UNIT 3

ORGANIZATION STRUCTURE AND

GROUPS IN ORGANIZATIONS
ORGANIZATION STRUCTURE
 Organizational structure: Formal system of task and reporting
relationships that coordinates and motivates organizational members so
that they work together to achieve organizational goals. An
organization structure outlines how job tasks are formally
distributed ,grouped ,and coordinated .
 Organizational structure (OS) is the systematic arrangement of human
resources in an organization so as to achieve common business
objectives. It outlines the roles and responsibilities of every member of
the organization so that work and information flow seamlessly,
ensuring the smooth functioning of an organization.
 Organizational design: Process by which managers make specific
organizing choices that result in a particular kind of organizational
structure
ELEMENTS OF ORGANISATIONAL
STRUCTURE
1. WORK SPECIALIZATION
2. DEPARTMENTALIZATION
3. CHAIN OF COMMAND
4. SPAN OF CONTROL
5. CENTRALIZATION AND DECENTRALIZATION
6. FORMALIZATION
7. INTEGRATION AND DIFFERENTIATION
8. AUTONOMY AND CONTROL
9. BUREAUCRACY
 WORK SPECIALIZATION define the amount of task are divided into separate parts in
an organization. The main aim of the organizational design is distributing the several tasks
into various parts and every task is completed by different individual effectively.

 DEPARTMENTALIZATION After work is divided up through work specialization ,

they must be collected so that common tasks can be coordinated . The basis on which jobs
are grouped together is called the departmentalization .There are five common forms of
departmentalization. Functional Departmentalization, Product Departmentalization
Geographical Departmentalization, Process
Departmentalization,CustomerDepartmentalization

 CHAIN OF COMMAND is the constant line of authority that extends from upper
organizational levels to the lowest level and explains who reports to whom . we cannot
discuss the chain of command without discussing authority and unity of command.
Authority refers to the rights essential in a managerial position to give orders and expect
them to be followed. The principle of unity of command helps preserve the concepts of an
unbroken line of authority .it says a person should have one and only one superiors to
whom he or she is directly responsible.
 SPAN OF CONTROL is important to a large degree because it defines the number of levels
and managers are in an organization . It also helps in determining the numbers of employee's
managed by a manager efficiently and effectively.

 CENTRALIZATION AND DECENTRALIZATION

Centralization refers to the degree to which decision making is concentrated at a single point in
the organization . level managers are not capable or experienced in decision making as upper
level managers. Decentralization means power or authority to take decision is not in limited
hands .employee's can help the organization in solving the problems by giving their
ideas ,more people provide input into decisions. Decentralized departments make it easier to
address customer concern as well.

 FORMALIZATION refers to the unit to which jobs with in the organization are standardized
. In organizations that are highly formalized , there are explicit job descriptions , lots of
organizational rules , and clearly defined procedures covering work processes.

 INTEGRATION Hierarchy of authority ,Liaison roles, Teams, committees, task

forces ,Standardization & formalization
Centralized organizational structure

 As has been said, in a centralized organizational structure, decisions are

made by top managers and are distributed down the chain of
command.
 For sure, the structure has a range of advantages. It ensures greater
control over business processes. But most importantly, it only includes
highly experienced professionals that are able to foresee the effect of
decisions made in the long run.
 The biggest drawback of a centralized organizational structure is the
amount of time the decision-making process takes in large companies.
Imagine a customer support manager being asked to implement an
exclusive package for a high-ticket customer. To get permission, they’d
need to run the request up the chain of command and wait for it to be
processed by top management. When the request is approved, a high-
ticket customer might no longer be there.
Decentralized organizational structure

To avoid this issue, large organizations turn to

decentralization. In a decentralized structure, lower-level
employees pinpoint issues and make decisions before
communicating it to upper management. Greater autonomy
not only empowers employees but also eliminates process
delays, which are common for centralized systems.
However, decentralization also brings coordination
challenges and higher expenses.
Often, it’s recommended that early-stage startups and small
businesses go after a centralized organizational structure.
Fast-growing companies and enterprises usually choose a
decentralization framework.
1. Functional structure

A functional structure groups employees into different departments by work

specialization. Each department has a designated leader highly experienced in the
job functions of each employee supervised by them.
Most often, it implements a top-down (centralized) decision-making process where
department managers report to upper management. Ideally, leaders of different
teams communicate regularly and coordinate their strategies while lower-level
employees have little idea of the processes taking place outside their department.
The main challenge companies with a functional structure face is the lack of
coordination between departments. Employees may lose the larger company
context when focusing on very specific tasks and failing to interact with members
of other departments.
To create a functional organizational structure that works, you’ll need to train
leaders to foster collaboration across departments.
Examples of organizations with a functional structure include: Amazon,
Starbucks.
 Pros of functional org. structures
 Scalable.
 Operational efficiency.
 Encourages employees to specialize their skillsets.
 Empowers employees to focus on their specific role and responsibilities.
 Empowers teams and departments with clear, specific goals that they can work
towards.
 Cons of functional org. structures
 Leads to poor cross-department communication.
 Creates obscure roles, processes, and workflows that are company or industry-
specific.
2. Divisional structure

A divisional structure organizes employees around a common product or

geographical location. Divisional organizations have teams focused on a
specific market or product line.
These brands can’t help but split the entire organization by location to be
able to adjust their strategies for audiences representing different markets.
These smaller groups are relatively independent and mainly follow a
decentralized framework. Still, the leaders of each department are likely
to operate under centralized corporate management. It means that
company culture is dictated by top management, but operational decisions
can be made by each division independently.
Giants such as McDonald’s and Disney also add functional units to their
structure for better control.
Examples of organizations with a divisional structure include: Disney,
GM, McDonalds.
 Pros of divisional org. structures
 Understand individual markets better.
 Promotes flexibility.
 Faster responses to changes or needs that are locality or regional based.
 Autonomous approaches leads to experimentation among teams and
allows organization to test multiple approaches, driving innovation.
 Cons of divisional org. structures
 Duplication efforts.
 Poor documentation.
 Lack of organizational communication.
 Departments compete against one another.
 Lack of hierarchy understanding.
3. Matrix structure

Within a matrix organizational structure, team members report to

several managers at once.
Having multiple supervisors allows for company-wide interaction
and faster project delivery. For instance, when answering to
functional managers and project managers, employees have a
chance to collect experience outside their team. While functional
managers can help to solve job-specific issues, project managers
can bring in knowledge or talents from other departments.
If you go after a matrix organizational structure, you’ll need to find
a way to avoid authority confusion and prevent conflicts between
managers.
Examples of organizations with a matrix structure
include: Caterpillar, Phillips, Texas Instruments.
 Pros of matrix org. structures
 Flexibility to pull employees into more important projects
at will.
 Empowers employees to build and test skillsets outside of
their pre-determined roles.
 Faster project deliverables.
 Cons of matrix org. structures
 Often leads to conflicts among leaders and managers.
 Confusion on authority.
 Frequency of change.
4. Team structure

 A team-based organizational structure creates small teams that

focus on delivering one product or service. These teams are
capable of solving problems and making decisions without
bringing in third parties.
 Team members are responsible for managing their workload
and have full control over the project. Team-based
organizations are distinguished by little formalization and
high flexibility. This structure works well for global
organizations and manufacturers.
 Examples of organizations with a team-based structure
include: Apple, Cisco, Google.
Pros of team-based org. structures
Drives growth and innovation.
Promotes lateral career moves.
Provides experiences across departments and teams.
Experience is valued over seniority.
Less emphasis on management.
Is more agile.
Cons of team-based org. structures
No clear authority.
Career path growth is not clear.
Not formalized.
5. Network structure

A network structure goes far beyond your internal company structure.

It’s an act of joining the efforts of two or more organizations with the
goal of delivering one product or service. Typically, a network
organization outsources independent contractors or vendors to complete
the work.
In a network organization, teams are built from full-time employees as
well as freelance specialists – this way, in-house workers can spend
most of their time focusing on the work they specialize in. Such an
approach allows companies to adapt to market changes and obtain the
missing skills fast.
Working with individuals that aren’t integrated into your company
culture results in lower formalization and higher agility.
Examples of organizations with a network structure include: Dow
Chemical, H&M, IBM
Pros of network org. structures
Promotes organizational agility and flexibility.
Fosters collaboration across employees.
Breaks down silos.
Cultivates better understanding of industry, products, and customers.
Creates a web of work-related relationships.
Creates highly-specialized skillsets in employees.
Cons of network org. structures
Extremely complex and convoluted.
Lower formalization.
High turnover.
Feeling of inequality between full-time employees and contractors/freelancers.
Difficult to know who has final approval.
6. Hierarchical structure

It’s the most common organizational structure type that follows a direct
chain of command.
A chain of command, in this case, goes from senior management to
general employees through a range of executives on the departmental
and team level. The highest-level executive has the highest power over
the decision-making process.
On one hand, this structure enables organizations to streamline business
processes, develop clear career paths, and reduce conflicts. A company
hierarchy leaves no place for challenging managers’ authority, which can
be good in some cases.
On the other hand, a hierarchical structure slows down decision-making
and may hurt employee morale.
Examples of organizations with a hierarchical structure include:
Sony
Pros of hierarchical org. structures
Obvious chain-of-command.
Clearly defined reporting structure and individual responsibilities.
Sets clear career path growth.
Builds niche skills and specialities.
Departments and teams create a sense of “we’re in this together”.
Cons of hierarchical org. structures
Bureaucracy, processes, and red-tape slow down innovation.
More resistant to change.
Employees focus on department goals and KPIs over what’s actually most
important for the company.
Employees at the bottom of the org structure feel like they don’t have an
impact.
Feeling that there is no place to challenge authority.
7. Flat organization structure

 In a flat organizational structure, there are few middle managers

between employees and top managers. The structure requires less
supervision, increases employee involvement, and boosts trust in the
workplace.
 Due to its simple nature, a flat organization structure, also called a
“flatarchy”, is typically used by small businesses and startups.
 Examples of organizations with a flat structure include: Value, most
small businesses.
 Pros of flat org. structures
 More responsibility for employees.
 Open communication.
 Clear path of approval.
 Implementation happens fast.
 Cons of flat org. structures
 Not scalable.
 Relies on one person to be the decision-maker.
 Leads to employees with generalized skillsets, with a lack of
specializations.
HOW TO DESIGN YOUR
ORGANIZATIONS STRUCTURE
1. Create a charter
2. Build your strategy
3. Assess your internal processes and systems
4. Design your structure
5. Create a transition plan
6. Implement your new structure
7. Monitor the impact
8. Gather feedback and improve.
ROLE OF MANAGERS IN STRUCTURE
COMMUNICATION
SCALAR PROCESS
FUNCTIONALIZATION
DELEGATION
DECENTRALIZATION
MINTZBERG’S CONTRIBUTION FOR
ORGANIZATION STRUCTURE
Simple Structure
Also called the entrepreneurial organization, the simple structure is a vertically
organized pyramid with vertical lines of authority. Its key characteristics are direct
supervision of subordinates, organic organization according to functions and a
lack of formal support structures. Authority is concentrated at the peak in the
person of the CEO. Small and young organizations often fall into this category
because it is the default structure that develops when the entrepreneur avoids
formal restrictions.
Machine Bureaucracy
The machine bureaucracy gets its name from its high level of work
standardization, making organizational units function together like the parts of a
machine. Companies with mass-produced output use this form. Tasks are
standardized and detailed in operating procedures that allow employees to carry
out their work with a minimum of training. Lines of authority are formal, with
some power residing in the groups that develop the policies and procedures that
govern the company.
Professional Bureaucracy
The professional bureaucracy is bureaucratic without being centralized. It relies
on highly qualified professionals to carry out the work with a high degree of
independence. The organization achieves its coordination of functions by
standardizing the skills and qualifications required to carry out the work of a
particular position. The bureaucracy focuses on defining positions in terms of
capabilities and making sure these mesh to allow the organization to function.
Divisionalized Form
Large organizations with diversified products create divisions to handle related
activities. The advantage of this divisionalized organizational structure is that
the divisions can act with a high degree of autonomy to address their particular
situations, while the central part of the organization concentrates on the big
picture. The existence of divisions also means that there is an inherent
duplication of activities, with each division containing essential functions such
as sales, human resources and accounting.
Adhocracy
 Formal organizational structures take time to adjust to changes. In
industries that are changing rapidly or in project-based companies
where projects are all different, such formal structures limit the
required flexibility. The adhocracy adapts to whatever situation it
encounters. Its characteristics include a lack of formal structure
combined with a variety of highly skilled employees. The adhocracy
forms teams to carry out work. Teams are self-organizing with matrix
structures that allow effective vertical and horizontal sharing of
authority based on competence and the particular situation.
BURNS AND STALKER PATTERN OF
ORGANIZATION STRUCTURE
MECHANISTIC:
 tallness in hierarchy,
 specialization,
 centralization in authority,
 formalization.
 Work best under stable conditions

ORGANIC:
 flatness,
 generalization,
 Decentralization
 flexibility
 Best fit dynamic conditions and complex technology
Groups in Organisations and Group Dynamics.

Stephen robbins defines a group “as two or more

individuals, interacting and interdependent, who have
come together to achieve particular objectives.”
CHARACTERISTICS/ PROPERTIES
OF GROUP
 Group structure is defined as the layout of a group
 Group size
 Collective identity
 Interaction
 Group goal
 Group norms: The typical standard set by the group collaboratively that every
member has to follow.
 Group composition
 Group roles: The different roles a person plays as a part of the group.
 Interdependence
 Cohesiveness: Extent of belongingness towards each other in the group
 Diversity
 Conformity: The decisions or stand taken by majority in the group.
 Workplace behavior: The ethics that one needs to follow while
working with an organization.
 Status: The designation of members in the group.
 Social Loafing: The phenomena where group members put less
effort
 towards achieving a goal than they would have while working alone.
 Cohorts: Sharing common behavior in the group.
 Reference Groups: Other groups to which a group is compared to.
 Group Demography: Extent of sharing same behavior.
TYPES OF GROUPS
Most individuals belong to various types of groups. These different
groups can be broadly classified in two types.
FORMAL GROUPS:
these groups are consciously created to serve an organizational
objective. E.g crew of an airline flight
Formal groups can be further divided into different types.
[a] Command group: It is a group determine by the connection
between individual who are a formal part of the organization. For eg,
the marketing department comprising of the general manager and the
other marketing staff.
[b] Task group: A task group is created by the management to
accomplish certain organizational goals. It is specifically created to
solve the problem or perform a defined task.
INFORMAL GROUPS:
Informal groups are groups that develop naturally among people,
without any direction from the organization within they operate.
They are formed spontaneously and are based on personal
relationships or specific interests. The different types of informal
groups are:
[a] Interest groups: Interest groups consist of person who share
common interests. They may be job related interest, or such as
sports, national politics or religion.
[b] Friendship groups: friendship group consist of individual who
come together because they share one or more common
characteristics. They consist of people with natural affinities for
one another.
In group and out group
Membership groups and reference groups
Committees
Cliques
SAYLE’S CLASSIFICATION OF GROUPS
Apathetic groups
Erratic groups
Strategic groups
Conservative groups
WHY DO PEOPLE JOIN GROUPS
People join groups for a variety of different reason. Most people belong to
several groups because different groups provide different benefits.
The following are the benefits:
(1) Security.
(2) Self-esteem.
(3) Status.
(4) Affiliation.
(5) Power.
(6) Goal achievement.
(7) Satisfaction of needs.
(8) Shared interest and goals.
GROUPS DYNAMICS
According to Keith Davis – “The social process by which people interact face
to face in small groups is called group dynamics. It is concerned with the
interaction of individuals in a face to face relationship. It focuses on team
work, wherein small groups are constantly in contact with each other and
share their ideas to accomplish the given tasks.”
FACTORS INFLUENCING WORKING OF GROUPS: Each group has its
own unique personality. This is because several factors affect the working
of groups. The different factors that influence group dynamics can be
classified in to:
 EXTERNAL FACTORS
 GROUP RESOURCES
 GROUP STRUCTURE
 GROUP PROCESS
 GROUP TASKS
EXTERNAL CONDITIONS
work groups don’t exists in isolation. They are a part of the
larger organization. They are as follows.
(1) organization strategy.
(2) authority structures.
(3) formal regulations.
(4) organizational resources.
(5) human resources selection process.
(6) performance evaluation and reward system.
(7) organizational culture
(8) physical work setting.
GROUP MEMBER RESOURCES
To succeed a group must have members with the right skills and competencies. The resources
that individual members bring to the group have a strong influence on its performance.
Abilities and personality characteristics of group members are two important resources.
Abilities: What group members can do it has a strong bearing on group performance.
Intellectual and task relevant ability of group members affects overall group performance.
Personality characteristics: The personality traits of individual group members strongly
influence how they interact with other group members. Characteristics such as
authoritarianism and dominance have a negative impact on groups.
GROUP STRUCTURE
Group structure refers to the pattern of interrelationships between the individuals constituting
a group. The different aspects or variables of group structure are:
Formal leadership ,Roles , Norms, Status ,Size, Cohesiveness, Composition.
GROUP PROCESS
Group process includes the communication patterns used by members for information
exchange, group decision processes, leader behavior, conflicts and the like. One group
process that has generated considerable interest among researchers is the social
facilitation effect. Psychologists have given different explanations for the social
facilitation effect. Some of the prominent explanations are:
(1) Drive theory.
(2) Evaluation apprehension.
(3) Distraction-conflict model.
GROUP TASK
Task may be simple, routine and standardized or they be complex, non routine, and novel.
The nature of the task moderates the group process and effect group performance and
member satisfaction. For certain kind of tasks, large groups are more suitable while for
some tasks smaller groups are desirable. Greater interaction among group members is
required when there is a high degree of interdependence among the tasks that group
members must perform.
STAGES OF GROUP DEVELOPMENT
Every group passes through different stages in its life cycle. According to a Bruce
Tuckman’s model, every group passes through five distinct stages of group
development.
 Forming: In the forming stages the members share personal information and try to
know more about the tasks to be preformed.
 Storming: the members compete for positions of status and control. This is a period of
high emotionality and tension among group members. The storming stage is completed
when the intra group conflicts are resolved and the group’s leadership is accepted.
 Norming: In this stage the group really begins to come together as a co-ordinated unit.
Members start co-operating with each other and place their competing interest in the
background.
 Performing: This stage is sometimes called as total integration. During this stage, the
group members work effectively and efficiently towards achieving the group objectives.
 Adjourning: In this stage the group prepares for disbandment. The group’s focus is
now on wrapping up activities rather than achieving high task performance.
COG LADDER’S GROUP
DEVELOPMENT
Polite stage
Why we’re here stage
Power stage
Cooperation stage
Espirit stage
GROUP FORMATION THEORIES
PROPINQUITY THEORY
HOMAN’S THEORY
BALANCE THEORY
EXCHANGE THEORY
GROUP DECISION MAKING
TECHNIQUES
Brainstorming
Nominal group thinking
Didactic technique
Delphi technique
Devil’s Advocate
Electronic meeting
Fish bowling
Interacting groups
Brainstorming
This technique includes a group of people, mostly between five and
ten in number, sitting around a table, producing ideas in the form
of free association. The main focus is on generation of ideas and
not on evaluation of these ideas.
Nominal Group Thinking
This technique is similar to brainstorming except that this
approach is more structured. It motivates individual creativity.
Members form the group for namesake and operate independently,
originate ideas for solving the problem on their own, in silence and
in writing. Members do not communicate well with each other so
that strong personality domination is evaded.
Didactic Interaction
This technique is applicable only in certain situations, but is an excellent method
when a situation actually demands it.
The type of problem should be such that it generates output in the form of yes or
no. Say for example, a decision is to be made whether to buy or not to buy a
product, to merge or not to merge, to expand or not to expand and so on. These
types of decision requires an extensive and exhaustive discussion and
investigation since a wrong decision can have serious consequences.
Delphi Technique
This technique is the improvised version of the nominal group technique, except
that it involves obtaining the opinions of experts physically distant from each other
and unknown to each other.
This isolates group members from the undue influence of others. Basically, the
types of problems sorted by this technique are not specific in nature or related to
a particular situation at a given time.
NEGATIVE ASPECT OF GROUP
DYNAMICS
Group think: It describes situations where group pressures
for conformity, deters the group from critically appraising,
unusual, minority or unpopular views. Group think is a
disease that attacks many groups and can dramatically
hinder their performance.
Group shift: refers to a condition where the position of an
individual in the group changes to adopt a more extreme
position due to the influence of the group.
Polarization: In this, the individuals bring to the group their
strong predispositions towards the topic.
EMERGENCE OF INFORMAL LEADERS
TASK LEADER: Its job is to help the group
accomplish its objectives and stay on target.

SOCIAL LEADER: role is to restore and maintain

group relationships by recognizing
contributions ,reconciling disagreements and playing a
supportive role to help the group develop.
GROUP ROLES
TASK ORIENTED ROLES
RELATIONSHIP ROLES
INDIVIDUAL ROLES
GENERAL ROLES
COMMUNICATION
The sharing of information between two or more
individuals or groups to reach a common
understanding.
It includes coordination, transmission of information
and sharing emotions and feelings. Effective
communication helps people grasp issues, build
rapport with coworkers and achieve consensus.
Communication is how we coordinate actions and
achieve goals.
CONTROL
Controlling is one of the managerial functions like planning, organizing, staffing
and directing. It is an important function because it helps to check the errors
and to take the corrective action so that deviation from standards are minimized
and stated goals of the organization are achieved in a desired manner.
According to modern concepts, control is a foreseeing action whereas earlier
concept of control was used only when errors were detected. Control in
management means setting standards, measuring actual performance and
taking corrective action. Thus, control comprises these three main activities.
Organizational control is the process that managers in an organization use to
ensure that the company reaches its goals.
_Establish standards to measure performance
_Measure actual performance
_Compare performance with the standards
_Take corrective action