ORGANIZATIONAL

ORGANIZATIONAL
STRUCTURE
STRUCTURE and
and
DESIGN
DESIGN
 ORGANIZATION :
SYSTEM
Organization should be viewed as a
system.
A System is a Set of
Interacting Elements
that
Acquire INPUTS from the Envnt.
TRANSFORM them and
DISCHARGES OUTPUTS to
the External Environment.
 ORGANIZATION :
SYSTEM
• INPUTS:
Employees,
Raw Materials & other
Physical Resources
Information and Financial Resources

• TRANSFORMATION PROCESS:
It CHANGES these Inputs into sthg.
of VALUE that can be EXPORTED
back to the ENVIRONMENT
 ORGANIZATION :
SYSTEM
• OUTPUT:
Specific Products or Services

Employee Satisfaction

Pollution and
Other By-products
 ORGANIZATION:
CLOSED SYSTEM
It would not Depend on its Environment,
Autonomous, Enclosed, and
Sealed off from OUTSIDE world.

• More Focused on Internal System

• Early Management Concepts including

Scientific Management approach....

• The Environment would be STABLE and

Predictable
• Primary Management ISSUE:
Efficiency
 ORGANIZATION:
OPEN SYSTEM
It must Interact with Environment to
Survive
-It both Consumes Resources and
Exports Resources to the
Environment.
It must continuously Change and
Adapt to the
Environment
Internal Efficiency is just One Issue
sometimes the Minor one
 ORGANIZATION:
SUBSYSTEM
They perform the Specific Functions
required for
Organizational Survival,
such as;
PRODUCTION
MAITENANCE
BOUNDARY SPANNING
ADAPTATION
MANAGEMENT
 ORGANIZATION:
SUBSYSTEMS
• PRODUCTION SUBSYSTEM:
Produces the Products or Services outputs
of the
organization

• BOUNDARY SUBSYTEM:
Responsible for Exchanges with the
External Environment e.g.,
Purchasing or Marketing Products

• MAINTENANCE:
Maintains Smooth Operations and
Upkeep of the organization’s
Physical and Human Elements
 ORGANIZATION:
SUBSYSTEMS
• ADAPTIVE SUBSYSTEM:
It is Responsible for
Organizational Change
and Adaptation
• MANAGEMENT SUBSYSTEM:
It is Responsible for Coordinating
and Directing the
Other Subsystems of the
organization.
 ORGANIZATIONAL
CONFIGURATION
• Various PARTS of the organization are
Designed to Perform the
Key Subsystem Functions.
• Every Organization has FIVE PARTS
(according to Henry Mintzberg)
1. TECHNICAL CORE
2. TECHNICAL SUPPORT
3. ADMINISTRATIVE SUPPORT
4. TOP MANAGEMENT
5. MIDDLE MANAGEMENT
 ORGANIZATIONAL
CONFIGURATION
• 1. TECHNICAL CORE:
Produces the products and
services outputs of the organization

• 2. TECHNICAL SUPPORT:
- Helps the organization to adapt to
Environment.
- Scanning of the Environment for
Problems, Opportunities,
Technological Development
 ORGANIZATIONAL
CONFIGURATION
• 3.ADMINISTRATIVE SUPPORT
-Smooth Operations and
Upkeep of the Organization
including its
Physical and Human Elements
that is,
HR Activities- Recruiting and
Hiring, Compensation, T & D,
Maintenance Activities-
Cleaning, Repair of Machines
 ORGANIZATIONAL
CONFIGURATION
• MANAGEMENT
4. TOP MANAGEMENT:
It provides Direction, Strategy,
Goals, and Policies for the Entire
organization.
5. MIDDLE MANAGEMENT
It is Responsible for Implementation
and Coordination at the
Departmental Level
-Mediating bt. Top Management and
the Technical Core
 ORGANIZATIONAL
STRUCTURE
• ORGANIZING
The Process of Creating an
Organization’s Structure
• ORGANIZATIONAL STRUCTURE
How Job Tasks are Formally
Divided, Grouped, and Coordinated
• ORGANIZATIONAL DESIGN
It is concerned with the
Developing or Changing the Organizational
Structure-A process that involves decisions
about Six Key Elements;
Key Design Questions for Designing the proper
Organizational Structure
• 1. To what degree are Activities are
Subdivided into Separate Jobs?
• 2. On what basis will Jobs be Grouped
Together?
• 3. To Whom do Individuals and Groups
Report?
. 4. How many Individuals can a Manager
Efficiently and Effectively Direct?
5. Where does Decision Making Authority Lie?
6. To What Degree there will be
Rules and Regulations to Direct
Employees and Managers?
 ORGANIZATIONAL STRUCTURE

Organizational Design
Six key Elements
1. Work Specialization
-Division of Labor
-The Degree to which Tasks/
Activities in an organization are
divided into Separate Jobs.
-A Job is broken down in Steps and
each Step is done by a different
person
 1. Work Specialization
• Human Diseconomies from Specialization
came to be known as
BOREDOM,
FATIGUE,
STRESS,
LOW PRODUCTIVITY,
POOR QUALITY,
INCREASED ABSENTEEISM and
HIGH TURNOVER
2. DEPARTMENTALIZATION

• It is the basis of grouping the

Jobs
• Ways of Classifying and Grouping
Work Activities

• a. FUNCTIONAL:
Groups Jobs by Functions
Performed.
• It is the most popular
way to GROUP ACTIVITIES
 2. DEPARTMENTALIZATION-

FUNCTIONAL:
• …Can be Used in ALL types of
Organizations, Only the Functions
Change to Reflect the Organization’s
Activities
• It puts together Efficiencies due to
similar
 ORGANIZATIONAL STRUCTURE
Organizational Design
b. PRUDUCT Departmentalization:
Groups Jobs by the Type of Product or Product Line.
• The major Advantage is the Increased
ACOUNTABILITY for
product PERFORMANCE
• Each Major Product Area is Placed under the
Authority of a Manager
for Everything regarding that
Product
ORGANIZATIONAL STRUCTURE
Organizational Design

c. PROCESS
• Groups jobs on the basis of Product Flow
• Each Dept. is Specializes in ONE
SPECIFIC PHASE of PRODUCTION
• It can also be Used for processing
CUSTOMERS as well as products
 ORGANIZATIONAL STRUCTURE
Organizational Design
d. GEOGRAPHICAL …
• Groups jobs on the basis of Territory
or Geography
e. CUSTOMER
• Groups jobs on the basis of Common
Customers
• Microsoft- organized around Four
Customer Markets;
Consumers, Businesses, Large
Corporations, Software Developers
 ORGANIZATIONAL STRUCTURE
Organizational Design
3. CHAIN OF COMMAND
It is the Continuous Line of Authority that
extends from upper organizational level to lower
levels
and CLARIFIES Who Reports to Whom.

• Authority and Unity of Command

• These concept do not have Substantial
Relevance today because of Advancements in
Information Technology
and Trend toward Empowering Employees
 ORGANIZATIONAL STRUCTURE
Organizational Design

4. SPAN OF CONTROL

Number of employees a manager can

Efficiently an Effectively Manage

• The Wider or Larger the Span,

The more Efficient the
Organization
 ORGANIZATIONAL STRUCTURE
Organizational Design
7. FORMALIZATON
In organizations with high Formalizations
there are
Explicit Job Descriptions,
Numerous Rules,
Clearly Defined Procedures
Covering Work Processes
-In short it is the extent to
which employee behavior is
Guided by Rules and Procedures
-Employees have little Discretion as to
what is to be Done? When and How?
ORGANIZATIONAL STRUCTURE
Organizational Design
 ORGANIZATIONAL STRUCTURE
Organizational Design
5.CENTERLIZATION

6.DECENTERLIZATION
The degree to which Lower level
employees provide input or actually
make decision
 Two models of Organizational
Design 1. MECHANISTIC
• This organization has Rigid,
and
Tightly Controlled Structure and
Characterized by:
High Specialization
Rigid Departmentalization
Narrow Span of Control
High Formalization and
Little Participation in decision
making by the lower-level
employees
 ORGANIZATIONAL STRUCTURE
Organizational Design

2. ORGANIC ORGANIZATION

Highly Adaptive and Flexible

• Cross-Functional Teams
• Cross Hierarchical Teams
• Free flow of Information
• Wide span of control
• Decentralization
. Low Formalization
 ORGANIZATIONAL STRUCTURE
Organizational Design
• Employees are
highly Trained and Empowered
to handle Diverse Job Activities
and Problems.

• The High Levels of Skills, Training

and the Support provided by
other Team Members
make Formalization and
Tight Managerial Controls
Unnecessary.
ORGANIZATIONAL STRUCTURE
Organizational Design
• CONTIGENCY FACTORS
What an appropriate structure of an
organization should be depends on
Four Contingency factors:

1. Organization’s Strategy
2. Size
3. Technology
4. Degree of
Environmental
Uncertainty
 ORGANIZATIONAL STRUCTURE
Organizational Design
1. STRATEGY and STRUCTURE:
-Structure should Follow Strategy
-It must facilitates the Achievement of
Organizational Goals
-Current Strategy Framework; Focus on three
Dimensions:
A.INNOVATORS
Organization’s Pursuit of Meaningful and
Unique Innovations.
-they Need Flexibility – Organic Stcr.
 ORGANIZATIONAL STRUCTURE
Organizational Design
2. COST MINIMIZATION:
Pursuit of tightly Controlled Costs
- they Seek the
Efficiency,
Stability
and Tight Control: MECHANISTIC

3. IMMITATION:
Minimizing the Risk and Maximizing the Profit by
Copying the Market Leader
-They use the characteristics of both the
Structures
Mechanistic; Tight Control, Low Costs
Organic ; to Mimic the Industry’s
Innovative Directions
ORGANIZATIONAL STRUCTURE

Organizational Design
2. SIZE AND STRUCTURE
-Large Organizations….Mechanistic
--the Relationship is not Linear

3. TECHNOLOGY and STRUCTURE

a. Unit Production
b. Mass Production
c. Process Production
-More Routine the Technology…
-More Non-routine the Technology…
ORGANIZATIONAL STRUCTURE

Organizational Design
4. ENVIRONMENTAL UNCERTAINTY
and STRUCTURE

The greater the uncertainty, the more

an organization needs FLEXIBILITY
which is offered by the Organic
organization
ORGANIZATIONAL STRUCTURE

Organizational Design

TRADITIONAL ORGANIZATIONAL DESIGNS

1. SIMPLE STRUCTURE:
A. Low Departmentalization
b. Wide Span of Control
c. Authority Centralized in a Single
person
d. Little Formalization
ORGANIZATIONAL STRUCTURE

TRADITIONAL ORGANIZATIONAL
DESIGNS

2. BUREAUCRACY

• Highly Routine Operating Tasks Achieved

through
-Specialization
-Very Formal Rules & Reg..
-Tasks Grouped into Functional
Depts.
-Centralized Authority
-Narrow Span of Control
-Decision making follows Chain
of Command
 ORGANIZATIONAL
STRUCTURE: Bureaucracy
• The primary Strength lies in its Ability to
Perform Standardized Activities in a highly
Efficient Manner
• Putting Like Specialists together in
Functional Depts. Results in economies of
scale
• Minimum duplication of Personnel and
Equipment
 ORGANIZATIONAL
STRUCTURE: Bureaucracy
• Works best with Less Talented- Low/Middle
Level Managers
• Greater prevalence of Rules and Regulations
Substitutes Managerial Discretion
• Little need for Innovative and Experienced
Decision makers below the Senior Executives
• Specialization creates Subunits Conflicts-
Functional Unit goals Override the overall goals
of the org.
 ORGANIZATIONAL
STRUCTURE
MATRIX STRUCTURE
• Combines two forms of departmentalization:
Functional and Product
• It attempts to gain the Strengths of Each,
while Avoiding their Weaknesses
• It Breaks the Unity of command concept-
Dual Chain of command
 MATRIX STRUCTURE

• It has Ability to Facilitate coordination

When the organization has a multiplicity of
complex and Interdependent activities
• The dual line of Authority reduce the
Tendencies of departmental members to
become so busy protecting their interests
over the organization’s overall goals.
NEW DESIGN OPTIONS
TEAM STRUCTURE
• Management uses Teams as
Coordination Device
• It breaks down departmental barriers
and decentralizes Decision making to
the level of the Work Team
NEW DESIGN OPTIONS
VIRTUAL ORGANIZATION
• They are small organizations that
OUTSOURCE major business functions
• It is highly Centralized, with little or no
Departmentalization
- Movie Making orgs.
- Reduces long-term risks, because there is
no long term- a team Assembled for a
Finite period and then Disbanded
NEW DESIGN OPTIONS
BOUNDARYLESS
ORGANIZATION
• Breaking down the External Barriers bt.
The company and its Customers and Suppliers
• It seeks to
Eliminate the Chain of Command
Have Limitless Span of Control
Replace departments with
Empowered Teams
 ORGANIZATION DESIGN
AND EMPLOYEE BEHAVIOR
• Work Specialization contributes to higher
employee Productivity but at the price of
Reduced Job Satisfaction
- But Individual differences
prevail
• The negative behavioral outcomes from
high specialization are most likely to
surface in Professional jobs occupied by
individuals with High Needs for Personal
Growth and Diversity
 ORGANIZATION DESIGN
AND EMPLOYEE BEHAVIOR
• Relationship bt.Span of Control and
Employee Performance
- Individual Differences Prevail

• However there is some evidence that A

Manager’s Job Satisfaction increases as
the Number of Employees Supervised
Increases
 ORGANIZATION DESIGN
AND EMPLOYEE BEHAVIOR
• There is strong evidence linking
Centralization and Job Satisfaction
• Less Centralized orgs. Have a
Greater amount of Participative
Decision Making which is positively
Related with Job Satisfaction
 ORGANIZATION DESIGN
AND EMPLOYEE BEHAVIOR
• The Decentralization- Satisfaction
relationship is Strongest with employees
who have LOW SELF-ESTEEM
• They have less confidence in their abilities
• They place higher value on shared decision
making- thus to share Responsibilities