ORGANIZATION ORGANIZATION STRUCTURESTRUCTURE

WHAT IS ORGANIZATIONAL WHAT IS ORGANIZATIONAL STRUCTURE?STRUCTURE?

According to STEPHEN P ROBBINS “An organizational According to STEPHEN P ROBBINS “An organizational structure defines how job tasks are formally divided, structure defines how job tasks are formally divided, grouped and coordinated.”grouped and coordinated.”

According to FRED LUTHANS “Organization structure According to FRED LUTHANS “Organization structure represents the skeleton framework for organizational represents the skeleton framework for organizational behavior.” behavior.”

Organizational structure is defined as “the framework of Organizational structure is defined as “the framework of tasks, reporting and authority relationships within which an tasks, reporting and authority relationships within which an organization functions.”organization functions.”

NEED FOR FORMAL NEED FOR FORMAL ORGANIZATION STRUCTUREORGANIZATION STRUCTURE

Facilitating ManagementFacilitating Management Encouraging GrowthEncouraging Growth Optimum Use of Technological ImprovementOptimum Use of Technological Improvement Encouraging Human Use of Human BeingsEncouraging Human Use of Human Beings Stimulating CreativityStimulating Creativity

Work SpecializationWork Specialization

Work Specialization or Division Of Labor Work Specialization or Division Of Labor refers to the degree to which activities in an refers to the degree to which activities in an organization are subdivided into separate organization are subdivided into separate jobs.jobs.

In essence, individuals specialize in doing In essence, individuals specialize in doing part of an activity rather than the entire part of an activity rather than the entire activity.activity.

DepartmentalizationDepartmentalization The basis by which jobs are grouped together The basis by which jobs are grouped together

is called Departmentalization.is called Departmentalization.

The various ways by which The various ways by which Departmentalization can be done are:-Departmentalization can be done are:-

FunctionalFunctional ProductProduct CustomerCustomer GeographicGeographic

Chain of CommandChain of Command

Who reports to whom?Who reports to whom?

Span of ControlSpan of Control

How many people can a manager manage?How many people can a manager manage?

FormalizationFormalization

It refers to the degree to which the jobs within It refers to the degree to which the jobs within the organization are standardized.the organization are standardized.

The degree of formalization can vary widely The degree of formalization can vary widely between organizations and within between organizations and within organizations.organizations.

The Degree of FormalizationThe Degree of Formalization

Higher

Em

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Fre

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HighFormalization

LowFormalization

HigherLower

Sta

nd

ard

iza

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Lower

Formal decision making authority is held by Formal decision making authority is held by a few people, usually at the topa few people, usually at the top

CentralizationCentralization

Decision making authority isDecision making authority isdispersed throughout the organizationdispersed throughout the organization

DecentralizationDecentralization

Centralization and Decentralization

DecentralizedDecentralizedDecisionDecisionMakingMaking

CentralizedCentralizedDecisionDecisionMakingMaking

EmployeeEmployeeEmpowermentEmpowerment

ManagerialManagerialControlControl

ManagerialManagerialControlControl

EmployeeEmployeeEmpowermentEmpowerment HighHighHighHigh

LowLow LowLow

Making Decisions in Making Decisions in OrganizationsOrganizations

FORMS OF ORGANIZATIONAL FORMS OF ORGANIZATIONAL STUCTURESSTUCTURES

The Line and Staff Organization StructureThe Line and Staff Organization Structure The Functional Organization StructureThe Functional Organization Structure The Divisional Organization StructureThe Divisional Organization Structure The Matrix StructureThe Matrix Structure The Project Organization Structure The Project Organization Structure Free form Organization StructureFree form Organization Structure Network Organization StructureNetwork Organization Structure

Line and Staff Organization Structure

Line Departments – Substantive (direct) in its contribution to organization’s overall objective

Staff Departments – Objective (indirect) in its contribution to organization’s overall objective

Line and Staff conflictReasons of conflict are:• Difference in view points• Lack of Demarcation between Line and Staff• Lack of proper understanding of authority • Different background

Functional Organization Structure Traditional concept of organizing. The basis of departmentation is the various

functions to be performed by the organization.

Widely used in medium and large organizations.

Divisional Organization Structure Also known as Profit Decentralization. Organization is divided into fairly autonomous units. Each unit is self contained and directly accountable

to the organization.

Basis of Divisionalisation Product Divisionalisation Territorial Divisionalisation Strategic Business Divisionalisation

Product Divisionalisation

Vice PresidentSales and Marketing

Vice President Research and Development

Vice President Materials

Management

CEO

Vice President Finance

CannedSoups

Division

PDM

FrozenVegetableDivision

PDM

FrozenEntreesDivision

PDM

BakedGoods

Division

PDM

Centralized support functions

Divisions

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Geographic Divisionalisation

Regional Operations

Regional Operations

Regional Operations

Regional Operations

CEO

Central Support Functions

Individualstores

Matrix Organization Structure

It is the realization of two dimensional structure which emanates directly from two dimensions of authority.

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Matrix StructureCEO

Vice PresidentEngineering

Vice PresidentFinance

Vice PresidentPurchasing

Vice PresidentSales and Marketing

Vice President Research and Development

Product AManager

Product BManager

Product CManager

Product DManager

Product Team

Two-boss employee

Project Organization Project Organization StructureStructure

Free Form Organization

Also known as naturalistic, organic form of organization structure.

Free form structures reduce the emphasis on positions, departments and other formal units, and on the organizational hierarchy.

Free form organizations are suitable for those industries which have to work in highly dynamic environments.

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Network organization structure

A recent innovation in organizational architecture is the use of network structures.

A network structure is a cluster of different organizations whose actions are coordinated by contracts and agreementsrather than through a formal hierarchy.