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TRIANI
O RGANIZATIONAL
STRUCTURE & D ESIGN
Chapter
9
O RGANIZATION STRUCTURE
D EFINING O RGANIZATIONAL S TRUCTURE
Organizing
the process of creating an organization’s
structure
Organizational structure
the proper arrangement of jobs within an
organization
Organizational design
the developing of an organization’s structure
work specialization
departmentalization
S IX
KEY ELEMENTS OF AN
chain of command
ORGANIZATION
span of control
centralization and
decentralization
formalization
W ORK S PECIALIZATION
the dividing work activities in an
organization into separate job tasks
increased productivity
it could create human diseconomies
D EPARTMENTALIZATION
the basis by which job are grouped
together
functional
groups jobs by functions performed
product
groups jobs by product line
D EPARTMENTALIZATION
geographical
groups jobs on the basis of territory or
geography
process
groups jobs on the basis of product or
customer flow
customer
groups jobs on the basis of specific customer
F UNCTIONAL
D EPARTMENTALIZATION
P RODUCT
D EPARTMENTALIZATION
G EOGRAPHICAL
D EPARTMENTALIZATION
P ROCESS
D EPARTMENTALIZATION
C USTOMER
D EPARTMENTALIZATION
C HAIN OF C OMMAND
the continues line of authority that move from
upper to the lowest level of an organization and
clarifies who report to whom
authority
the right inherent in a managerial position to tell people
what to do and to expect them to do it
C HAIN
OF
C OMMAND
responsibility
the obligation to perform any assigned duties
unity of command
a person should only report to only one manager
number of employees that a manager
can efficiently and effectively manage
determines the number of levels and
managers in an organization
the wider the span, the more efficient
the organization
S PAN OF C ONTROL
appropriate span influenced by:
the skills and abilities of employees
the complexity of tasks performed
availability of standardized procedures
S PAN OF C ONTROL
S PAN
OF
C ONTROL
C ENTRALIZATION & D ECENTRALIZATION
Centralization
 the degree to
which decision
making is
concentrated at a
single point in the
organization
Decentralization
 the degree to
which decisions
are made by
lower level
employees
F ORMALIZATION
the degree to which jobs within the
organization are standardized
extent to which employee behavior is
guided by rules and procedures
O RGANIZATION D ESIGN
D ECISIONS
rigidly and tightly controlled structure
tries to minimize the impact of
differing human traits
most large organizations have some
mechanistic characteristics
M ECHANISTIC
O RGANIZATION
highly adaptive and flexible structure
permits organization to change when the need arises
employees are highly trained and empowered to handle
diverse job activities
minimal formal rules and little direct supervision
O RGANIC
O RGANIZATION
M ECHANISTIC
AND
O RGANIC O RGANIZATION
Mechanistic
Rigid
departmentalization
Clear chain of command
Narrow spans of control
Centralization
High formlization
Organic
Cross-hierarchical teams
Free flow information
Wide spans of control
Decentralization
Low information
C ONTINGENCY
FACTORS
Strategy and Structure
Size and Structure
Technology and Structure
S TRATEGY AND S TRUCTURE
Structure should facilitate the
achievement of goals
Strategy and structure should be closely
linked
Strategy focuses on innovation, cost
minimization, imitation
S TRATEGY AND S TRUCTURE
Innovation
need the flexibility and free flow of
information of the organic structure
Cost minimization
seek efficiency, ability, and tight control of
mechanistic structure
Imitation
use structural characteristic of both
mechanistic and organic structures
size affects structure at a
decreasing rate
S IZE AND S TRUCTURE
T ECHNOLOGY AND S TRUCTURE
converts inputs into outputs
mechanistic structure supports
routine technology
organic structure supports nonroutine
technology
T ECHNOLOGY AND S TRUCTURE
unit production
production of items in units or small
batches
mass production
large-batch manufacturing
process production
continuous-process production
W OODWARD ’ S F INDINGS ON
T ECHNOLOGY, S TRUCTURE , AND
E FFECTIVENESS
E NVIRONMENTAL U NCERTAINTY
S TRUCTURE
AND
one way to reduce environmental uncertainty is to
adjust the organization’s structure
with greater
stability,
mechanistic
structures are
more effective

the greater the
uncertainty, the
greater the need
for an organic
structure

C OMMON O RGANIZATIONAL
D ESIGN
Simple Structure
Functional Structure
Divisional Structure
T RADITIONAL O RGANIZATION
D ESIGN
S IMPLE S TRUCTURE
low departmentalization, wide spans of
control, authority centralized in a single
person, and little formalization

as organizations increase in size, the
structure tends to become more
specialized and formalized

Commonly used by small business
groups similar or related
occupational specialties
together
F UNCTIONAL S TRUCTURE
D IVISIONAL S TRUCTURE
composed of separate divisions

Each division has relatively limited
autonomy

Parents corporation acts as an external
overseer to coordinate and control the
divisions
S TRENGTHS AND W EAKNESSES OF T RADITIONAL
O RGANIZATIONAL D ESIGNS
C ONTEMPORARY
O RGANIZATIONAL D ESIGN
Team Structures
Matrix and Project Structures
The Boundaryless Organization
C ONTEMPORARY
O RGANIZATIONAL D ESIGNS
T EAM S TRUCTURES
entire organization is made up of work
teams

Employee empowerment is crucial

Teams responsible for all work activity
and performance

Complements functional or divisional
structures in large organizations
C ONTEMPORARY
O RGANIZATIONAL D ESIGNS
Team Structure
• What it is: A structure in which the entire organization is made up of
work groups or teams.
• Advantages: Employees are more involved and empowered. Reduced
barriers among functional areas.
• Disadvantages: No clear chain of command. Pressure on teams to
perform
M ATRIX AND P ROJECT S TRUCTURES
Matrix
assigns specialists
from different
functional
departments to
work on projects led
by project managers
Project
employees work
continuously on
projects
M ATRIX AND P ROJECT S TRUCTURES
Matrix
 adds vertical dimension
to the traditional
horizontal functional
departments
 creates a dual chain of
command
Project
 employees do not
return to a functional
department at the
conclusion of a project
 all work performed by
teams comprised of
employees with
appropriate skills and
abilities
 tends to be very fluid
and flexible
A N E XAMPLE OF A M ATRIX
O RGANIZATION
C ONTEMPORARY
O RGANIZATIONAL D ESIGNS
Matrix-Project Structure
What it is: A structure that assigns specialists from different
functional areas to work on projects but who return to their areas
when the project is completed. Project is a structure in which
employees continuously work on projects. As one project is
completed, employees move on to the next project.
• Advantages: Fluid and flexible design that can respond to
environmental changes. Faster decision making.
• Disadvantages: Complexity of assigning people to projects. Task
and personality conflicts.
T HE B OUNDARY LESS
O RGANIZATION
design is not defined by, or limited to, the
horizontal, vertical, or external boundaries
imposed by a predefined structure
Virtual organization
Network organization
T HE B OUNDARY LESS
O RGANIZATION
Virtual organization
Consist of a small core of full time
employees and hire outside specialist
temporarily as needed to work on projects
Network organization
Uses its own employees to do some work
activities and networks of outside suppliers
to provide other needed product
component or work process
C ONTEMPORARY
O RGANIZATIONAL D ESIGNS
Boundaryless Structure
What it is: A structure that is not defined by or limited to artificial
horizontal, vertical, or external boundaries; includes virtual
and network types of organizations.
• Advantages: Highly flexible and responsive. Draws on talent wherever
it’s found..
• Disadvantages: Lack of control. Communication difficulties..
Keeping Employees Connected
TODAY ’ S
O RGANIZATION
D ESIGN C HALLENGES
Building a Learning Organization
Managing Global Structural Issues
T ERMS TO K NOW

Organizational structure

Authority

Organizational design

Responsibility

Work specialization

Unity of command

Departmentalization

Span of control

Functional dept

Centralization

Product dept

Decentralization

Geographical dept

Formalization

Process dept

Mechanistic

Customer dept

Organic

Chain of command

Strategy and Structure
T ERMS TO K NOW

Innovation

Simple structure

Cost minimization

Functional structure

Imitation

Divisional structure

Size and structure

Team structure

Technology and structure

Matrix and project

Unit production

Boundary less organization

Mass production

Virtual organization

Process production

Network organization