„Organizational
structure”
Organizational structure
Organizational structure -
definitions
Organizational structure – the formal
arrangement of task, communication and authority
relationships that influence and control how people
co-ordinate and conduct their work.
Organigram or organization chart – diagram which
consists of boxes (representing groupings, positions
or other structural units) and lines (depicting
reporting relationships).
Organigram - example
LINES BOXES
Organizational structure -
definitions
Span of control – the number of subordinates that
a manager or supervisor can directly control; the
number of employees a manager can feasibly
oversee.
Unity of command - provides that an employee is
responsible to only one supervisor, who in turn is
responsible to only one supervisor, and so on up the
organizational hierarchy.
Exercise 1
Darren is the manager of a branch of well known tool hire firm
Anna is the assistant manager and she reports to Darren
Anna delegates to the department managers – Jane, Tom and Om
Felicity, Matt and Ryan all report to Jane
Rachel, Sally and Pete are accountable to Tom
Omar is responsible for John, Mark, Sam and James
Draw the organization chart for the tool hire firm
Who has the largest span of control and how big is it?
How many layers are in this hierarchy?
Who does Tom delegate to?
Exercise 2
Exercise 2
Organizational structure - types
Layers of management in the organization's
hierarchy
Flat organizational structure Tall organizational structure
Flat and tall structure
1 1
2 2 2
3 3
4 4
2–level hierarchy
5 5
6 6
6–level hierarchy
Differences between flat and tall
structures
Structure FLAT TALL
Wide span of control (each Narrow span of control (each
Span of control manager has to manage many manager has to manage only few
subordinates) subordinates)
Control of
Loose control Close control
subordinates
Less costly because it has less Costly because it has many
Cost managers managers
Communictaion will not be
Communication may be distorted
Communicatio distorted and delayed because
and delayed because there are
n there are few layers of
many layers of management
management
Decision making is quick
Decision Extra levels of management slow
because there are few levels of
making down decision making
management
Promotional
Fewer promotions More promotional opportunities
opportunities
Organizational structure - types
Departmentation
Functional structure
Divisional structure
Process-oriented structure
Departmentation – refers to the grouping
together of activities in organizational
subunits.
Functional structure
Functional structure – occurs when individuals and groups
are located together based on the function their tasks have
within the organization.
Board of
directors
Chief executive
HR Finance Marketing Production
Functional structure
Advanteges
Critical mass of functional activity that supports efficiency
within
a function
Skill development
Disadvantages
Relatively slow speed of response to environmental change
Lower innovation and change readiness
Frequent decison overload at the top of the function
Interfunctional communication and co-ordination problems
due to different and even conflicting objectives and
Divisional structure
Divisional structure – results in multiple subunits that are
focused on different products, regions and markets or market
segments.
Head office
Product Product Product Product division
division A division B division C D
Personnel Sales Finance Manufacturing
The divisional structure is particulary appropriate where there are a
number of very different product or service offerings, significantly
different market conditions for different oferings, or large geographic
dispersion.
Divisional structure
Advanteges
Fast response to changing environmental conditions
Customer satisfaction is typically higher
Disadvantages
Duplication of functions across divisions
Poorer co-ordination across divisional boundaries
Lower technical specialization and specialist competence in
divisional functions
Limitations to integration and standardization across
divions
Organizational structure - types
Hybrid structures - these apply to more than one of the
departmentation principles simultaneously. The best known of
which is the matrix structure.
Chef executive
Production Finance Marketing
director director director
Project
director 1
Project
director 2
Project
director 2
How can I work for more than
one boss?
The following situation was described by an employee
who reported to more than one boss:
My job has expanded and I now have three bosses to report to
rather than one. I have tried to point out that I can only do a
limited amount for each boss, but they don’t seem to understand
the difficulties involved in reporting to three different masters. My
initial idea was to get them all together to discuss what each can
reasonably expect of me, but they don’t get on with one another
and have found excuses to miss the meetings. How can I tackle
this?
To what extent and how might such difficulties be
avoided in
a matrix structure?
Exercise 3
Propose the most appropriate organizational structures
for the following enterprises. Justify your choice.
Exercise 3
Kowalski and Sieczko partnership is engaged in the
production of wooden windows and doors. The company
employs 6 people, including 4 carpenters, one
accountant, and one secretary. Most matters related to
running the company are handled by the partners, with
one being responsible for production and the other for
finance and marketing.
Exercise 3
The company Project-World Ltd. was founded by
architects who are engaged in the broad field of
building design and the design of spaces around them,
known as landscaping. The company employs several
dozen architects and designers with varying experience
and specializations. For each project,
a team is typically created from different departments
Process-oriented structure
Process-oriented structure – seeks to align the structure of
the organization with the workflows and core processes that
aim at addressing and meeting customer needs.
CEO
Pharmacy Purchising and
Patient records
services procurement
Neonatal intensive
care unit
Prenatal
outpatient care
… (other core
process groups)
Process-oriented structure
Advanteges
Flexible and responsive reactions to customer demands
Minimize the disconnects in flows of information, materials
or people
Provides potentially satisfying work environment
Customer satisfaction is typically higher
Disadvantages
The level of failed applications is high (too complex to apply
easily, the costs can outweight the benefits)
Exercise 4
Functional or proces-oriented structure?
Teamwork, cooperation between teams Formal authority
Slow adaptation to the environment Command and control
Dominance of customer needs orientation Competition among organizational units for resources
Self-control
Free flow of information
Mechanistic and organic
organizational forms
Mechanistic organizational form
Mechanistic
organizations - these
provide a blueprint of an
organizational structure
that is often compared to a
machine: all the parts are
clearly aligned to work
together in prescribed,
predetermined and stable
ways.
Organic organizational form
Organic organizations –
sometimes referred to as
organismic organizations.
Reflects an organizational
form emerging in fluid and
relatively unpredictable
situations. It is typified by a
high level of flexibility in job
responsibilities, also
incorporating high levels of
technical exppertise at the
lower level of the organization
Differences between
mechanistic and organic
organizational forms
Organizational
MECHANISTIC ORGANIC
form
Nature of tasks Routine Nonroutine
Degree of
High Low
standardization
Degree of
High Low
formalization
Hierarchy of Tall with narrow span of
Flat with wide span of control
authority control
Decision making Centralized Decentralized
QUIZ
Test
1. Which type of structure is used when a
company has locations in multiple cities?
A. Flat organizational structure
B. Functional organizational structure
C. Divisional organizational structure
D. Process-oriented structure
Test
2. What does the organizational matrix
structure focus on?
A.The use of divisional work groups that focus on
different tasks
B.The use of small, highly specialized teams to
maximize efficiency
C.The use of strong hierarchical structure
D.The use of cross–functional teams
Test
3. A state university has a system where most of the decisions
are made by the top level of management and subordinates are
not supposed to question them. The are no complex decision-
making process that involve multiple parties and most of
communication goes from the bottom toward the top. Why this
is NOT a common mechanistic structure?
A.Because most of the decisions are made by the top level of
management
B.Because there are no complex decision-making process that involve
multiple parties
C.Because most of the communication goes from the bottom toward
the top
D.Because the subordinates are not supposed to question the decision-
making process
Test
4. Which of the following is NOT a characteristic
of
a flat organizational structure?
A.Relatively few layers of management
B.Relatively large span of control
C.A graphical representation of its organizational
structure will be relatively wide and short
D.More promotional opportunities
Test
5. Span of control is:
A.the number of employees a manager can feasibly
oversee
B.the number of managers an employee can deal
with
C.the number of top managers making decisions
D.the number of decions top managers delegate to
lower-level managers
Revision before
Test 1
Task 1
What kind of Mintzberg’s role play managers in each
situation?
A manager spends most of the day talking to employees,
1.
motivating them, and ensuring they feel valued in their work. He
also listens to their concerns and provides guidance to help them
stay productive.
During a board meeting, a manager presents a report on the
2.
department's progress and discusses the achievements and
challenges faced over the past quarter. She represents her team
and speaks on their behalf.
Facing a sudden shortage of materials, a manager evaluates
3.
alternatives and quickly decides to source from a new supplier to
keep production running smoothly.
A manager receives and reviews detailed market research reports
4.
to stay updated on industry trends. She analyzes this information to
Task 2
Which of the following are considered E - elements of
PEST?
a)Visa requirements and trading tariffs
b)Weather and climate
c)Currency inflation and interests rates
d)Age and gender
e)Taxation regulations
f)Cost of living
g)Stability of governments
h)Gross domestic product
Task 3
Provide 3 out of 5 definitions
a)Synergy
b)Task environment
c)Unity of command
d)Therblig
e)Departmentation
Task 4
List and describe the key elements that
contribute to the formation of organizational
culture. For each element, explain how it
impacts employees' behavior and the overall
environment.
Task 5
Below is a list of prominent figures in management
theory. Match each representative to the correct school
of management thought.
a)Elton Mayo
b)Henry Ford
c)Abraham Maslow
d)Frederic Winslow Taylor
e)Max Weber
