Essentials of

Organizational Behavior, 10/e

Stephen P. Robbins & Timothy A. Judge

Chapter 14

Foundations of
Organizational Structure
Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall 14-1
 After studying this chapter, you
should be able to:
1. Identify the six elements of an organization’s structure.
2. Describe the common organizational designs.
3. Compare and contrast the virtual and boundaryless
organizations.
4. Demonstrate how organizational structures differ.
5. Analyze the behavioral implications of different
organizational designs.
6. Show how globalization affects organizational structure.

Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall 14-2

 What is Organization
Structure?
• It defines how job tasks are formally
divided, grouped, and coordinated
• Key elements to be addressed:
 Work specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization
 Decentralization
 Formalization

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Element 1: Work Specialization
• Also known as division of labor
• Describes the degree to which activities in
the organization are subdivided into
separate jobs
• Benefits:
 Greater efficiency and lower costs
• Costs:
 Human costs when carried too far
 Job enlargement as a solution
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Element 2: Departmentalization

• Basis by which jobs are grouped together

so that common tasks can be coordinated
• Common bases:
 Function
 Product
 Geography
 Process
 Customer

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 Element 3: Chain of Command
Unbroken line of authority that extends from
the top of the organization to the lowest
echelon and clarifies who reports to whom

•Authority: positional rights

•Unity of Command principle: one boss
•Fewer organizations find this is relevant
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 Element 4: Span of Control

• The number of employees a manager is

expected to effectively and efficiently
direct
• Determines the number of levels and
managers an organization has
 Trend is toward wider spans of control
 Wider span depends on knowledgeable employees
 Affects speed of communication and decision making

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 Element 5: Centralization and
Decentralization
Centralization - degree to which decision
making is concentrated at a single point in
the organization
 Only includes formal authority: positional rights
 Highly centralized when top managers make all the
decisions
 Decentralized when front line employees and
supervisors make decisions
 Trend is toward increased decentralization

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 Element 6: Formalization

Degree to which jobs

within the organization
are standardized
 Formal = minimum
discretion over what is to
be done, when it is
done, and how
 Informal = freedom to
act is necessary
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Common Organizational Designs

• Simple structure
• Bureaucracy
• Matrix structure

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 Simple Structure

• Low degree of departmentalization

• Wide spans of control
• Authority centralized in a single person
• Little formalization
• Difficult to maintain in anything other
than small organizations
Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall 14-11
 Bureaucracy
• Highly routine operating tasks achieved
through specialization
 Formal rules and regulations
 Centralized authority
 Narrow spans of control
 Tasks grouped by functional departments
 Decision making follows the chain of command

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 Matrix Structure
• Combines two forms of
departmentalization
 Functional
 Product
• Dual chain of command
• Advantages:
 Facilitates coordination and efficient allocation of
specialists
• Disadvantages:
 Possible confusion, fosters power struggles, stress
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 Matrix Structure for a College
of Business Administration

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 New Design Options
• The Virtual Organization
 A small core organization that outsources
major business functions
 Also known as a network or modular
organization

• The Boundaryless Organization

 Eliminates vertical and horizontal
boundaries Customers
 Removes exterior barriers Workers

 Relies heavily on technology Suppliers

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 Models of Organizational Design

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 The Four Forces that Influence
Structure
1. Strategy
 Innovation – introduce new offerings - organic
 Cost-Minimization – cost control - mechanistic
 Imitation – minimal risk and maximum profit - both
2. Organization Size
 Bigger becomes mechanistic
3. Technology
 Routine equals mechanistic, nonroutine is organic
4. Environment
 Dynamic environments lead to organic structures
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 Organizational Designs and
Employee Behavior
• Cannot generalize any link between
structure and performance
• Too much individual variance
• Consider employee preferences for:
 Work Specialization
 Span of Control
 Centralization

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 Global Implications

Culture and Organizational Structure:

• Insufficient research at this point

Culture and Employee Structure Preferences:

• National culture does influence
• High power distance cultures accept mechanistic structure

Culture and the Boundaryless Organization:

• Natural avenue for modern global companies

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 Implications for Managers

• Structural relationships impact attitude and

behavior
• Structure constrains employee behaviors

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 Keep in Mind…
• As tasks become more complex and
required skills more diverse, more use of
cross-functional teams
• Simple structures are easy to create but
difficult to grow
• External boundaries can be reduced
through globalization, strategic alliances,
customer-organizational links, and
telecommuting
Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall 14-21
 Summary
1. Identified the six elements of an organization’s
structure.
2. Described the common organizational designs.
3. Compared and contrasted the virtual and boundaryless
organizations.
4. Demonstrated how organizational structures differed.
5. Analyzed the behavioral implications of different
organizational designs.
6. Showed how globalization affects organizational
structure.
Copyright ©2010 Pearson Education, Inc. Publishing as Prentice Hall 14-22
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