8th edition
Steven P. Robbins
Mary Coulter
Defining Organizational Structure
• Organizational Structure:
 The formal (conforming to standards) arrangement of jobs
within an organization.
• Organizational Design:
 Developing or changing an organization’s structure – a
process that involves decisions about six key
elements:
 Work
specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization and decentralization
 Formalization
Page 174
Slide 2
Some Purposes of Organizing
• Divides work to be done into specific jobs and
departments.
• Assigns tasks and responsibilities associated with
individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals,
groups, and departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.
Exhibit 9–1
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Slide 3
Organizational Structure
• Work Specialization
 The degree to which activities in an organization are
divided into separate jobs – also known as division of
labor.
 An
entire job is broken down into steps that are
completed by different people with each one specializing
in doing part of the job.
 Today, managers see work specialization as an important
mechanism but recognize that it can result in boredom,
fatigue, stress, poor quality, increased absenteeism and
higher turnover.
Some organizations have broadened
the scope of jobs and reduced work
specialization.
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Slide 4
Five Common Forms of Departmentalization
Functional
 Groups jobs by functions performed.
Product
 Groups jobs by product line.
Geographical
 Groups jobs on the basis of territory or geography.
Process
 Groups jobs on the basis of product or customer flow.
Customer
 Groups jobs by type of customers and needs.
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Slide 5
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
Exhibit 9–2a
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Slide 6
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
Exhibit 9–2b
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Slide 7
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.
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Exhibit 9–2c
Slide 8
Process Departmentalization
+ More efficient flow of work activities
– Can only be used with certain types of products
Exhibit 9–2d
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Slide 9
Customer Departmentalization
+ Customers’ needs and problems can be met by specialists
- Duplication of functions
- Limited view of organizational goals
Exhibit 9–2e
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Slide 10
Trends in Departmentalization
Two popular trends (new styles & practices) in
departmentalization are the increasing use of
customer departmentalization and the use of crossfunctional teams. This structure allows the
company to better understand its customers and to
respond faster to their needs.
Cross-functional teams:
 Groups of individuals who are experts in various
specialties and who work together as a team.
E.g. Employees from finance, purchasing,
engineering, quality control, representatives from
outside suppliers, etc…, etc…
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Slide 11
Chain of Command
• Chain of Command
The continuous line of authority that extends
from upper organizational levels to the
lowest levels and clarifies who reports to
whom.
It helps employees answer the
questions: “Who do I go to
if I have a problem” and “To
whom am I responsible?”
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Slide 12
Chain of Command
• Authority
The rights inherent (existing) in a managerial
position to tell people what to do and to
expect them to do it.
Managers are part of the chain of command and are
granted (given) authority to facilitate decision
making and coordination in meeting their
responsibilities
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Slide 13
Chain of Command
• Responsibility
The obligation or expectation to perform
any assigned duties.
As managers coordinate and integrate the work of
employees, those employees assume an
obligation to act in accordance with
instructions.
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Slide 14
Chain of Command
• Unity of Command
The management principle that a person
should report to only one manager.
The unity of command principle helps preserve the
concept of a continuous line of authority.
Without it, conflicting demands and priorities
from multiple bosses can create problems.
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Slide 15
Chain of Command
• Traditional and contemporary views:
Today, because of information technology and
the use of computers, new organizational
designs are implemented and the concepts of
chain of command have become less relevant.
With computers, employees can access information that
used to be available only to top managers and
communicate with anyone in the organization without
going through the formal channels – the chain of
command.
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Slide 16
Span of Control
The number of employees a manager can
efficiently and effectively manage.
 It
determines the number of managers in an organization.
 Wider spans are more efficient in terms of cost.
A manager’s span of control is affected by:
 Skills
and abilities of the manager and the employees.
 Characteristics of the work being done.
 Standardization of tasks or their complexity.
 The organization’s culture.
 The manager’s own style of supervision.
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Slide 17
Span of Control
• Traditional and contemporary views:
The wider or larger the span of control, the
more efficient the organization.
 However,
when the span becomes too large,
performance decreases because managers no
longer have the time to provide the necessary
leadership and support.
Today, the trend is toward wider spans while
investing heavily in employee training.
 Managers
recognize that they can handle a wider
span when employees know their jobs well or can
turn to co-workers if they have questions.
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Slide 18
Contrasting Spans of Control
Exhibit 9–3
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Slide 19
Organizational Structure
• Centralization
 The degree to which decision-making is concentrated
at a single point in the organizations.
 If top managers make the organization’s key
decisions with little or no input from below, then the
organization is centralized.
• Decentralization
 The degree to which lower-level employees provide
input or actually make decisions.
 As organizations become more flexible and
responsive, there is a trend toward decentralizing
decision making. The organization is decentralized.
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Slide 20
Factors that Influence the Amount of
Centralization
• More Centralization
 Environment is stable.
 Lower-level managers are not as capable or experienced at
making decisions as upper-level managers.
 Lower-level managers do not want to have a say in decisions.
 Decisions are significant.
 Organization is facing a crisis or the risk of company failure.
 Company is large.
 Effective implementation of company strategies depends on
managers retaining say over what happens.
Exhibit 9–4a
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Slide 21
Factors that Influence the Amount of
Decentralization
• More Decentralization
 Environment is complex, uncertain.
 Lower-level managers are capable and experienced at making
decisions.
 Lower-level managers want a voice in decisions.
 Decisions are relatively minor.
 Corporate culture is open to allowing managers to have a say in
what happens.
 Company is geographically dispersed.
 Effective implementation of company strategies depends on
managers having involvement and flexibility to make decisions.
Exhibit 9–4b
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Slide 22
Organizational Structure
• Formalization
 The degree to which jobs within the organization are
standardized and the extent to which employee
behavior is guided by rules and procedures.
 In organizations with high formalization:
 Job descriptions are explicit.
 Organizational rules are numerous.
 Procedures covering work processes are clearly
defined.
 In organizations with low formalization:
 Job behaviors are relatively unstructured (not regulated).
 Employees have freedom in how they do their work.
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Slide 23
Organizational Design Decisions
• Mechanistic Organization
 A rigid and tightly
controlled structure:
High specialization.
 Rigid departmentalization.
 Narrow spans of control.
 High formalization.
 Limited information
network (downward).
 Little decision
participation by lowerlevel employees.

Page 181
• Organic Organization
 A Highly flexible and
adaptive structure:
Non-standardized jobs.
 Fluid team-based structure.
 Little direct supervision.
 Minimal formal rules.
 Open communication
network.
 Empowered lower-level
employees.

Slide 24
Mechanistic versus Organic
Organization
Exhibit 9–5
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Slide 25
Structural Contingency Factors
• Strategy and Structure
The organizational structure must support
and facilitate achievement of strategic
goals.
 Because
goals are influenced by the
organization’s strategies, structure should
follow strategy.
 If
managers change the organization’s strategy,
they need to modify the structure to
accommodate and support the change.
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Slide 26
Structural Contingency Factors
• Size and Structure
An organization’s size significantly affects its
structure.
 As
an organization grows larger, its structure
tends to change from organic to mechanistic.
 Large
organizations have more specialization,
departmentalization, centralization, and rules
and regulations than do small organizations.
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Slide 27
Structural Contingency Factors
• Technology and Structure
Woodward’s studies demonstrate that
organizations adapt their structures to their
technology.
Technologies differ by their degree of
routineness (same procedures) or standardization.
 The
more routine the technology, the more
mechanistic the structure can be.
 The
more non-routine the technology, the more
organic the structure can be.
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Slide 28
Woodward’s Findings on Technology,
Structure, and Effectiveness
Exhibit 9–6
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Slide 29
Structural Contingency Factors
• Environmental Uncertainty and Structure
 Mechanistic, rigid structures tend to be most effective
in stable and simple environments.
 Organic, flexible structures tend to be most effective
in dynamic and uncertain environments.
 Examples
of dynamic environmental forces: Global
competition, product innovation by competitors,
increased demands from customers for high quality
and faster deliveries.
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Slide 30
Common Organizational Designs
• Traditional Designs
Simple structure – found in small businesses.
 Low
departmentalization, wide spans of control,
centralized authority, little formalization.
Functional structure.
 Departmentalization
by function.
 Groups similar occupational specialties together.
– Operations, finance, human resources, research and
development.
Divisional structure – found in large corporations.
 Composed
of separate business units or divisions with
limited autonomy under the coordination and control of
the parent corporation.
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Slide 31
Strengths and Weaknesses of Common
Traditional Organizational Designs
Exhibit 9–7
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Slide 32
Organizational Designs
• Contemporary Organizational Designs
Team structures
 The
entire organization is made up of work groups or
self-managed teams of empowered employees.
Matrix structures
 Specialists
from different functional departments are
assigned to work on projects led by a project manager.
 Matrix participants have two managers.
Project structures
 Employees
work continuously on projects; as one
project is completed, they move on to the next project.
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Slide 33
A Matrix Organization in an Aerospace Firm
Exhibit 9–9
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Slide 34
Organizational Designs
• Contemporary Organizational Designs
Boundaryless Organization
A
flexible and unstructured organizational design that is
intended to eliminate boundaries (limits) imposed by a
predefined structure.
 Removes internal boundaries:
– Eliminates the chain of command
– Has limitless spans of control
– Uses empowered teams rather than departments
 Eliminates
external boundaries:
– Uses virtual, network, and modular (varied and flexible)
organizational structures to get closer to stakeholders.
Page
Slide 35
Removing Boundaries
• Virtual Organization
An organization that consists of a small
core of full-time employees and that
temporarily hires specialists to work on
opportunities that arise.
 The
company enjoys a network of talents
(expertise) without the overhead (cost) and
structural complexity.
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Slide 36
Removing Boundaries
• Network Organization
A small core (central) organization that
outsource (obtain services from outside suppliers) its
major business functions (e.g.,
manufacturing).
 This
approach allows organizations to
concentrate on what they do best and obtain
services from outside companies that can do
those services better (e.g. Nike, Reebok).
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Slide 37
Removing Boundaries
• Modular Organization
A manufacturing organization that uses
outside suppliers to provide product
components or modules (parts) that are then
assembled into final products.
A
modular organization can quickly be
redesigned as needed.
 Automobile manufacturers use outside
suppliers to provide sections of the cars which
are put together into finished automobiles by a
small number of employees (e.g. GM, Ford).
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Slide 38
Organizational Designs
• The Learning Organization
 An organization that has developed the capacity to
continuously learn, adapt, and change through the
practice of knowledge management by employees.
Characteristics of a learning organization:
 An
open team-based organization design that
empowers employees.
 Extensive and open information sharing.
 Leadership that provides a shared vision of the
organization’s future, support and encouragement.
 A strong culture of shared values, trust, openness,
and a sense of community.
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Slide 39
Characteristics of a Learning Organization
Exhibit 9–10
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Slide 40
C H A P T E R R E V I E W 1/3
Defining Organizational Structure (slides 4,5,11~16,18)
• Discuss the traditional and contemporary view of work
specialization.
• Describe each of the five forms of departmentalization.
• Explain cross-functional teams.
• Differentiate chain of command, authority, responsibility,
and unity of command.
• Discuss the traditional and contemporary views of chain
of command.
• Discuss the traditional and contemporary views of span of
control.
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Slide 41
C H A P T E R R E V I E W 2/3
Defining Organizational Structure (Slides 20,23)
• Tell what factors influence the amount of centralization and
decentralization.
• Explain how formalization is used in organizational design.
Organizational Design Decisions (slides 24~28,30)
•
•
•
•
Contrast mechanistic and organic organizations.
Explain the relationship between strategy and structure.
Tell how organizational size affects organizational design.
Discuss Woodward’s findings on the relationship of
technology and structure.
• Explain how environmental uncertainty affects
organizational design.
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Slide 42
C H A P T E R R E V I E W 3/3
Common Organizational Designs (slides 31,33,36~39)
• Contrast the three traditional organizational designs.
• Explain team-based, matrix, and project structures.
• Discuss the design of virtual, network, and modular
organizations.
• Describe the characteristics of a learning organization.
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Slide 43