Organizational behaviour and types of organizational structures

Study Text –
Organizational behavior
Learning outcome 1
SAVINDRI SENEVIRATNE

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Organizational Behavior - Lecture 01 8/12/2013

What is an Organization?
 A social unit of people that is structured and

managed to meet a need or to pursue collective
goals.
 All organizations have a management structure

that determines relationships between the
different activities and the members, and
subdivides and assigns roles, responsibilities,
and authority to carry out different tasks.
 Organizations are open systems, which means

they affect and are affected by their environment.
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Therefore…
What is an Organization?
Definition:
1. Social entity
2. Goal directed
3. Designed as deliberately structured and
coordinated activity systems
4. Linked to the external environment

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Importance of Organizations
 Bring together resources to achieve desired

goals and outcomes
 Produce goods and services efficiently
 Facilitate innovation
 Use modern manufacturing and computer

based technology
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Importance of Organizations
(Contd…)
 Adapt to and influence a changing environment
 Create value for owners, customers and

employees
 Accommodate ongoing challenges of diversity,

ethics, and the motivation and coordination of
employees

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 An organization has it’s own

1.
2.
3.
4.
5.
6.

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Environment
Goals and Strategies
Size
Technology
Culture
Structure


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 Different Types of Organizational Structure
 An organizational structure is used by businesses

to provide an overall hierarchy and reporting
structure for each job within the organization, and
defines how an organization will operate to meet
its goals.
 one of several basic types of organizational

structure can provide a platform to allow for future
growth without making extensive changes to job
responsibilities, the management structure or
financial budgets for each area.

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Departmental
 For business with several distinct departments,
an organizational structure that defines each
department may work well to allow for future
growth.
 This is considered the one of the most basic
organizational structures, and in most cases,
each department has one executive overseeing
the operations of that department.
 As one or several departments expand, it allows
the organization to include additional jobs or
promote employees to new supervisory roles
within the department, without reorganizing or
expanding the entire structure of the organization.
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Functional
 If an organization is less departmentalized, such
as a small business with fewer than 100
employees, a functional organizational structure
may be suitable for the business.
 This type of structure arranges the organization
based on each employee's roles and
responsibilities, providing a hierarchy based on
each job description.
 As employees take on additional responsibilities
and become more knowledgeable of the
organization's goals, this allows the organization
to promote those employees by increasing their
salary or changing the job description with
Organizational Behavior - Lecture 01 additional responsibilities, as well as titling the job
8/12/2013
as a senior role.

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Geography
 Even small businesses may have satellite offices
nationally or internationally with specific goals in
each of those geographical areas.
 A geographical organizational structure may be
suitable for this type of business.
 This allows the organization to designate job
titles, responsibilities and a hierarchy based on
the needs of each location.
 This allows for oversight by an executive at each
regional location based on local market trends
and profitability.
 This type of structure allows the organization to
quickly increase or discontinue services within a
specific area without affecting the entire

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Business Unit
 For small businesses who work in different
industries or markets, the organizational structure
can be broken down by each business unit.
 This type of structure is often based on
profitability for each unit.
 Like a departmental structure, each business unit
is overseen by an executive who directs all
operations.
 Although all business units may be successful,
some may grow faster than others due to industry
or market trends.
 This allows for restructuring in one business unit
that may be growing rapidly or decline without
affecting other business units in the organization.

Matrix
 Matrix structure, is a hybrid of divisional and
functional structure.
 Typically used in large multinational companies,
the matrix structure allows for the benefits of
functional and divisional structures to exist in one
organization.
 This can create power struggles because most
areas of the company will have a dual
management--a functional manager and a
product or divisional manager working at the
same level and covering some of the same
managerial territory.
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Divisional Structure
 Divisional structure typically is used in larger
companies that operate in a wide geographic
area or that have separate smaller organizations
within the umbrella group to cover different types
of products or market areas.
 For example, “A” Company was organized
divisionally--with a small engine division, a
compressor division, a parts division and divisions
for each geographic area to handle specific
needs.

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Organizational behaviour and types of organizational structures

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