TOPIC 10

Organizational Structures
and Systems

Presented by: Bernante, Dalagan, Lasco, Marcial

 THE
BEEHIVE
Organizational
structure
What is Organizational Structure?
• Refers to the division of labor as well as the patterns
of coordination, communication, workflow, and
formal power that direct organizational activities.

Why is it important?
• Aligns with activities with goals, improves efficiency,
shapes culture
 DIVISION OF LABOR
Definition
• Refers to the subdivision of work
into separate jobs assigned to
different people.
Concept
• Leads to job specialization: Focusing
on a narrow set of tasks within a
larger process.
• (eg., BioWare game development
team with specialized roles for
programming, artwork, sound, etc.
 Benefits of
Specialization

• Increased efficiency: Shorter work

cycles, reduced task switching,
lower training costs.

• Improved quality: Better skill-job

match, specialization leads to
expertise.

• Faster completion: Teams with

diverse skills finish projects quicker
than individuals.
 Coordinating Work
Activities
• Division of labor creates • Optimal specialization depends on the
interdependence, requiring feasibility of coordination.
coordination mechanisms to align work.

Coordinating
Mechanisms
 Organizational model

Traditional Nontraditional

• Formally defined roles: Clear job duties • Less-formalized roles and procedures:
and responsibilities outlined for each Flexible and adaptable workflows.
member. • Emphasis on collaboration: Teamwork
• Rule-driven: Extensive policies and and shared decision-making encouraged.
procedures dictate how work is done. • Less emphasis on status: Flatter hierarchy
• Stable and resistant to change: Rigid with reduced focus on seniority.
structures slow to adapt to new
situations.
• Clear hierarchy: Chain of command and
lines of authority are well-defined.
 Traditional Nontraditional

• Formalized work behavior: Activities • Organic nature: More fluid and

regulated by organizational guidelines adaptable to change than traditional
and standards. structures.
• Examples: Major corporations, • Examples: Film crews, project teams,
government agencies, large factories, startups, smaller healthcare agencies.
banks.
 Chain of
command and
span of control
• Chain of command: The number of authority levels in an organization, visualized in an organigram.
• Span of control: The number of workers reporting to a single supervisor.

Tall vs. Flat Structures:

• Tall structures: Many levels of authority, narrow span of control (more supervision)
• Advantages: Clear career paths, adequate supervision.
• Disadvantages: Feeling disconnected from senior management, "top-heavy" with too many managers.

• Flat structures: Few levels of authority, wide span of control (less supervision).
• Advantages: Increased interaction between levels, less bureaucracy.
• Disadvantages: Fewer promotion opportunities, potential for inadequate supervision.
 Choosing the
Right Structure

• Consider organizational goals, complexity,

and workforce needs.

• Routine tasks may benefit from flat structures

with minimal supervision
.

• Complex goals may require taller structures

with specialized levels.
 Centralized DECENTRRALIZED

• Centralization: Decision-making • Decentralization: Decision-making

authority concentrated at the top of the authority distributed to lower levels of
organization. the organization.
• Centralized: Ice cream chain corporate • Decentralized: Individual store managers
office decides flavors, staffing, and make decisions about flavors, staffing,
advertising for all stores. and advertising for their stores.
 Centralized DECENTRRALIZED
ADVANTAGES ADVANTAGES
• Flexibility: Stores can adapt to local
• Uniformity: All stores operate with the
needs and conditions.
same standards of quality and efficiency.
• Employee engagement: Lower-level
• Control: Top management maintains
employees feel more empowered and
control over overall direction of the
involved in decision-making.
organization.
DISADVANTAGES DISADVANTAGES
• Lack of flexibility: Individual stores may • Lack of consistency: Quality and
not be able to adapt to local needs and efficiency may vary across different
conditions. stores.
• Employee disengagement: Lower-level • Poor decision-making: Lower-level
employees may feel powerless and managers may make mistakes if they lack
 Choosing the Right
Structure
• Consider the organization's size, complexity,
and goals.

• Centralization may be better for smaller, less

complex organizations.

• Decentralization may be better for larger,

more complex organizations.
 TRADITIONAL
ORGANIZATIONAL
STRUCTURES
Bureaucracy:
• Prototype of traditional structure with well-defined hierarchy and strict rules.
Characterized by:
⚬ Specialization of labor: Workers become experts in specific tasks.
⚬ Authority hierarchy: Pyramid-like structure with clear reporting lines.
⚬ Formal rules and procedures: Extensive guidelines for work behavior.
⚬ Impersonality: Decisions based on logic, not emotions.
⚬ Merit-based employment: Hiring and promotion based on qualifications.
⚬ Emphasis on written records: Meticulous documentation of actions.
• Advantages: Increased productivity, uniformity, and fairness.
 TRADITIONAL
ORGANIZATIONAL
STRUCTURES
Line-Staff Structure:
• Two groups of employees: line and staff.
⚬ Line: Workers directly involved in primary tasks (production, service delivery).
⚬ Staff: Support personnel for specialized functions (maintenance, HR, PR).
• Advantages: Efficient division of labor, specialized expertise.
• Disadvantages: Can be complex and cumbersome, potential disconnect between line and staff.
Examples: Manufacturing organizations, supermarkets, fast-food restaurants.
 Nontraditional
Organizational
Structures:
Team Organization:
• Broadly defined jobs: Workers have diverse skills and knowledge of overall goals.
• Collaboration: Emphasis on teamwork and shared resources.
• Group Decision Making: Workers contribute significantly to important decisions.
• Flat Structure: Less focus on hierarchy and formal roles.
• Examples: Project teams, startups, research & development units.
 Nontraditional
Organizational
Structures:
Project Task Force:
• Temporary Teams: Assembled for specific projects with diverse expertise.
• Collaborative Work: Members contribute equally without strict hierarchy.
• Short-Term Focus: Disbanded after completing the project.
• Examples: Event planning committees, product launch teams, crisis response teams.
Matrix Organization:
• Hybrid Structure: Blends functional and product-based teams.
• Dual Reporting Lines: Workers report to both functional and product managers.
• High Flexibility: Adapts quickly to changing market conditions.
• Suitable for Complex Tasks: Ideal for projects requiring creativity and innovation.
• Potential Drawbacks: Confusion and conflict due to dual reporting, may not be suitable for routine
tasks.
 Nontraditional
Organizational
Structures:
Advantages of Nontraditional Disadvantages of Nontraditional
Structures: Structures:
• Increased flexibility and adaptability. • Potential for confusion and conflict
• Enhanced communication and due to dual reporting (matrix).
collaboration. • Less suitable for routine tasks.
• Greater job satisfaction and employee • Requires high levels of employee
motivation. self-motivation and communication
• Improved performance in complex and skills.
creative work.
 Organizational
systems
Simple Structure Functional structure Divisional structure
• A structure with few • A structure that groups • A structure that groups
employees, one employees around employees around
product or service, specific knowledge or geographic areas, outputs
and minimal hierarchy resources. (products or services), or
clients.
Team-based structure Matrix structure Network structure
•A structure built • A structure that overlays
• A structure that consists
around self-directed two structures, such as a
of a core firm and several
teams that complete functional structure and a
satellite organizations.
an entire piece of project-based structure.
work.
 Contingencies of
Organization Design
 1. External Environment
The external environment includes anything outside the organization, including most
stakeholders (e.g., clients, suppliers, government), resources (e.g., raw materials, human
resources, information, finances), and competitors.

a. Dynamic versus Stable Environments

Dynamic environments have a high rate of change, leading to novel situations and a lack of
identifiable patterns. In contrast, stable environments are characterized by regular cycles of
activity and steady changes in supply and demand for inputs and outputs

b. Complex versus Simple Environments

Complex environments have many elements, whereas simple environments have few things to
monitor.
c. Diverse versus Integrated Environments
Organizations located in diverse environments have a greater variety of products or services,
clients, and regions. In contrast, an integrated environment has only one client, product, and
geographic area.

d. Hostile versus Munificent environment

Hostile environment is characterized by challenging, adverse, or unfavorable conditions that
pose significant threats or obstacles to an organization's success. Munificent environment is
characterized by abundance, growth opportunities, and favorable conditions for organizations.
 II. Organizational Size
Larger organizations should have different structures from smaller organizations.

III. Technology
Refers to the mechanisms or processes by which an organization turns out its product or
service.

a. Variability b. Analyzability
-Jobs with low variability (routine tasks) benefit from -Predictable work with low analyzability thrives in
mechanistic structures mechanistic structures
-High variability (exceptions to standard procedures) -Unpredictable work with high analyzability needs
requires organic structures for adaptability. organic structures for expert discretion.

IV. Organizational strategy

Refers to the way the organization positions itself in its setting in relation
to its stakeholders, given the organization’s resources, capabilities, and mission.
 IMPORTANCE OF ORGANIZATIONAL
STRUCTURES
a. Division of Labor b. Coordinating Work Activities
• It is essential to economic progress • It allows a unified and harmonious work
because it allows people to specialize in force to work toward a common goal.
particular tasks. • It allows for the more beneficial and
• A given number of workers can produce efficient allocation of resources in an
far more output using division of labor organization/company, which reduces
compared to the same number of conflict and redundancies between
workers each working alone. individuals or department.
• Each task and responsibility is clearly • It plays a crucial role in building good
defined. relationship among individuals and
teams within the workplace.
IMPORTANCE OF ORGANIZATIONAL STRUCTURES
IMPORTANCE OF ORGANIZATIONAL MODELS

TRADITIONAL

a. The bureaucracy b. The line-staff organizational

structure
• Every employee has clearly defined roles and a reporting
structure is in place.
• This can ensure that operations run smoothly, and employees to
be more productive and efficient in respective tasks which can
result in higher output.
• It creates an environment for communication. Because employees
are related in terms of function, job context is understood within
departments, providing a basis for understanding.
IMPORTANCE OF ORGANIZATIONAL STRUCTURES
IMPORTANCE OF ORGANIZATIONAL MODELS

NON-TRADITIONAL

a. The team organization b. The project task force

c. The matrix organization

• Enable organizations be more agile and adapt to change more

quickly.
• Improve communication and collaboration between employees.
• Lead to increased innovation and creativity within the work force.
• Create a more positive work environment overall.
 IMPORTANCE OF ORGANIZATIONAL systems

• Facilitate the flow of information and feedback

between different levels and units of the
a. Simple structure organization, which can enhance
b. Functional structure decision-making, problem-solving, and
c. Divisional structure innovation.

d. Team-based structure • Align the goals and strategies of the

organization with its vision and mission, which
e. Matrix structure
can increase motivation, commitment, and
f. Network structure
performance.
• Enable the organization to adapt to changing
environments and customer needs, which can
 IMPORTANCE OF ORGANIZATIONAL DESIGNS

• Provides the structure for business processes and

the framework for an organization to deliver its
core qualities.
a. External environment • Dictates the coordination of activities, systems of
b. Organization size power, control and communication, roles and
c. Technology responsibilities necessary for strategy
implementation.
• Ensures that the form of the organization
matches its purpose or strategy, meets the
challenges posed by business realities and
significantly increases the likelihood that the
 PROS AND CONS OF
DIVISION OF LABOR
PROS

• Efficiency - Workers are focused on one task, they can master it

and improve their production times.
• Collaboration - Different specialties can encourage people to
collaborate on a single project by combining their expertise and
passion for creating a stronger final product.
• Quick training - Employees have fewer tasks to master, so they
can be trained quicker and reach mastery at a faster rate.
 PROS AND CONS OF
DIVISION OF LABOR
CONS

• Boredom - When an employee completes a single task repeatedly

for long periods, it can lead to boredom and burnout.
• Inequality - Dividing labor between employees does not always
mean that the effort, responsibility or benefits are divided evenly.
 PROS AND CONS OF
coordinating work activities
PROS

• Informal and good relations: Being a communication system at the same

level, it facilitates the exchange of ideas, knowledge and thoughts
between the different departments.
• Rapid communication and problem-solving: Allows the rapid
transmission of messages and the resolution of complex problems within
an organization.
• Linkage with different areas of knowledge: Enables to identify new areas
of expertise when workers at the same level communicate with one
another.
 PROS AND CONS OF
coordinating work activities
CONS

• Information overload: Given that in communication the information is

filtered less, many times there is a large amount of data and this can lead
to an overload.
• Time-consuming: Coordinating working activities requires time and
effort to ensure that different departments and groups are working in
sync. It involves planning, organizing, and communicating with various
stakeholders.
ELEMENTS THAT CREATE ORGANIZATIONAL
STRUCTURE
a. Span of Control
• is also called span of management
• refers to the number of people directly reporting to the
next level in the hierarchy.
• narrow span of control / wide span of control
Tall vs Flat Structure
b. Centralization and Decentralization
• Centralization - The degree to which formal decision
authority is held by a small group of people, typically
those at the top of the organizational hierarchy.
• Decentralization - As organizations grow, however, they
diversify and their environments become more complex.
Senior executives aren’t able to process all the decisions
that significantly influence the business. Consequently,
larger organizations typically decentralize; that is, they
disperse decision authority and power throughout the
organization.
c. Formalization
• The degree to which organizations standardize behavior
through rules, procedures, formal training, and related
mechanisms.
• In other words, companies become more formalized as
they increasingly rely on various forms of standardization
to coordinate work.
 Mechanistic vs Organic Structure

• narrow span of control • wide span of control

• centralized • decentralized
• high degree of formalization • little formalization
 I. Simple structure
• Most companies begin with a simple structure
• They employ only a few people and typically offer only one distinct
product or service.
• There is minimal hierarchy—usually just employees reporting to the
owners.
 II. Functional structure

• Growing organizations usually introduce a functional structure at some

level of the hierarchy or at some time in their history.
• A functional structure organizes employees around specific knowledge or
other resources.
 III. Divisional structure

• The divisional structure (sometimes called the multidivisional or

M-form structure) groups employees around geographic areas, outputs
(products or services), or clients.
 IV. Team-based structure
• An organizational structure built around self-directed teams that
complete an entire piece of work.
 V. Matrix structure
• An organizational structure that overlays two structures (such as a
geographic divisional and a functional structure) in order to leverage the
benefits of both.
 VI. Network structure
• An alliance of several organizations for the purpose of creating a
product or serving a client.
 organizational
Structure
• Mutual Adjustment
• Direct Supervision
• Standardization of work process
• Standardization of work output
• Standardization of skills and knowledge
1. Mutual Adjustment- achieves the coordination of work by the simple process
of informal communication.
2. Direct Supervision- Direct supervision achieves coordination by having one
person take responsibility for the work of others, issuing instructions to them
and monitoring their actions.
3. Standardization of work process- Another mechanism to achieve
coordination is to standardize or specify work processes.
4. Standardization of work output- To achieve coordination is to standardize or
specify the product of the work to be performed.
5. Standardization of skills and knowledge- Coordination among work activities
can be attained by specifying in advance the knowledge, skills, and training
required to perform the work.
 basic parts of
organization
• Operating core
• Strategic Apex
• Middle line
• Technostructure
• Support staff
1. Operating Core- Consists of those employees who are responsible for
conducting the basic work duties that give the organization its defining
purpose.
2. Strategic Apex- The strategic apex is responsible for the overall success of
the entire organization. The strategic apex is associated with the executive
leadership of the organization.
3. Middle Line- Represents those employees who have the day-to-day
authority for ensuring that the overall goals set by the strategic apex are
being carried out by the operating core.
4. Technostructure- Employees who possess specific technical expertise that
facilitates the overall operation of the organization.
5. Support Staff- staff provides services that aid the basic mission of the
 importance of aligning
Organizational structure to
business startegy
• Decision-making
• Employee Engagement
• Greater Visibility
• Better Collaboration
• Dynamic Culture
• Increased Leadership Credebility
1. Decision-Making- When the organizational structure is aligned with the business strategy,
decision-making processes become easier and more effective.
2. Employee Engagement- An aligned structure empowers employees by providing clarity on
their roles, responsibilities, and how their work contributes to the organization's success.
3. Greater Visibility- A well-aligned organizational structure provides greater visibility into the
different functions and departments within the organization
4. Better Collaboration- When the organizational structure is aligned with the business
strategy, barriers are minimized, and cross-functional collaboration is encouraged.
5. Dynamic Culture- An organization that adapts its structure to its strategy is better equipped
to embrace change and adapt to new market conditions.
6. Increased leadership credibility= When the organizational structure is aligned with the
business strategy, it demonstrates that leadership has a clear vision for the organization's
future and is capable of executing that vision.
 4 BUSINESS ELEMENTS
MONEY
PRODUCT a practical plan to finance your
the goods or services that a business during its start-up
company offers to its mode
customers.

PEOPLE
are the employees, MARKET
the target audience or
stakeholders, partners, and
customer base that the business
customers who interact with
serves.
the business.
Thank
You