SUPERVISORY

MANAGEMENT

ORGANIZATION STRUCTURE AND

FUNCTIONS
 At the end of the session students
should be able to:
Identify & describe the six elements that
define an organization’s structure
Explain the Characteristics of bureaucracy
Describe the matrix organization
Know about mechanistic & organic
structural model
Identify & explain three strategy
dimensions
 What is an organization?
Organizations are groups of people, with
ideas and resources, working towards
common goals.

The purpose of the organizing function is

to make the best use of the organization’s
resources to achieve its goals.
What is Organizational Structure
The formal decision making framework
by which job tasks are divided,
grouped, and coordinated.
Formalization is an important aspect of
structure.
It is the extent to which the units of the
organizations are explicitly defined and
its policies, procedures and goals are
clearly stated.
 Organizational Structure
The formal organization can be seen and
represented in chart form
An organization chart displays the organizational
structure and shows job titles, lines of authority,
and relationships between departments.
It is the framework that enables employees to
work together productively.
It allows adequate management to provide for
each group
 Organzational Structure

It helps employees to know where to report

and whom to ask for help.
Organizational chart is a diagram that
traditionally shows boxes to indicate
functions, with connecting lines to indicate
relationships.
 Organizational Structure
The relationships within the organization structure
can also be called the chain of command. This
shows flow of authority, accountability and
responsibility
Authority is the right inherent in a managerial
position to give orders and to expect these orders to
be followed
Accountability is the duty to inform and update
supervisors
Responsibility is the obligation to perform the job
requirements and meet objectives.
Key Elements of Organizational
Structure
• Work Specialization
• Departmentalization
• Chain of Command
• Span of Control
• Centralization and Decentralization
• Formalization
 Work Specialization
Refers to the degree to which tasks in
the organization are subdivided into
separate jobs.

Division
Divisionof
oflabor:
labor:
• • Makes
Makesefficient
efficientuse
useof
ofemployee
employeeskills
skills
• • Increases
Increasesemployee
employeeskills
skillsthrough
throughrepetition
repetition
• • Less
Lessbetween-job
between-jobdowntime
downtimeincreases
increasesproductivity
productivity
• • Specialized
Specializedtraining
trainingisismore
moreefficient
efficient
• • Allows
Allowsuse
useof
ofspecialized
specializedequipment
equipment
 Disadvantages of Work
Specialization
Boredom
Fatigue
High employee turnover
Absenteeism
 Departmetalization
The basis by which jobs are grouped
into manageable units.
Grouping can be based on function,
product, geography, process and
customers
Functional Departmentalization
Grouping activities by functions performed.
Activities can be grouped according to
function (work being done) to pursue
economies of scale by placing employees with
shared skills and knowledge into departments
for example HR, Marketing, Accounting.
Functional departmentalization can be used in
all types of organizations.
 Product Departmentalization
Grouping activities by product line. Tasks can also be
grouped according to a specific product or service, thus
placing all activities related to the product or the
service under one manager.
Each major product area in the corporation is under
the authority of a senior manager who is specialist in,
and is responsible for, everything related to the
product line.
LA Gear is an example of company that uses product
departmentalization. Its structure is based on its varied
product lines which include women’s footwear,
children’s footwear and men’s’ footwear.
Customer Departmentalization
Grouping activities on the basis of common
customers or types of customers.
Jobs may be grouped according to the type of
customer served by the organization.
The assumption is that customers in each
department have a common set of problems
and needs that can best be met by specialists.
Geographic Departmentalization
Grouping activities on the basis of
territory.
If an organization's customers are
geographically dispersed, it can group jobs
based on geography. For example,
Northern, Southern, Western, Eastern,
etc.
Process Departmentalization
Grouping activities on the basis of product or
service or customer flow
Because each process requires different skills,
process departmentalization allows
homogenous activities to be categorized.
For Example, the manufacturing sector might
be departmentalized based on processes such
as washing, pressing, tubing, casting,
finishing, etc.
 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.

The chain of command helps organizations

function smoothly by making two things clear
Who is responsible for each task
Who has the authority to make official decisions
 Unity of Command
A subordinate should have one and
only one superior to whom he or
she is directly responsible.
If the unity of command is broken,
an employee might have to cope
with conflicting demands or
priorities from several superiors.
 Span of Control
The number of subordinates a
manager can efficiently and effectively
direct.

Traditionally, the span of control has

been defined as a number between 4
and 7 subordinates under one manager
 Span of Control
Determines the number of levels and
managers an organization has.
The wider the span, the more efficient
the organization as it relates to
resources.
 Centralization
The degree to which the decision
making is concentrated at a single
point in the organization
The concept includes only formal
authority, that is, the rights
inherent in one’s position.
 Decentralization

The degree to which decision making is

spread throughout the organization.
Action can be taken more quickly to solve
problems, more people provide input into
decisions, and employees are less likely to
feel alienated from those who make the
decisions that affect their work lives.
 Formalization
The degree to which jobs within the organization
are standardized.
In highly formalized jobs, incumbents have
minimum amount of discretion over what is to be
done, when it is to be done and how he or she
should do it.
Inputs are handled in exactly the same way,
resulting in a consistent and uniform output.
There are explicit job descriptions, lots or rules, and
clearly defined procedures covering work
processes.
 Common Organizational 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.
 Simple Structure
It has a low degree of departmentalization
Wide spans of control,
Authority centralized in a single person
Little formalization
It is a “flat” organization
Only has 2 or 3 vertical levels
A loose body of employees, and one individual in
whom the decision making authority is centralized.
Simple Structure
Strengths Weaknesses
Simplicity Difficult to maintain
Fast, flexible and in large organization
inexpensive to
maintain Risky – if the owner
Accountability is dies the organization
clear might close down.
 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.
Bureaucracy
Strengths Weaknesses
Ability to perform
standardized activities Specialization
in a highly efficient creates subunit
manner conflicts
Minimum duplication
of personnel and Functional unit
equipment goals can override
Enhanced overall goals of
communication the organization
Centralized decision
making
 Matrix Structure

It is another popular organizational

design option.
It creates dual lines of authority and
combines functional and product
departmentalization.
It breaks the unity of command
concept.
Employees have two bosses.
Matrix Structure (College of Business
Administration)

(Director)

(Dean) Employee
New Design Options (Team Structure)
The use of teams as the central device
to coordinate work activities.
It breaks down departmental barriers and
decentralizes decision making to the level of the
work team.
It requires employees to be generalists as well as
specialists.
 Virtual Organization
A small, core organization that outsources its
major business functions.
Highly centralized with little or no
departmentalization.
Answers the question, Why own when you can
rent?
It is also called network or modular organization.
A Virtual Organization
 Boundaryless Organization

An organization that seeks to eliminate the chain of

command, have limitless spans of control, and replace
departments with empowered teams.

T-form
T-formConcepts:
Concepts:
Eliminate
Eliminatevertical
vertical(hierarchical)
(hierarchical)and
and
horizontal
horizontal(departmental)
(departmental)internal
internal
boundaries.
boundaries.
Breakdown
Breakdownexternal
externalbarriers
barriersto
tocustomers
customers
and
andsuppliers.
suppliers.
Boundryless Organization
It is made possible through networked
computers and relies heavily on
information technology.
It is also called the T-form or
technology based organization.
Why do structures differ?
Mechanistic Model
A structure characterized by
extensive departmentalization, high
formalization, a limited information
network, and centralization.
Why do structures differ?
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.
Why do Structure differs - Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major
new products and services.
Cost-minimization Strategy
A strategy that emphasizes tight cost controls,
avoidance of unnecessary innovation or marketing
expenses, and price cutting.

Imitation Strategy
A strategy that seeks to move into new products or
new markets only after their viability has already
been proven.
The Strategy-Structure Relationship
Strategy Structural Option

Innovation Organic: A loose structure; low

specialization, low formalization,
decentralized

Cost minimization Mechanistic: Tight control; extensive

work specialization, high formalization,
high centralization

Imitation Mechanistic and organic: Mix of

loose with tight properties; tight
controls over current activities and
looser controls for new undertakings
Why Do Structures Differ? – Size

Size
How the size of an organization affects its structure. As
an organization grows larger, it becomes more
mechanistic.

Characteristics
Characteristicsof
oflarge
largeorganizations:
organizations:
• •More
Morespecialization
specialization
• •More
Morevertical
verticallevels
levels
• •More
Morerules
rulesand
andregulations
regulations
Why Do Structures Differ? – Technology

Technology
How an organization transfers its
inputs into outputs.
Why Do Structures Differ? – Environment

Environment
Institutions or forces outside the
organization that potentially affect the
organization’s performance.