The document discusses organizational structure and design. It describes six key elements of organizational design: work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization. It also discusses two basic organizational structures - mechanistic and organic. An organization's structure is contingent on factors like its strategy, size, technology, and environmental uncertainty. Traditional structures include simple, functional, and divisional forms, while contemporary structures incorporate teams, matrices, projects, boundaryless, and learning organizations.
2. Outline
Organizing
Organizational structure
Organizational Design
Six Key Elements of Organizational Design
Work Specialization
Departmentalization
Chain of Command
Span of Control
Centralization and Decentralization
Formalization
Basic organizational structures
Mechanistic organization
Organic organization
Contingency Factors affecting structural choice
Organizational Design
Traditional Design
Contemporary Design
3. What is Organizing?
Organizing
Arranging and structuring work to accomplish
organizational goals. It’s an important process during
which managers design an organization's structure.
Organizational Structure
Is the formal arrangement of jobs within an organization.
This structure, which can be shown visually in an
organizational chart, also serves many purposes.
Organizational design
A process that involves decisions about six key elements: work
specialization, departmentalization, chain of command, span of
control, centralization and decentralization, and formalization
4. Six Elements of Organizational Design
1. Work Specialization
• Which is dividing work activities into separate job tasks.
• Individual employees “specialize” in doing part of an activity
rather than the entire activity in order to increase work output.
• It’s also known as division of labor.
• Work specialization makes efficient use of the diversity of skills
that workers have.
• E.g McDonald’s uses high work specialization to get its
products made and delivered to customers efficiently and
quickly— that’s why it’s called “fast” food.
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6. Six Elements of Organizational Design
2. Departmentalization
How jobs are grouped together is called departmentalization.
Five common forms of departmentalization are used, although an
organization may develop its own unique classification
1. Functional Departmentalization
2. Geographical Departmentalization
3. Product Departmentalization
4. Process Departmentalization
5. Customer Departmentalization
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10. Six Elements of Organizational Design
3. Chain of Command
Is the line of authority extending from upper organizational levels
to lower levels, which clarifies who reports to whom
Managers need to consider it when organizing work because it
helps employees with questions such as “Who do I report to?” or
“Who do I go to if I have a problem?”
Three major concepts to understand chain of command
1. Authority
2. Responsibility
3. Unity of Command
11. Chain of Command
Authority :Refers to the rights inherent in a managerial position
to tell people what to do and to expect them to do it.
Line authority
Staff authority
Responsibility : When managers use their authority to assign
work to employees, those employees take on an obligation to
perform those assigned duties. This obligation or expectation to
perform is known as responsibility
Unity of Command : States that a person should report to only
one manager. Without unity of command, conflicting demands
from multiple bosses may create problems
14. Six Elements of Organizational Design
4. Span of Control
How many employees can a manager
efficiently and effectively manage?
The traditional view was that managers
could not—and should not— directly
supervise more than five or six subordinates
The contemporary view of span of control
recognizes that there is no magic number.
Many factors influence the number of
employees that a manager can efficiently
and effectively manage.
These factors include the skills and abilities
of the manager and the employees, and the
characteristics of the work being done.
15. Span of control
• The trend in recent years has been toward larger spans of control.
• Managers are beginning to recognize that they can handle a wider
span when employees know their jobs well and when those
employees understand organizational processes.
16. Six Elements of Organizational Design
5. Centralization and Decentralization
Centralization is the degree to which decision making
takes place at upper levels of the organization.
If top managers make key decisions with little input from
below, then the organization is more centralized.
Decentralization is the more that lower-level
employees provide input or actually make decisions.
18. Six Elements of Organizational Design
6. Formalization
Refers to how standardized an organization’s jobs are
and the extent to which employee behavior is guided by
rules and procedures
In highly formalized organizations, there are explicit job
descriptions, numerous organizational rules, and clearly
defined procedures covering work processes.
19. Organizational structures
Basic organizational design revolves around two organizational forms
Mechanistic organization:
Was the natural result of combining the six elements of structure also
called as bureaucracy.
Organic organization
Is a highly adaptive form that is as loose and flexible as the mechanistic
organization is rigid and stable
21. Contingency Factors affecting Structural choice
Appropriate structure depends on four contingency variables:
1. The organization’s strategy
2. Size
3. Technology
4. Degree of environmental uncertainty.
22. Contingency Factors affecting Structural choice
Strategy and Structure : An organization’s structure should facilitate goal
achievement. Because goals are an important part of the organization’s strategies, it’s
only logical that strategy and structure are closely linked.
Size and Structure: There’s considerable evidence that an organization’s size affects
its structure
Large organizations—typically considered to be those with more than 2,000 employees—tend to
have more specialization, departmentalization, centralization, and rules and regulations than do
small organizations.
Technology and Structure: That organizations adapt their structures to their
technology depending on how routine their technology is for transforming inputs into
outputs.
In general, the more routine the technology, the more mechanistic the structure can be, and
organizations with more non routine technology are more likely to have organic structures
Environmental Uncertainty and Structure: In stable and simple environments,
mechanistic designs can be more effective. On the other hand, the greater the
uncertainty, the more an organization needs the flexibility of an organic design.
Mechanistic organizations are not equipped to respond to rapid environmental change and environmental
uncertainty
23. Traditional Organizational Design
These structures tend to be more mechanistic in nature.
Simple Structure:
Is an organizational design with low departmentalization, wide
spans of control, authority centralized in a single person, and little
formalization
Functional Structure :
Is an organizational design that groups similar or related
occupational specialties together.
Divisional Structure :
Is an organizational structure made up of separate business units
or divisions.
25. Contemporary Organizational Design
These contemporary designs include
Team structures:
A team structure is one in which the entire organization is made up of work teams
that do the organization’s work. It allows the organization to have the efficiency of a
bureaucracy and the flexibility that teams provide
Matrix and project structures:
Matrix structure assigns specialists from different functional departments to work on
projects being led by a project manager.
Project structure, in which employees continuously work on projects.
Boundary less organizations:
Is an organization whose design is not defined by, or limited to, the horizontal,
vertical, or external boundaries imposed by a predefined structure.
Learning organizations.
Is an organization that has developed the capacity to continuously learn, adapt, and
change
