ORGANISATIONAL
STRUCTURE
BY GROUP 9 :-
UMANG,
MEGHA,
ASHISH,
SACHITANAND,
SAURAV,
NEERAJ
• According to S.P. Robbins, “An
organisational structure defines how
job tasks are formally divided, grouped
and coordinated.”
• Organisation structure is the
framework of tasks, reporting and
authority relationships within which an
organisation functions.
• There are six key elements that need to be
considered for designing an organisation’s
structure –
i. Work Specialisation
ii. Departmentalisation
iii. Chain of Command
iv. Span of Control
v. Centralisation and Decentralisation
vi. Formalisation
• There are six key elements that need to be
considered for designing an organisation’s
structure –
i. Work Specialisation
ii. Departmentalisation
iii. Chain of Command
iv. Span of Control
v. Centralisation and Decentralisation
vi. Formalisation
Essentials for Organisation Structure
• Work Specialisation
One of the most important features of an
organisation structure is work
specialisation.
Every effective organisation defines the
duties and responsibilities of all employees
and trains them to attain expertise in their
work.
This can be applied to both managerial and
technical functions.
• Chain of command
An organisation would be more effective if
there is unity of command within the
firm.
Each employee should receive orders or
instructions from only one superior.
Also, proper authority and responsibilities
should be designated to get the work done
and help achieve organisational goals.
• Departmentalization
It is the process in which jobs are grouped
together to bring coordination among the
organisational tasks.
Jobs are grouped on the basis of –
1. Function,
2. Product ,
3. Geography or
4. Customer
• Departmentalization by function
This is the most widely used method of
departmentation. It involves grouping
people with similar skills in one unit.
• Departmentalization by product
It involves breaking down an organisation
into small, independent units, each of
which produces a particular product or
service.
• Departmentalization by geography
This method involves the grouping of jobs on
the basis of territory. This helps firms to
customise their products and develop
strategies as per the competition in the region.
• Departmentalization by customer
This involves dividing the organisation into
depts. based on the type of customers they
serve.
Span of control
The number of subordinates a manager can efficiently
and effectively direct
An example to illustrate the validity of this statement
Assume that there are two organizations A & B
Company A Company B
Operative level Operative level
employees employees
4100 4100
span 4 span 8
Managers required 1025
managers required
512(approx)
Average salary
saves $32 million/ year
$40000/year
so, wider spans are more
efficient in terms of
cost savings
Advantages and Disadvantages of small and large spans
In small spans manager Employee performance
can maintain close control suffers in large span
because supervisors
cant provide necessary
Major drawbacks of small leadership and support
spans
• Expensive
• Complex vertical
communication
• Over tight supervision
Centralization and Decentralization
Centralization : Refers to the degree to which decision
making is concentrated at a single point in the organization
Decentralization : Decision discretion is pushed to lower-
level employees
Formalization : Refers to the degree to which
jobs within the organization are standardized
Common organization designs
THE SIMPLE STRUCTURE
• CENTRALIZED DECISION-MAKING
• LOW DEGREE OF DEPARTMENTALIZATION
• WIDE SPAN OF CONTROL
THE BUREACRACY STRUCTURE
•FORMALIZED RULES AND REGULATIONS
•DECISION MAKING FOLLOWS A CHAIN OF COMAND
THE MATRIX STRUCTURE
•COMBINES TWO FORM OF DEPARTMENTALIZATION
MATRIX DESIGN
• Combination of Project Design with those of
functional one.
• Used in sectors characterized by a high degree
of specialization along with the emphasis on
project and other specific goals such as
R&D,advertisment agencies, hospitals etc.
ADVANTAGE OF MATRIX STRUCTURE
• Facilitates coordination between the various
complex functions of the organization.
• It also enables the organization to allocates
functional specialists among different
department in an effective manner.
DISADVANTAGE OF MATRIX DESIGN
• Violates the principle of unity of command.
• Matrix design is also criticized for the
confusion it creates and the amount of stress
it places on individuals.
• Leads to Role conflict and ambiguity among
employees.
VIRTUAL ORGANIZATION
Temporary network of companies each having
expertise in certain skills and specialized
organization.
CHARACTERISTICS OF VIRTUAL
ORGANIZATION
• Different organization with varying skills and
core competencies enter into short term
partnership.
• Located in different geographical location can
use IT to communicate.
• It is difficult to define the boundaries.
BOUNDRYLESS ORGANIZATION
What
That which seeks to eliminate the chain
of command
Have limitless spans of control
Replace departments with empowered
teams
How
By eliminating vertical an horizontal
boundaries
VERTICAL BOUNDARIES
• By having cross-hierarchical teams
• Participative decision making
• 360-degree performance appraisals
HORIZONTAL BOUNDARIES
Functional departments create horizontal
boundaries
So, replacing functional departments with cross-
functional teams.
Rotation of people into and out of different
functional areas.
BENEFITS OF BOUNDRYLESS ORGANIZATION
BREAKING DOWN EXTERNAL BARRIERS
External Barriers constituencies are:
Suppliers
Customers
Regulators
Joint Ventures in different countries
Customer empowerment
Virtual organizations
DRAWBACKS
REASONS FOR DIFFERENCE IN STRUCTURES
Mechanistic Model
-High formalization
-Limited information network
-Centralization
Organic Model
-Participative decision making
-Comprehensive information network
-Cross-Functional teams
ORGANIZATIONAL MODELS
STRATEGY
Importance of Strategy
Organizational objectives are derived from strategies
Strategy and organizational structure should be closely linked
Types of Strategy
Innovation
Emphasize introduction of major new products and services
o Logical Org Structure linkage: Organic model
Cost Minimization
Emphasize tight cost control, avoidance unnecessary innovation and
marking expense and price cutting
o Logical Org Structure linkage: Mechanistic model
Imitation
Seeks to move into products, services or markets only their viability has
been proven
o Logical Org Structure linkage: Mechanistic and organic model
Organizational Size
Larger Size Org Small Size Org
More than 2000 employee Less than 2000 employee
More Work Specialization Less Work Specialization
Departmentalization Decentralization
More rules and regulations Low formalization
More vertical levels
Note:
Increase in employee strength for small size organization shift towards
mechanistic structure
Impact becomes less important as organization expands
Environment
Importance of environment
Organizational structure is affected by environmental uncertainty
For Ex: New Competitors, Tech breakthrough, Government policy
Dimensions of Environment
Capacity
It determines degree to which it can support growth in organization
o Scarce and abundant
Volatility
It determines degree of instability in organization
o Dynamic and Stable
Complexity
It determines degree of heterogeneity and homogeneity among
environmental element in organization
o Simple and complex
Three Dimensional Model of Environment
Stable
Abundant
Logical Org Structure
linkage
Mechanistic Model
Simple Complex
Logical Org Structure
linkage
Organic Model
Scarce
Dynamic
CONCLUSION
