Organizational
Structure
Learning Objectives
• Describe six key elements in
organizational structure
• Explain mechanistic model or the organic
model
• Compare and contrast traditional and
contemporary organizational designs
5-2
What Is Organizing?
• Organizing
– The function of management that
creates the organization’s structure.
– Involves grouping similar tasks,
assigning roles and responsibility.
5-3
Organization Design
• It refers to the process of creating hierarchy
in the organization structure and
determining the flow of responsibility and
authority within the structure in
an organization.
• It involves defining, designing, and re-
structuring organizational structure for
smooth and effective functioning.
• A process for shaping the way organizations
are structured. 5-4
Organization structure: defined
• A systematic approach detailing the
hierarchy within an organization.
• A system that outlines how certain
activities are directed to achieve the goals
of an organization. These activities can
include rules, roles, and responsibilities.
5-5
Cont;d..
• Determines:
what employees do, whom they report
to, and how decisions are made. how
they interact with other people and
teams within the organization.
how responsibilities and roles are
assigned and grouped throughout an
organization.
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5-7
Aspects in organization design
• Line of authority
• Roles, duties, rights, and responsibilities
• Reporting relationships
• Flow of information
• Communication patterns
• Job functions, decision-making, task
allocation.
• Rules and regulations
• Degree of team work
5-8
Cont’d…
• It is a formal management of jobs within an
organization.
• It describes the organizational hierarchy in terms of
different roles, responsibilities, supervision, etc. It
demonstrates different roles of the employees, job
descriptions, job functions, decision-making
authorities, reporting structure, allocation of tasks in
the department, flow of information between
different levels of an organization, clarity of job of
each employee project team, branch, etc.
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Six key elements of Organizational design
• 1. Work specialization
• 2. Chain of command
• 3. Span of control
• 4. Departmentalization
• 5. Centralization vs decentralization
• 6. Formalization
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Work specialization
• It is the process of dividing work activities
into separate specified job units or tasks.
• Use of skills, knowledge or expertise.
• Leads to higher performance and
productivity.
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What is department?
• The department designates a
distinct area, division, or branch
of an organization over which a
manager has authority for the
performance of specified
activities.
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Formal Vs Informal organization
Formal organization pertains to the
intentional structure of roles in a
formally organized enterprise.
The informal organization is a network
of personal and social relations not
established or required by the formal
organization but arising spontaneously
as people associate with one another
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What Is Departmentalization?
• Departmentalization
– How jobs are grouped together
• Functional Departmentalization
– Grouping activities by functions performed
• Product Departmentalization
– Grouping activities by major product areas
• Customer Departmentalization
– Grouping activities by customer
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Cont’d..
• Geographic Departmentalization
– Grouping activities on the basis of geography
or territory
• Process Departmentalization
– Grouping activities on the basis of work or
customer flow
• Cross-functional Teams
– Teams made up of individuals from various
departments and that cross traditional
departmental lines
5-15
Authority and Responsibility
• Chain of Command
– The line of authority extending from upper
organizational levels to lower levels, which
clarifies who reports to whom
• Authority
– The rights inherent in a managerial
position to give orders and expect the orders
to be obeyed
• Responsibility
– An obligation to perform assigned duties
5-16
Types of Authority Relationships
• Line Authority
– Authority that entitles a manager to
direct the work of an employee
• Staff Authority
– Positions with some authority that have
been created to support, assist, and
advise those holding line authority
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5-19
Span of Control
• Span of Control
– The number of
employees a
manager can
efficiently and
effectively
supervise
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Organization with Narrow Spans
21
5-21
Organization with Wide Spans
22
5-22
Formalization
• Formalization
– How standardized an organization’s jobs
are and the extent to which employee
behavior is guided by rules and procedures
• Centralization
– The degree to which decision making takes
place at upper levels of the organization
• Decentralization
– The degree to which lower-level managers
provide input or actually make decisions
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Types of structures
• Mechanistic structure
– A top‐down, hierarchical structure; high in
specialization, formalization, and centralization.
– The structure is more clearly defined as a
hierarchy with leadership delegating specific
roles and tasks to those below.
– With a centralized leadership, the mechanistic
structure strives to have specific job
descriptions for everyone. People work on
individual tasks, with managers and leaders
supervising them.
5-24
Organic structure
• A structure that’s low in specialization,
formalization, and centralization.
• The organic structure is said to be flat,
meaning that there isn't a typical hierarchy
from the lower level workers up to senior
management. Often, there are often a lot of
employees that work in horizontal clusters,
rather than in vertical clusters.
5-25
• Within the organic organization structure,
employees are encouraged to work
together and to have teams working on
tasks together or coordinating the flow of
information and duties.
5-26
5-27
Simple Structure
• Simple Structure
–An organizational design with
low departmentalization,
wide spans of control,
authority centralized in a
single person, and little
formalization
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Traditional Organizational Designs
• Functional Structure
– An organizational design that groups similar
or related occupational specialties together
• Divisional Structure
– An organizational structure made up of
separate business units or divisions
5-29
Contemporary Organizational Structures
• Team Structure
– A structure in which the entire organization is
made up of work teams
• Matrix Structure
– A structure in which specialists from different
functional departments are assigned to work
on projects led by a project manager
• Project Structure
– A structure in which employees continuously
work on projects
5-30
Cont’d..
• Boundaryless Organization
– An organization whose design is not defined
by, or limited to, boundaries imposed by a
predefined structure. Characterized by lack
of structures and an approach to business
that is based on the free flow of information
and ideas to drive innovation, efficiency and
growth
5-31
Cont’d..
• Virtual organizations emerged in 1990 and
is also known as digital / network / modular
organization. Simply speaking, a virtual
organization is a network of cooperation
made possible by ICT.
• It is a social network in which all the
horizontal and vertical boundaries are
removed. In this sense, it is a boundaryless
organization. It consists of individual’s
working out of physically dispersed work
places, or even individuals working from 5-32
Cont’d..
• Network Organization
–An organization that uses its
own employees to do some
work activities and networks of
outside suppliers to provide
other needed product
components or work processes
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Dr. Reddy’s Structure
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Learning Organization
An organization that
has developed the
capacity to
continuously
learn, adapt, and
change
5-35
5-36
Why do structures differ?
• Different organizations use different structure
for different reasons. Depending on following
factors, structures differ:
• Organizational strategy
• Organizational size
• Environment
5-37
Restructuring at ZEE
Entertainment Enterprises Ltd.
• The Board has reviewed and approved the lean
organisation structure proposed by the MD & CEO,
which aims at streamlining the organisation and
improving efficiencies across the business. The
strong and capable set of leaders identified for each
core business segment in the lateral structure, are
highly reflective of the Company’s deep bench
strength and ensure that the Company remains well-
positioned for the future. We are confident that a
resilient and lean team will enable the Company to
achieve its set goals and priorities for the future,
further generating higher value for the shareholders
5-38
Cont;d..
• The restructured framework prioritizes speed and
agility, fostering collaboration and synergy among
core business segments, including Broadcast,
Digital, Movies, and Music. This strategic move
aims to bolster operational efficiency and elevate
key personnel within the organization The new
structure is effective immediately, reflecting the
company's commitment to adaptability and
efficiency in a rapidly evolving industry landscape
• Domestic broadcasting, Digital Business, Music
business, International broadcasting, content
production, 5-39
Contingency Variables Affecting
Structural Choice
• Different organizations use different
structure for different reasons. Depending
on following factors, structures differ:
• Organizational strategy
• Organizational size
• Technology
• Environment
5-40
Reasons for restructuring
1. Create a focus on core businesses
2. Align businesses vertically to improve
accountability and reporting
3. Improve valuation and shareholder value
4. Provide a clear direction to potential investors
5. Take advantage of future growth potential
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Reading
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Reading
• [Link]
organisational-design-restore-the-dignity-of-
work-in-the-age-of-ai/
5-43
Questions
???
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