuals and teams

within an organization is coordinated. Structure
is a valuable tool in achieving coordination, as it
specifies reporting relationship, delineates formal
communication channels, and describes how
separate actions of individuals are linked
together.
 O R G A N I Z AT I O N A S A S T R U C T U R E

T H E O R G A N I Z A T I O N S T R U C T U R E B O R N O U T O F T H E P R O C E S S M U S T R E F L E C T:

The objectives and plans from which the activities of the enterprise
are derived;

The centers of authority, the areas of the responsibility and

accountability relationships;

The environment within which it is constrained to function; and

The quality of available manpower to run it.

 TYPES OF
O R G A N I Z AT I O N A L
STRUCTURE
 HIERARCHIAL
ORGANIZATIONAL
STRUCTURE
PROS

• Better defines levels of 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
• Creates camaraderie between employees within the same
department

CONS

• Can slow down innovation or important changes due to increased

bureaucracy
• Can cause employees to act in the interest of their department
instead of the company as a whole
• Can make lower-level employees feel like they have less ownership
and can’t express their ideas for the company
 Pros
FUNCTIONAL
ORGANIZATIONAL • Allows employees to focus on
STRUCTURE their role
• Encourages specialization
• Help teams and departments
feel self-determined
• Is easily scalable in any sized
company.

Cons

• Can create silos within an organization

• Hampers interdepartmental communication
• Obscures processes and strategies for different markets or products in a company
 HORIZONTAL
ORGANIZATIONAL
STRUCTURE

Pros Cons

• Gives employees more • Can create confusion since employees do not have a
responsibility clear supervisor to report to
• Fosters more open communication • Can produce employees with more generalized skills
and knowledge
• Improves coordination and speed of • Can be difficult to maintain once the company grows
implementing new ideas beyond startup status.
 DIVISIONAL
ORGANIZATIONAL MARKET- BASED
STRUCTURE DIVISION
ORGANIZATIONAL
STRUCTURE
 DIVISIONAL
ORGANIZATIONAL
STRUCTURE

PRODUCT- BASED
DIVISION
ORGANIZATIONAL
STRUCTURE
 DIVISIONAL
ORGANIZATIONAL
STRUCTURE

GEOGRAPHIC

DIVISIONAL

O R G A N I Z AT I O N A L

STRUCTURE
 DIVISIONAL
ORGANIZATIONAL
STRUCTURE
Pros Cons

• Helps large companies stay • Can easily lead to duplicate

flexible resources
• Allows for a quicker response to • Can mean muddled or
industry changes or customer insufficient communication
needs between the headquarters and
• Promotes independence, its divisions
autonomy, and a customized • Can result in a company
approach competing with itself.
 MATRIX Pros

ORGANIZATIONAL • Allows supervisors to easily choose

STRUCTURE individuals by the needs of a project
• Gives a more dynamic view of the
organization
• Encourages employees to use their skills
in various capacities aside from their
original roles

Cons

• Presents a conflict between

department managers and project
managers.
• Can change more frequently than
other organizational chart types
 TEAM- BASED
ORGANIZATIONAL
STRUCTURE
 TEAM- BASED
ORGANIZATIONAL
STRUCTURE
Pros

• Increases productivity, performance, and transparency by breaking down silo mentality

• Promotes a growth mindset
• Changes the traditional career models by getting people to move laterally
• Values experience rather than seniority
• Requires minimal management
• Fits well with agile companies with Scrum or tiger teams

Cons

• Goes against many companies’ natural inclination of a purely hierarchical structure

• Might make promotional paths less clear for employees
 NETWORK Pros

ORGANIZATIONAL • Visualizes the complex web of onsite and offsite

STRUCTURE relationships in companies

• Allows companies to be more flexible and agile
• Give more power to all employees to collaborate,
take initiative, and make decisions
• Helps employees and stakeholders understand
workflows and processes

Cons

• Can quickly become overly complex when

dealing with lots of offsite processes
• Can make it more difficult for employees to
know who has final say
• Consider the needs of your organization,
including the company culture that you want
to develop, and choose one of these
organizational structures.
PROCESS- BASED
ORGANIZATIONAL
STRUCTURE
 PROCESS- BASED
ORGANIZATIONAL
STRUCTURE
Pros

• Can lead to faster and more efficient processes

• Promotes teamwork within departments and across departments.

Cons

• Can lead to barriers between departments

• Can lead to miscommunication between departments, especially
during handoffs.
 CIRCULAR Pros
ORGANIZATIONAL
STRUCTURE • Promotes the flow of information
across the organization
• Promotes communication and
collaboration between employees
and departments

Cons

• Can cause confusion around who

to report to, especially for new
employees
• Can take longer to make decisions
 LINE
ORGANIZATIONAL
Pros
STRUCTURE
• Reporting structure is clear
• Stable environment

Cons

• Can be inflexible
• Can limit innovation and
specialization
• Can lead to managers
having a lot of power
C E N T R A L I Z AT I O N
 CENTRALIZATION

Is the degree to which decision making

authority is concentrated at higher levels in
an organization.
 CENTRALIZATION
Important advantages of centralization:

• Power and prestige are provided the chief executives,

• Uniformity of policies, practices, and decisions are fostered.
• Full utilization of the main office specialist is promoted, due in a large part to
their proximity to the top-management level.
• Highly qualified specialist can be utilized because the scope and volume of
work are sufficient to support and to challenge topnotch management.
• Duplication of functions is maintained at a minimum.
• The danger of actions drifting and getting off course is minimized.
• Elaborate and extensive controlling procedures and practices are not
required.
• A strong coordinated top-management team is developed.
D E C E N T R A L I Z AT I O N
 DECENTRALIZATION

Of authority provides the manager with a

wider scope of authority for all activities
affecting his division.
 DECENTRALIZATION
Important advantages of decentralization:

• A decentralized organization stresses delegation of authority and relieves to top manager’s

load.
• The development of “generalists” rather than specialist is encouraged.
• Intimate persona ties and relationships are promoted resulting in greater employee
enthusiasm and coordination.
• Familiarity with important aspects of special work is readily acquired.
• Efficiency is increased since the structure can be viewed “as a whole”, so that trouble spots
can be detected and remedied easily.
• For the multi-unit enterprise keyed to geographical dispersion, full advantage of respective
local conditions can be obtained.
• Plans can be tried out on an experimental basis in one plant and modified and proven before
being supplied to similar plants of a company.
• Risks involving possible losses of personnel, facilities and plants are spread out.
FORMALIZ ATION
 FORMALIZATION

Is the extent to which policies, procedures, job

descriptions, and rules are written and explicitly
articulated. In other words, formalized structures are
those in which there are many written rules and
regulations. These structures control employee behavior
using written rules, and employees have little autonomy
to make decisions on a case-by-case basis. Formalization
makes employee behavior more predictable.
CHAIN OF
COMMAND
 CHAIN OF COMMAND

A chain of command is an organizational structure

that documents how each member of a company
reports to one another. At the top of the chart
would be the founder, owner or CEO, and the
people who report to them would appear directly
below. This pattern continues until every person
or level of employment at the organization is
accounted for.
 CHAIN OF COMMAND

This hierarchy changes over time as employees

join and leave. A chain of command exists to
distribute power and responsibilities, keep
employees aware of company news and create a
system for sharing knowledge. It also ensures
each employee is responsible for their own work
but also has a more senior leader to offer support,
encouragement and motivation.
 CHAIN OF COMMAND

CHAIN OF COMMAND ADVANTAGES:

• INCREASED EFFICIENCY
• CLEAR DIRECTION
• STABILITY
• ACCOUNTABILITY
• STRUCTRED RESPONSIBILITY
• OUTSIDE UNDRSTANDING
 CHAIN OF COMMAND

CHAIN OF COMMAND DISADVANTAGES:

• LESS COLLABORATION
• SLOW COMMUNICATION
• DECREASED EMPLOYEE EMPOWERMENT
• MORE COMPETITION
THANK YOU
FOR
LISTENING!
REFERENCES
 REFERENCES

• Dess, G., Lumpkin, G.T., Eisner, A., McNamara, G., and Kim, B., Strategic Management
6th Edition, Published by: McGraw-Hill Education, 2 Penn Plaza NewYork, NY 10121.
Copyright 2012

• Martinez, E., Abasolo, P., and Carlos, C., Management Theory and Practice 2nd Edition,
Published by: GIC Enterprises & CO., Inc., Copyright 2019. M. Recto, Manila Philippines

• Massie, J., Essential of Management 4th Edition, Published by: JMC Press, Inc., 388
Quezon Blvd. Ext, Quezon City Philippines

• https://www.lucidchart.com/blog/types-of-organizational-structures?
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