ORGANISATIONAL
STRUCTURE AND DESIGN
Organizing
Arranging and structuring work to accomplish the
organization's goals.
Purposes of organizing
Organizational structure
The formal arrangement of jobs within an organization.
Organizational design
Developing and changing an organization's structure
Designing Organizational Structure
Organizational Design
A process involving decisions about six key elements to change the
structure of organization
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
The Elements of Structure
• Work specialization
A component of organization structure that involves
having each discrete step of a job done by a different
individual rather than having one individual do the
whole job.
Economies and Diseconomies
of Work Specialization
5–7
Organizational Structure: Control
• Chain of command
The continuous line of authority that extends from
upper organizational levels to the lowest levels and
clarifies who reports to whom.
• Unity of Command
The management principle that no person should
report to more than one boss.
• Span of control
The number of subordinates a manager can direct
efficiently and effectively.
Chain of Command
Organizational Structure: Control
(cont’d)
• Authority
The rights inherent in a managerial position to give
orders and expect them to be obeyed.
• Power
An individual’s capacity to influence decisions.
• Responsibility
An obligation to perform assigned activities.
Types of Organizational Authority
• Line authority
The position authority (given and defined by the
organization) that entitles a manager to direct the
work of operative employees.
• Staff authority
Positions that have some authority (e.g., organization
policy enforcement) but that are created to support,
assist, and advise the holders of line authority.
Line Versus Staff Authority
Centralization And Decentralization
• Centralization
A function of how much decision-making authority is
pushed down to lower levels in an organization; the
more centralized an organization, the higher the level
at which decisions are made
• Decentralization
The pushing down of decision-making authority to
the lowest levels of an organization
Types of Departmentalization
Functional
Product
Customer
Geographic
Process
Departmentalization
• Functional departmentalization
The grouping of activities by functions performed
• Product departmentalization
The grouping of activities by product produced
• Customer departmentalization
The grouping of activities by common customers
• Geographic departmentalization
The grouping of activities by territory
• Process departmentalization
The grouping of activities by work or customer flow
Formalization
Formalization refers to how standardized an
organization's jobs are and the extent to which
employee behavior is guided by rules and procedures
Contingency Variables Affecting
Structure
• Mechanistic organization
The bureaucracy; a structure that is high in
specialization, formalization, and centralization
• Organic organization
An adhocracy; a structure that is low in specialization,
formalization, and centralization
Structure follows strategy
5–21
Mechanistic versus Organic Organizations
• Rigid hierarchical relationships • Collaboration (both vertical and
• Fixed duties horizontal)
• Many rules • Adaptable duties
• Formalized communication • Few rules
channels • Informal communication
• Centralized decision authority • Decentralized decision authority
• Taller structures • Flatter structures
