1. Structure and Design of Organizations
Peter Drucker: While a poor structure makes a high performance impossible, the best structure in the world will not ensure good performance

2. Organization structure
The way component parts and activities are grouped, controlled and coordinated to achieve specific aims and outcomes.
How jobs tasks are formally divided, grouped and coordinated
Structure is a means for attaining the objectives and goals of an organization

3. The Organization Chart
The chart is an illustration in box and-lines informing about the formal lines of authority and the division of labor.
The Vertical Hierarchy of Authority: A glance up and a glance down shows the chain of command
The Horizontal Specialization: A glance to the left and right on the line of an organization chart shows the different jobs or work specialization

4. Chart—Example for a Hospital
Board of Directors
Strategic Planning Advisor
Chief Executive Officer
Legal Counsel
President
Cost Containment Staff
Executive Administrative Director
Executive Medical Director
Director of X-Ray & Laboratory Services
Director of Pharmacy
Chief Physician
Director of Personnel
Director of Admissions
Director of Nutrition & Food Services
Director of Patient & Public Relations
Director of Accounting
Director of Surgery
Director of Outpatient Services

5. Organization’s Major Elements
Authority refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources.
Delegation is the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy
Responsibility is the obligation you have to perform the tasks assigned to you
Accountability managers must report and justify work results to managers above them

6. Key elements in org.structure
Work specialization: To what degree are tasks subdivided into separate jobs?
Departmentalization: On what basis will jobs be grouped together? By function, product, customer, By territory…
Chain of command: To whom individuals and groups report?
Span of control: How many individuals can a manager direct? Important factors: Required Contact. Degree of Specialization. Ability to Communicate…
Centralization and decentralization: Where does decision-making authority lie? Centralized Authority: important decisions are made by higher-level managers. Decentralized Authority: important decisions are made by middle-level and supervisory-level managers
Formalization: To what degree will there be rules to direct employees and managers. Refers to the extent to which expectations regarding the means and ends of work are specified and written

7. Spans of Control: Narrow versus Wide
CEO
Narrow
Key:
T = Top manager
M = Middle manager
F = First-line (supervisory) manager T M
Wide

8. Contingency Design Mechanistic vs. Organic
Is the process of fitting the organization to the environment.
Factors Affecting contingency Design are:
Mechanistic vs. Organic
Differentiation vs. Integration
Size
Technology
Life Cycle

9. Characteristics of Mechanistic & Organic Organizations
Centralized hierarchy of authority
Decentralized hierarchy of authority
Many rules and procedures
Few rules and procedures
Specialized tasks
Shared tasks
Formalized communication
Informal communication
Few teams or task forces
Many teams or task forces
Narrow span of control, taller structure
Wider span of control, flatter structure

10. Types of Organizational Structures
Simple Structure
Functional Structure
Divisional Structure
Conglomerate Structure
Hybrid Structure
Matrix Structure
Team-Based Structure
Network Structure

11. Simple Structure
Owner
Administrative
Assistant
There is only one hierarchical level of management beneath the owner

12. Functional Structure Structure for a business Structure for a hospital
President
Vice
President,
Marketing
Finance
Production
Human
Resources
Structure for a hospital
Chief
Administrator
Chief of
Medical
Services
Director of
Administrative
Outpatient
Nutrition &
Food Services

13. Divisional Structure
FunctionProduct Divisions group activities are arranged around similar products or services
Customer Divisions group activities around common customers or clients
Geographic Divisions group activities around defined regional locations

14. Divisional Structure Product Divisional Structure
President
Motion
Pictures & TV
Division
Music
Magazine &
Book
Internet
Products
Product Divisional Structure
Consumer
Loans
Mortgage
Business
Agriculture
Customer Divisional Structure
Western
Region
Northern
Southern
Eastern
Geographic Divisional Structure

15. Conglomerate Structures
This resembles the structure of General Electric
President
Lighting
Products
Appliances
Aircraft
Engines
Plastics
Financial
Services
Broad-
casting

16. Hybrid Structures A Hypothetical example of what GM might use Vice-
President,
Production
Marketing
Finance
Human
Resources
Functional divisional structure
President
Cadillac
Buick
Pontiac
Chevrolet
Product Divisional Structure
Manager
Region I
Region II
Region III
Region IV
Geographical divisional structure
A Hypothetical example of what GM might use

17. Matrix Structure Example of Ford Motor Company Functional Structure
President
Vice
President,
Engineering
Finance
Production
President.
Marketing
Project
Manager, Taurus
Manager, Mustang
Manager, Explorer
Manager, Expedition
Functional Structure
Subordinate reports to
both Vice President of marketing &
to project
Manager for Mustang
Project structure
Example of Ford Motor Company

18. Advantages of Matrix Organization
Efficient use or resources
Flexibility in conditions of change and uncertainty
Technical excellence
Freeing top management for long-run planning
Improving motivation and commitment
Providing opportunities for personal development

19. Team-Based Structures
President
Vice
President,
Research &
Development
Design
Engineering
Marketing
Product Team
Manager,
Manufacturing
Light Trucks
Sedans
Sport Cars
Project team members
Functional structure
Project teams

20. Network Structure Core of personal computer company USA Design Studio
Sweden
Components
Assembly
Mexico, Asia
Core of personal computer company
USA
Engineering
Company
Japan
Distribution
Company
Canada
Accounting
& Finance
USA

21. Organizational Life Cycle
Birth Stage the nonbureaucratic stage in which the organization is created
Youth Stage the organization is in a prebureaucratic stage, a stage of growth and expansion
Midlife Stage the organization becomes bureaucratic, a period of growth evolving into stability
Maturity Stage the organization becomes very bureaucratic, large and mechanistic
Consequences of Structural Deficiencies:
Motivation and morale can be affected
Decision making can be slow and of poor quality
Conflict and lack of coordination can occur
Failure to respond to changing circumstances
Rising costs