Organizational Structures

Dr Fred Mugambi MwirigiJKUAT

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Introduction Organizational designing and structuring are

key components of organizational planning Good structures must be flexible and adaptive

yet predictable with regard to the support they offer organizational operations

Firms must take time to study their operations in order to develop structures that reflect and respond to the needs of their organizations

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Centralization & Decentralization

Structures reflect various degrees of centralization or decentralization of operations

Centralization- authority to make important decisions is retained by managers at the top of the hierarchy

Decentralization- authority to make important decisions is delegated to managers at all levels in the hierarchy

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What Is an Organizational Structure?

An illustration showing how job tasks are formally divided, grouped, and coordinated.

Also called an organogram

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Questions to consider when Structuring

To what degree are articles subdivided into separate jobs?

On what basis will jobs be grouped together? To whom do individuals and groups report?

How many individuals can a manager efficiently and effectively direct?

Where does decision-making authority lie? decentralization

To what degree will there be rules and regulations to direct employees and managers?

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Key pillars of organizational structuring

Work specialization Departmentalization Authority vs responsibility Chain of command Unity of command Span of control Centralization vs decentralization

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Work Specialization The degree to which tasks in the

organization are subdivided into separate jobs.

Makes efficient use of employee skills Increases employee skills through

repetition Less between-job downtime increases

productivity Specialized training is more efficient Allows use of specialized equipment

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Departmentalization The basis by which jobs are grouped

together.Activities grouped by:

Function Product Geography Process Customer

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Authority Balance

Chain of Command

The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

Authority

The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.

Unity of Command

A subordinate should have only one superior to whom he or she is directly responsible.

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Span of Control

Narrow Span Drawbacks:

• Expense of additional layers of management.

• Increased complexity of vertical communication.

• Encouragement of overly tight supervision and discouragement of employee autonomy.

Narrow Span Drawbacks:

• Expense of additional layers of management.

• Increased complexity of vertical communication.

• Encouragement of overly tight supervision and discouragement of employee autonomy.

Concept:Concept:

Wider spans of management increase organizational efficiency.Wider spans of management increase organizational efficiency.

Concept:Concept:

Wider spans of management increase organizational efficiency.Wider spans of management increase organizational efficiency.

The number of subordinates a manager can efficiently and effectively direct.

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Centralization vs decentralization

Centralization

The degree to which decision making is concentrated at a single point in the organization.

Formalization

The degree to which jobs within the organization are standardized.

Decentralization

The degree to which decision making is spread throughout the organization.

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Factors That Influence Structure

Strategy Organization Size Technology Environment

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Common Organization Designs

Simple Structure

A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.

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Common Organization Designs (cont’d)

Bureaucracy

A structure of highly operating routine tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.

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The Bureaucracy Strengths

Functional economies of scale

Minimum duplication of personnel and equipment

Enhanced communication

Centralized decision making

Weaknesses Subunit conflicts with

organizational goals Obsessive concern with

rules and regulations Lack of employee

discretion to deal with problems

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Matrix Structure

Key Elements:

+ Gains the advantages of functional and product departmentalization while avoiding their weaknesses.

+ Facilitates coordination of complex and interdependent activities.

– Breaks down unity-of-command concept.

Key Elements:

+ Gains the advantages of functional and product departmentalization while avoiding their weaknesses.

+ Facilitates coordination of complex and interdependent activities.

– Breaks down unity-of-command concept.

A structure that creates dual lines of authority and combines functional and product departmentalization.

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04/20/23

Matrix Structure

CEO

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 employee1717

Modern Design Options

Characteristics:• Breaks down departmental barriers.

• Decentralizes decision making to the team level.

• Requires employees to be generalists as well as specialists.

• Creates a “flexible bureaucracy.”

Characteristics:• Breaks down departmental barriers.

• Decentralizes decision making to the team level.

• Requires employees to be generalists as well as specialists.

• Creates a “flexible bureaucracy.”

Team Structure

The use of teams as the central device to coordinate work activities.

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Virtual Organization

Advantage: Provides maximum flexibility while concentrating on what the organization does best.

Disadvantage: Reduced control over key parts of the business.

Advantage: Provides maximum flexibility while concentrating on what the organization does best.

Disadvantage: Reduced control over key parts of the business.

A small, core organization that outsources its major business functions.

Highly centralized with little or no departmentalization.

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Mechanistic Vs Organic Structures

Mechanistic Model

A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization.

Organic Model

A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

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Mechanistic Versus Organic Models

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Mechanistic v/s Organic Structure Contd.

Mechanistic Organic

Individual Specialization Joint Specialization

Simple Integration Complex integration

Centralization Decentralization

Standardization Mutual Adjustment

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In summary

Associated with

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Thank you

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