Foundations of Organization Structure

Group MembersUmer Farooq-010Mati-ur-Rehman-015Muhammad Usman-003Mian Sahib-088 BS(IT) 5th Semester

Organization Structure• How jobs are formally divided , grouped , and

coordinated. • There are six key elements for the design of

organization structure.– Work Specialization – Departmentalization– Centralization and Decentralization– Formalization– Span of Control– Chain of Command

Elements of Organizational Structure

Organizational Structure Elements

Work Specialization

Departmentalization

Chain of Command

Span of Control

Centralization &

Decentralization

Formalization

Work Specialization• Assign wok according to Work specialization • Division of labor• Activities subdivided into separate jobs• Consume less time to understand tools and

equipments• Increase efficiency of work

Departmentalization• The basis by which jobs are grouped.• Clustering individuals into units and units into

departments and departments into larger units.

• Encourages informal Communication among people and subunits.

Types of Departmentalization

Functions

Product & Services

Geography

Process

Types of Departmentalization• Grouped units by performed functions.• Efficiency gained by putting specialist together.• Departmentalize as Manufacturing, Accounting,

Supply. Functional

• Grouped by type of product or service• Increase accountability for performanceProduct/service

• Works for Processing customers as well as productProcess

• Departmentalization uses the particular type of customer of the organization.Customers

• Grouped on the basis of territory• Valuable if organization’s customer are scattered

over a large geographic area Geography

Chain of Command• Unbroken line of authority , extends from top of the

organization to the lowest• Clarifies who report to whom• Responsibility, legal duty to perform a task which is

assigned• Authority, right inherent in a managerial position to

give order and expects them to be obeyed• Unity of command, A person should have one and

only one superior to whom he is directly responsible• Organization more productive by enforcing chain of

command

Span of Control• The number of subordinates a manager can

efficiently and effectively direct• It determine the number of level and

manager an organization has• Types of Span Narrow

SpanWider Span

Types of Span

• Most efficient in terms of cost• Reduce efficiency effectiveness and employee

performance• Less time to provide leadership and support

Wider Span

• Manager can maintain close control• Expensive• Make vertical communication more complex• Slowdown decision making And isolate upper

management• Encourage supervision and discourage employee

autonomy

Narrow Span

Centralization and Decentralization

Centralization• Decision making

concentrated at single point

• Top manager make all decisions

• Decision making rate slow

• No other one participate in decision making

• Autocrative

Decentralization • Decision making pushed

down to managers closest to the action

• Solve problems quickly and effectively

• Allow others to participate in decision making

• Democrative

Formalization• The degree to which jobs within an

organization are standardized• Describe what, when and how to do work• Describe lots of organizational rules and

clearly defined procedures covering work process

• Reduce ambiguity• Increase consistency and uniform output

Organization ModelMechanistic Model • High Specialization• Rigid

Departmentalization• Clear Chain of

Command• Narrow Spans of Control• Centralization• High Formalization

Organic Model• Cross-functional Team• Cross-hierarchical Team• Free Flow of Information• Wide Spans of Control• Decentralization• Low Formalization

Common Organizational Design

• Low degree of departmentalization• Wide span of control• Centralized Structure• Little formalization

Simple Structure

• Work specialization structure• Very formalized rules and regulations• Task grouped in functional departments• Narrow span of control• Centralized authority

The Bureaucracy

• Create dual lines of authority• Combine functional and product departmentalization

Matrix Structure

New Design Options

•A small , core organization that outsources major business functions•Highly centralized•Little or no departmentalization

Virtual Organizati

on

•Eliminate the chain of command•Limitless span of control •Replace departmentalization with empowered team

Boundaryless

Organization

Causes of Different Structure

Causes

Strategy

Organization Size

Technology

Environment

Organization Size• Organization size’s significantly affects its structure• Larger organization have more specialization , more

formalization rather than smaller organization

Technology• The way in which an organization transfer its input

into output• Technology also affects organization Structure

Strategy

•Emphasizes the introduction of major new products and servicesInnovation

•Tight cost control•Avoidance of unnecessary innovation or marketing expenses•Price cutting

Cost-minimization

•Introduce new product only if their viability already proved•Risk aversion strategy

Imitation

Environment •The degree to which an environment support growth•Rich and growing environments generate excess resources Capacity

•Describe instability in the environment•Difficult to manage Volatility

•The degree of heterogeneity and concentration among environmental elements

Complexity

Organization Structure: Its determinants and Outcomes Causes Design Determines Associated with•Strategy•Size•Technology•Environment

•Mechanistic•Organic

Performance and

Satisfaction

Moderated by individual

differences and cultural norms