Slides MGMT 5

Chapter 5
Organisational Structure and Design
1
Main Content
• Structuring and Designing Organisation
• Working in Teams and in Group
2
Learning Objectives
After studying this chapter, you should be able to:
• Define organizational structure and organizational design
• Explain why structure and design are important to an
organisation.
• Describe the six key elements of organizational design.
• Explain team-based structures and why organisations are
using them.
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Organisational Structure
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Purposes of Organising
• Divides work to be done into specific jobs and
departments
• Assign tasks and responsibilities associated with
individual jobs.
• Coordinates diverse organizational task.
• Clusters jobs into units
• Establishes relationships among individuals, groups and
departments
• Establishes formal lines of authority
• Allocates and deploys organizational resources
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Organizational Structure and Design
• Organising:
– The process of creating an organization’s structure.
• Organizational Structure
– The formal arrangement of jobs within an organization.
• Organizational Design
– A process involving decisions about six key elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
Six Elements
in Designing an Organization’s Structure
1. Work Specialisation The degree to which tasks in an organization are
divided into separate job (also known as division of
labour)
2. Departmentisation The basic on which job are grouped in order to
accomplish organizational goals
3. Chain of Command An unbroken line of authority that extends from upper
levels of organization to the lowest levels and clarifies
who reports to whom
4. Span of Control The number of subordinate a manager can supervise
effectively and efficiently
5. Centralisation and Decentralisation Centralisation: The degree to which decision making
is concentrated in the upper levels of the organization
Decentralisation: The handing down of decision-
making authority to lower levels in an organization.
6. Formalisation/Standardisation The degree to which jobs within organization are
standardized and the extent to which employee
behavior is guided by rules and procedures
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Functional Departmentalization
• Advantages
• Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
• Coordination within functional area
• In-depth specialization
• Disadvantages
• Poor communication across functional areas
• Limited view of organizational goals
Figure 10.2a
Product Departmentalization
+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals
Source: Bombardier Annual Report.

Figure 10.2c
Geographical Departmentalization
• Advantages
• More effective and efficient handling of specific
regional issues that arise
• Serve needs of unique geographic markets better
• Disadvantages
• Duplication of functions
• Can feel isolated from other organizational areas
Figure 10.2b
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Span of Control
• The number of subordinates a manager can supervise
effectively and efficiently
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13
Factors influencing Centralisation and Decentralisation
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GROUP AND TEAMWORK
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Group vs. Team
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Understanding Groups
• Two or more interacting and interdependent

individuals who come together to achieve particular
goals.
• Formal groups
– Work groups defined by the organization’s structure
that have designated work assignments and tasks.
• Appropriate behaviors are defined by
and directed toward organizational
goals.
• Informal groups
– Groups that are independently formed to meet the
social needs of their members.
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Stages in Group Development
• Forming • Performing
– Members join and begin the
– A fully functional group
process of defining the group’s
purpose, structure, and leadership. structure allows the group
• to focus on performing the
Storming
task at hand.
– Intragroup conflict occurs as
individuals resist control by the • Adjourning
group and disagree over leadership. – The group prepares to
• Norming disband and is no longer
– Close relationships develop as the concerned with high levels
group becomes cohesive and of performance.
establishes its norms for acceptable
behavior.
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Stages of Group Development
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Advantages of Using Teams
• Teams outperform individuals.
• Teams provide a way to better use employee talents.
• Teams are more flexible and responsive.
• Teams can be quickly
assembled, deployed,
refocused, and disbanded.
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Characteristics of Effective Teams
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Characteristics of Effective Teams
• Have a clear understanding • Are unified in their

of their goals. commitment to team goals.
• Have competent members • Have good communication
with relevant technical and systems.
interpersonal skills. • Possess effective negotiating
• Exhibit high mutual trust in skills
the character and integrity • Have appropriate leadership
of their members.
• Have both internally and
externally supportive
environments
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How to Work In Team
• Set goals
• Agree on rules
• Communicate: Share, listen, integrate, …
• Respect each other
• Perform: Do your part/ help others/ ask for support
• Develop trust
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SUMMARY AND CONCLUSION
• Work is becoming more complex, which requires a
group or team effort
• Teams are groups where members with complementary
skills hold themselves mutually accountable for team
performance
• Building effective groups and teams requires knowledge
of task/technology, people, formal organization
arrangements and group culture
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COMMON COMPLAINTS ABOUT THE TEAM
PROJECT
• I am more productive when I work alone. I don’t even like working in

a team.
• I can’t change my schedule to attend team meetings.
• I do not know what’s going on in my team.
• I feel like I’m left out of the team.
• Some of the members did not participate.
• I am kind of surprised. The report we turned in is different than I
expected.
• We relied on Joe for company info. He did not get it. We’re screwed.
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Exercise
• Get into your project team
• Share your learning styles
• Discuss how best to work together
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Chapter 5

Organisational Structure and Design

+ Allows specialization in particular products and services

Source: Bombardier Annual Report.

• Two or more interacting and interdependent

• Have a clear understanding • Are unified in their

• I am more productive when I work alone. I don’t even like working in

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