Foundations of

Organizational Structure
Reported by:
Meralie Mae Gualdrapa
Aeron Kish Causapin

REPORTER 10
Meralie Mae & Aeron Kish
What is Organizational Structure?
• An organizational structure defines
how job tasks are formally divided,
grouped, and coordinated.
• Pattern of jobs and groups of jobs in
an organization. An important cause
of individual and group behavior.
BEST FOR You 2
O R G A N I C S C O M P A N Y
Concept of Organizational Structure
Structure as an Influence on Behavior
The key word in this definition is control.

Structure as Recurring Activities

The dominant feature of organization structure is
its patterned regularity.

BEST FOR You 3

O R G A N I C S C O M P A N Y
SIX ELEMENTS OF AN ORGANIZATION’S STRUCTURE

• Work Specialization
• Departmentalization
Organizational
• Chain of Command
Structure
Elements • Span of Control
• Centralization and Decentralization
• Formalization

BEST FOR You 4

O R G A N I C S C O M P A N Y
 SIX ELEMENTS OF AN ORGANIZATION’S STRUCTURE
The Key Question The Answer Is Provided by
»To what degree are activities
subdivided into separate »Work specialization
jobs?
»On what basis will jobs be
»Departmentalization
grouped together?
»To whom do individuals and
groups report? »Chain of command

BEST FOR You 5

O R G A N I C S C O M P A N Y
 SIX ELEMENTS OF AN ORGANIZATION’S STRUCTURE
The Key Question The Answer Is Provided by
»How many individuals can a
manager efficiently and »Span of control
effectively direct?
»Where does decision-making »Centralization and
authority lie? decentralization
»To what degree will there be
rules and regulations to direct »Formalization
employees and managers?
BEST FOR You 6
O R G A N I C S C O M P A N Y
WORK SPECIALIZATION
Describe the» Lorem
degree to which activities in the
ipsum dolor sit amet, consectetur adipiscing elit
organization are subdivided into separate jobs.
• Makes efficient use of employee skills.
• Increases employee skills through
repetition
• Less between-job downtime increases
productivity
• Specialized training is more efficient
• Allows useBEST
of FOR
specialized
You
equipment.
O R G A N I C S C O M P A N Y
7
DEPARTMENTALIZATION
The basis by which jobs are grouped together.

• Functions
• Product or Services
• Geography
• Process
• Customer
BEST FOR You 8
O R G A N I C S C O M P A N Y
 • Group units by performed functions.
FUNCTIONS • Efficiency gained by putting specialist together.

• Grouped by type of product or services.

PRODUCT/SERVICES • Increase accountability for performance.
• Grouped on the basis of territory.
GEOGRAPHY • Valuable if organization’s customer are scattered over
a large geographic area.

PROCESS • Works for processing customers as well as product.

• Departmentalization uses the particular type of

CUSTOMER customer of the organization.
BEST FOR You 9
O R G A N I C S C O M P A N Y
 CHAIN OF COMMAND
The unbroken line of authority that extends from
the top of the organization to the lowest echelon
and clarifies who reports to whom.
Authority refers to the rights inherent in a managerial
position to give orders and expect them to be obeyed.

Unity of Command, a person should have one and only one

superior to whom he or she is directly responsible.

BEST FOR You 10

O R G A N I C S C O M P A N Y
 SPAN OF CONTROL
The number of subordinates a manager can
efficiently and effectively direct.
• It determine the number of level and
manager an organization has.
• Two types of SPAN.
• WIDER SPAN
• NARROW SPAN

BEST FOR You 11

O R G A N I C S C O M P A N Y
 • Most efficient in terms of cost.
WIDER • Less time to provide leadership and support.
SPAN
• May reduce effectiveness in the organization.

• Manager can maintain close control.

• Expensive
NARROW • Make vertical communication more complex.
SPAN • Slow down decision making and isolate upper
management.
• Encourage supervision and discourage employee
autonomy. BEST FOR You
O R G A N I C S C O M P A N Y
12
CENTRALIZATION AND DECENTRALIZATION
The degree» Loremto which decision
ipsum dolor sit amet, consectetur adipiscing elit
making is
concentrated at a single point in the organization.
CENTRALIZATION DECENTRALIZATION
•Decision making •Decision making pushed down to
concentrated at single point. managers closest to the action.
•Top manager make all •Solve problems quickly and
decisions. effectively.
•Allow others to participate in
•Decision making rate is slow. decision making.
•AUTOCRATIC BEST •DEMOCRATIC
FOR You 13
O R G A N I C S C O M P A N Y
 FORMALIZATION
The degree to which jobs within the organization
are standardized..
• Describe what, when and how to do
work.
• Describe lots of organizational rules and
clearly defined procedures covering work
processes.
• Increase consistency and uniform output.
BEST FOR You 14
O R G A N I C S C O M P A N Y
Common Organizational Designs

• The Simple Structure

• The Bureaucracy
• The Matrix Structure

BEST FOR You 15

O R G A N I C S C O M P A N Y
SIMPLE STRUCTURE
Low degree of departmentalization.
Wide spans of control.
Centralized structure
Little formalization

BEST FOR You 16

O R G A N I C S C O M P A N Y
BUREAUCRACY
• Work specialization structure.
• Very formalized rules and regulations.
• Tasked grouped in functional departments.
• Narrow span of control.
• Centralized authority.
BEST FOR You 17
O R G A N I C S C O M P A N Y
 BUREAUCRACY
STRENGTHS WEAKNESSES
•Functional economies of •Subunit conflicts with
scale. organizational goals.
•Minimum duplication of •Obsessive concern with
personnel and equipment. rules and regulations.
•Enhanced communication. •Lack of employee discretion
•Centralized decision to deal with problems.
making.
BEST FOR You 18
O R G A N I C S C O M P A N Y
 MATRIX STRUCTURE
• Creates dual lines of authority.
• Combine functional and product
departmentalization
KEY ELEMENTS:
• Gains the advantages of functional and product
departmentalization while avoiding their weaknesses.
• Facilitates coordination of complex and interdependent
activities.
• Breaks down the unity of BEST
command
FOR You
concept.
O R G A N I C S C O M P A N Y
19
New Design Options

• The Virtual Organization

• Boundaryless Organization

BEST FOR You 20

O R G A N I C S C O M P A N Y
VIRTUAL ORGANIZATION
A small, core organization that
outsources major business functions.
Independent research
and development Advertising agency
consulting firm

Executive
group

Factories in Philippines Commissioned sales

representatives
BEST FOR You 21
O R G A N I C S C O M P A N Y
BOUNDARYLESS ORGANIZATION

• Organization that seeks to

eliminate the chain of
command.
• Have limitless spans of control.
• Replace departments with
empowered teams.
BEST FOR You 22
O R G A N I C S C O M P A N Y
DOWNZISING
A systematic effort to make an organization leaner
by closing locations, reducing staff, or selling off
business units that don’t add value.
EFFECTIVE STRATEGIES:
• Investment
• Communication
• Participation
• Assistance BEST FOR You
O R G A N I C S C O M P A N Y
23
WHY DO STRUCTURES DIFFER?
• Organization strategy
• Organization Size
• Technology
• Environment

BEST FOR You 24

O R G A N I C S C O M P A N Y
Mechanistic &
Organic Models of
Organizational Design
 • Emphasizing importance of achieving high levels
The
of production and efficiency through extensive use
Mechanistic
of rules and procedures, centralized policy and
Model
high specialization of labor.

The • Emphasizing importance of achieving high levels

of flexibility and development through limited use
organic of rules and procedures, decentralized authority,
Model and relatively low degrees of specialization.

BEST FOR You 26

O R G A N I C S C O M P A N Y
THE STRATEGY-STRUCTURE RELATIONSHIP
STRATEGY STRUCTURAL OPTION
• Organic : A loose structure; low specialization, low
Innovation formalization, decentralized.

Cost • Mechanistic : Tight control; extensive work

minimization specialization, high formalization, high centralization.

• Mechanistic and organic : Mix of loose with tight

Imitation properties; tight controls over current activities and
looserBEST
controls for new undertakings.
FOR You 27
O R G A N I C S C O M P A N Y
Organization Structure: Its Determinants and Outcomes

Causes
• Strategy Structural designs Performance
• Size • Mechanistic and
• Technology • Organic satisfaction
• Environment

Moderated by
individual
differences and
cultural norms

BEST FOR You 28

O R G A N I C S C O M P A N Y
 Contingency Design Theories
• - emphasizes the importance of fitting a design
to demands of a situation, including
technology, environmental uncertainty and
management choice.

BEST FOR You 29

O R G A N I C S C O M P A N Y
Technology and Organizational Design
- Effect of technology to the organization
structure.

Technology – physical and mental actions by an

individual to change the form or content of an
object or idea.

BEST FOR You 30

O R G A N I C S C O M P A N Y
 Environmental & Organizational Design
 The Classic Study
a) Differentiation
b) Integration
c) Environment
 Environmental Uncertainty & Organizational
Design in the Service Sector
 Relationship between Environmental Uncertainty
& Structure
 Environmental Uncertainty, Information
Processing & AdaptiveBEST
Design
FOR You
Strategies 31
O R G A N I C S C O M P A N Y
Sociotechnical Systems Theory
- Developed in the early 1950s by the
researchers of the London-based Tavislock
Institute of Human Relations.
- A sociotechnical system theory suggests that
production processes consist of social &
technical dimensions.

BEST FOR You 32

O R G A N I C S C O M P A N Y
 Structuring Virtual Organization
Virtual Organization
- achieves efficiently and flexibility
by subcontracting some of its operations
to members of a network, including
suppliers, distributors, customers,
strategic alliance partners, and even
competitors.

BEST FOR You 33

O R G A N I C S C O M P A N Y
THE END
Thank You
Meralie Mae & Aeron Kish