Dimensions Of

Organizational
Structure

What Is Organizational
Structure?
Anorganizational structuredefines how activities such as
task allocation, coordination and supervision are directed
toward the achievement oforganizationalaims. It can also
be considered as the viewing glass or perspective through
which individuals see their organizationand its
environment.

TYPES OF ORGANISATIONAL
STRUCTURE
Hierarchical structures:
The hierarchical organization structure is pyramid-shaped. At the top of the
structure is a single person, who has a small number of people reporting
directly to them. Each of these people has several people reporting into them
and the number of people at each level increases as you move down the
structure.

Flat structures:
There are fewer levels in the flat structure organization. In
this example structure, there is one person at the top with
everyone else reporting into them on an equal level.

Informal structures:
Many organization develop informal, sometimes invisible
structures. These are based on the reality of day-to-day
interactions at work. They are very important, as they can
pass on communications , they can be friendly and
supportive. They can also influence decisions, as there is
knowledge and discussion at an informal level. The
influence of these networks is significant.

No structure:
It is difficult to imagine any organization without a
structure. Even groups of young children start to establish a
network or informal hierarchy. In the beginnings of a new
organization there may be no formal structure but often this
changes over time.
Example: Small call centers, freelancers etc.

Structure Variables
Principles
Chain of

command
Span of control
Authority
Power
Responsibility

Departmentalizati
on
Functional
Divisional

Mechanistic and Organic

Organizations
Mechanistic organization
The bureaucracy; a structure that is high in
specialization, formalization, and centralization
Organic organization
A structure that is low in specialization, formalization,
and centralization

THE MACRO ENVIRONMENT

POLITICAL
Supports
Controls
ECONOMIC
Inflation
Unemployment
Productivity
TECHNOLOGICAL
Basic Research, New Knowledge
New Products, Processes, Services

ORGANIZATIONAL
STRUCTURE
SIX DIMENSIONS

WORK SPECIALIZATION (Division of Labor)

DEPARTMENTALIZATION

CHAIN OF COMMAND (Hierarchy of Authority)

SPAN OF CONTROL
CENTRALIZATION / DECENTRALIZATION
FORMALIZATION

WORK SPECIALIZATION (Division of Labor)

Work specialization:
A component of organization structure that involves having
each discrete step of a job done by a different individual
rather than having one individual do the whole job.

 Job Rotation
Systematically moving employees from one job to another. Most frequent
use today is as a training device for skills and flexibility.

Job Enlargement
An increase in the total number of tasks performed.
Increases training costs, unions want workers paid more pay for doing more tasks, and
work may still be dull and routine.

Job Enrichment
Increasing both the number of tasks the worker does and the control the
worker has over the job.

Job Characteristics Approach

Core Dimensions
Skill varietythe number of tasks a person does in a job.
Task identitythe extent to which the worker does a
complete or identifiable portion of the total job.
Task significancethe perceived importance of the task.
Autonomythe degree of control the worker has over
how the work is performed.
Feedback the extent to which the worker knows how
well the job is being performed.

Departmentalization:

The basis on which jobs are grouped together

Creates competitiveness between departments
Narrow vision with respect to organizational goals
5 different kinds of departmentalization:
Functional
Product
Geographic
Process
Customer

A) Functional
Functional Departmentalization groups activities by functions
performed.

More efficient to put together people with common skills and

orientation into a common unit.

B) Product:
Grouping your organization depending on the type of product created is
product departmentalization.

Increases accountability for product performance.

Also works with services.

Geographic:
Departmentalized on the basis of geography, or territory.
Ex. International companies having different departments for
each country.

D) Process:
Organizes departments by the processing that occurs.
Ex. inspecting, packing, shipping
E) Customer:
Departmentalize by the type of customer the organization
seeks to reach.
Ex. Corporate or individual customers.

Chain of Command:
Unbroken line of authority that extends form the top of
the organization to the bottom.
Designates where you go if you have a problem.
Becoming less structured than it was in the past.

Span of Control:
The number of employees a manager can efficiently
and effectively direct.
Generally determines the number of levels an
organization has.

 Line authority
The position authority (given and defined by the
organization) that entitles a manager to direct the work
of operative employees
Staff authority
Positions that have some authority (e.g., organization
policy enforcement) but that are created to support,
assist, and advise the holders of line authority

Types of Power
Legitimate
Power based on ones position in the formal hierarchy
Coercive
Power based on fear
Reward
Power based on the ability to distribute something that others value
Expert
Power based on ones expertise, special skill, or knowledge
Referent
Power based on identification with a person who has resources or traits

Centralization and Decentralization:

Decentralization:
The decision discretion is pushed down to lower-level

employees.
Take action quicker.
More people provide input into decisions.
Easier to address customer concerns.
Centralization:
The degree to which decision making is concentrated at a single
point in the organization.
Top management makes all the decisions.

Centralized decision making

Advantages
Uniform Policies & Actions Are Maintained
Top Management Knows Everything Thats Going On
(Awareness)
Control Is Maintained Over Costly/Risky Decisions
Environmental Threats Are Handled By Experienced Managers
Staff Experts Are Needed To Advise Top Management


1.
2.
3.
4.

Issues in Centralization:
Do we look only at formal authority
Can policies override decentralization
What does concentration at a single point mean?
Does information processing system that closely
monitors decentralized decisions maintain centralized
control

Formalization
The degree to which jobs within the organization are standardized.
Low Formalization:
Job behaviors are relatively non-programmed.
Lots of employee freedom.
Less standardization.
High Formalization:
Explicit job description.
Lots or organizational rules.
Clearly defined procedures for work processes.

Formalization Techniques

Selection
Role Requirements
Rules, procedures and policies
Training
Rituals

Range of Formalization
Unskilled jobs versus professional jobs
Kind of work being performed ( production versus sales)
Level in the hierarchy of organization

Why is formalization Important

Standardized behavior reduces variability
Standardization promotes coordination
Standardization offer economies/ cost effective

Traditional Organizational
Designs
There are three:

The Simple Structure

The Bureaucracy
The Matrix Structure

The Simple Structure:

A structure with a low degree of departmentalization. It has wide spans of control,
its power is centralized in a single person and there is little formalization.

Characteristics:

Flat, usually only two or three vertical levels.

Widely used in small businesses, where the manager = owner.
The strength is in its simplicity.
Fast, flexible, inexpensive to maintain, direct accountability.
Risky: Everything depends on one person.

The Bureaucracy:
An organization which uses standardization in a highly efficient manor.

Characteristics:

Routine operating tasks.

Specialization.
Clearly stated rules and regulations.
Tasks that are grouped into functional departments.
Centralized authority.

The Bureaucracy
Advantages:

Perform standardized activities in a highly efficient

manner.
Can operate with lesser talented staff, which will have
a smaller payroll.
Rules and regulations instead of managerial discretion.
Centralized decision making.

The Bureaucracy
Disadvantages:
Each Functional Department can get a self-focus; they may forget that
they are all inter-dependent.

Obsessive concern for following the rules.

The Matrix Structure:

Dual lines of authority, which combine both functional and product
departmentalization.

Characteristics:
Groups similar specialists Functional.
Facilitates coordination Product.
Employees of organization have two managers.

The Matrix Structure

Advantages:

Does not become overloaded when complexity arises.

Improves communication and flexibility.
Eliminates the dreaded bureau-pathologies.
Your specialists are grouped together.

Disadvantages:

Confusion and power struggles.

Stress on employees.
Unclear expectations.

New Design Options

The Team Structure.
The Modular Organization.
The Virtual Organization.
The Boundary-less Organization.

The Team Structure:

The use of teams as a central device to coordinate all work activities.

Characteristics:
Breaks down departmentalization.
Teams are given decision making power.
Teams generally consist of 3-20 people.
The teams can be short or long term.

The Modular Organization:

A small core organization that outsourcers major business functions.

Characteristics:

Outsourcing employees and/or materials.

Contracting allows job to be done better or cheaper.
Organization devote their talent to their most important activities.
There is an increased focus on customers and materials.

The Virtual Organization:

A continually evolving network of independent companies linked
together to share skills, costs and access to one anothers markets.

Characteristics:

Different firms join together to accomplish common strategic

objectives.
Some firms relinquish control, and act inter-dependently.
Sometimes blurred boundaries between companies.
Companies create win win deals by stimulating the market.

The Boundary-less Organization:

An organization that seeks to eliminate the chain of command, have limitless
spans of control and replace departments with empowered teams.

Characteristics:

Replaces departments with empowered teams.

Uses a participative decision-making style.
Heavy reliance on IT.
Can be difficult to manage.

Why Do Structures Differ?

1. Strategy:
Innovation: a strategy that emphasizes the introduction of major new
products and services.

Cost minimization: a strategy that emphasizes tight cost controls,

avoidance of unnecessary innovation or marketing expenses and
price cutting.

2. Organizational Size:
Size affects structure at a decreasing rate.
The impact of size is less important as the organization expanses (after 2000
employees).

Why Do Structures Differ?

3. Technology:
The way in which an organization transfers its inputs into
outputs.

Degree of routine-ness.
Related to formalization or centralization.
4. Environment:
Those institutions or forces outside the organization that
potentially affect the organizations performance.
Environmental uncertainty.

Static environment vs. dynamic environment.

Thank You