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Organizational Structure
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Foundations of Organization
Structure
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What Determines What Determines Organizational Structure?Organizational Structure?
To what degree are tasks 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?
To what degree will there be rules and regulations to direct employees and managers?
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Impact fromEconomies ofSpecialization
Impact fromHuman
Diseconomies
Work Specialization HighLowLo
wH
igh
Pro
du
ctiv
ity
Work SpecializationWork Specialization
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Other Aspects ofOther Aspects ofOrganization StructureOrganization Structure
DepartmentalizationDepartmentalization
FunctionalFunctionalProductProduct
GeographyGeographyProcessingProcessingCustomerCustomer
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Other Aspects ofOther Aspects ofOrganization StructureOrganization Structure
Chain of CommandChain of Command
Who reports to whom?
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Other Aspects ofOther Aspects ofOrganization StructureOrganization Structure
Span of ControlSpan of Control
How many direct reports can a manager
manage?
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DecentralizedDecentralizedDecisionDecisionMakingMaking
CentralizedCentralizedDecisionDecisionMakingMaking
EmployeeEmployeeEmpowermentEmpowerment
ManagerialManagerialControlControl
ManagerialManagerialControlControl
EmployeeEmployeeEmpowermentEmpowerment HighHighHighHigh
LowLow LowLow
Making Decisions in Making Decisions in OrganizationsOrganizations
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The Degree of
Formalization
Higher
Em
plo
yee
Fre
ed
om
HighFormalization
LowFormalization
HigherLower
Sta
nd
ard
iza
tio
n
Lower
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CentralizedCentralizedAuthorityAuthority
Wide SpansWide Spansof Controlof Control
FewFewDepartmentsDepartments
LittleLittleFormalizationFormalization
The Simple StructureThe Simple Structure
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TheTheBureaucracyBureaucracy
TheTheBureaucracyBureaucracy
FunctionalFunctionalStructureStructureFunctionalFunctionalStructureStructure
DivisionalDivisionalStructureStructureDivisionalDivisionalStructureStructure
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The Matrix StructureThe Matrix Structure
Cross-FunctionalCross-FunctionalCoordinationCoordination
ClearClearAccountabilityAccountability
Allocation Allocation of Specialistsof Specialists
Dual ChainDual Chainof Commandof Command
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The Team-BasedThe Team-BasedStructureStructure
The Team-BasedThe Team-BasedStructureStructure
EmpowerEmpowerWorkersWorkersEmpowerEmpowerWorkersWorkers
Hold TeamsHold TeamsAccountableAccountableHold TeamsHold TeamsAccountableAccountable
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The Virtual The Virtual OrganizationOrganization
CommissionedCommissionedSales RepresentativesSales Representatives
Factories inFactories inSouth KoreaSouth Korea
ExecutiveExecutiveGroupGroup
AdvertisingAdvertisingAgencyAgency
Independent R & DIndependent R & DConsulting FirmConsulting Firm
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EmpoweredEmpowered
EmployeeEmployee
TeamsTeams
WidenedWidened
Spans ofSpans of
ControlControl
LimitedLimited
Chain ofChain of
CommandCommand
The Boundaryless The Boundaryless OrganizationOrganization
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•High horizontal differentiation•Rigid hierarchical relationships•Fixed duties•High formalization•Formalized communication channels•Centralized decision authority
•Low horizontal differentiation•Collaboration (vertical and horizontal)•Adaptable duties•Low formalization•Informal communication•Decentralized decision authority
Mechanistic Versus Organic Structures
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Organizational DesignsOrganizational Designsand Employee Behaviorand Employee BehaviorOrganizational DesignsOrganizational Designsand Employee Behaviorand Employee Behavior
Span Span of Controlof Control
Span Span of Controlof Control
WorkWorkSpecializationSpecialization
WorkWorkSpecializationSpecialization
CentralizationCentralizationCentralizationCentralization
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Organization Structure Determinants and Outcomes
CausesCauses
• Strategy• Size• Technology• Environment
StructuresStructures
• Mechanistic• Organic
Determines
PerformancePerformanceand and
SatisfactionSatisfaction
Moderated byindividual differences
and cultural norms
