1. Management Theory: Chapter 10
Organizational Structure
and Design

2. Learning Objectives Explore the management task of “organizing”
Understand organizational structure and design
Elements of structure
Mechanistic vs. organic designs
Factors that influence organizational design
Common organizational designs
New organizational designs and ideas

3. Organizing “Organizing” is the process of
creating an organization’s structure,
determining what tasks are to be done,
who is to do them,
how the tasks are to be grouped,
who reports to whom, and
where decisions are to be made

4. Organizational Structure
“The formal framework by which job tasks are divided, grouped, and coordinated.”
To allow employees to effectively and efficiently do their work.

5. Elements of Organizational Structure
Specialization (separating)
Departmentalization (grouping)
Chain of command (authority)
Span of control (coordination)
Centralization/decentralization (decision-making)
Formalization (standardization)

6. Types of Departmentalization
functional
product line
process
geography
customer

7. Centralization vs Decentralization
Complex, uncertain environment
Capable lower-level managers
Minor decisions
Inclusive culture
Geographically dispersed structure
Involvement/flexibility key to success
Stable environment
Experienced upper-level management
Significance of decisions
Large company
Crisis or new direction

8. Organizational Chart Diagram showing reporting relationships
Shows how pieces of organization fit together (visual “graph” of the structure)
Often doesn’t reflect true authority

9. Factors that Influence Structural Design Choices
Strategy
Culture
Size
Technology/nature of the work
Skills & abilities of employees
Degree of environmental uncertainty

10. Structure Types: Mechanistic Organic
Rigid, stable structure
Standardized jobs & regulations
Rigid departmentalization
Narrow spans of control
High formalization
Centralized decisions
Downward communication
Adaptive, flexible structure
Jobs change frequently & rapidly
Jobs consist of diverse activities
Work often in teams
Minimal formal rules
Empowered employees
Low level of direct supervision

11. Simple Design Low departmentalization Wide spans of control
Centralized authority (one person)
Informal
Small or entrepreneurial businesses

12. Functional Design
Functional departmentalization applied to whole organization
R&D, manufacturing, sales & marketing, finance, human resources
Very common

13. Divisional Design Separate, semi-autonomous business units
“Corporate” supplies some support services and financing
In some conglomerates, these are fully autonomous units

14. Hierarchical Design Strict departmentalization
function, product, place or customer
Mechanistic/bureaucratic
Centralized authority, strict chain of command
Follows traditional management theories

15. Horizontal Design Flattens the hierarchy
Teams are primary building blocks
Decentralized authority
Small, strong, well-informed “center”

16. Team-Based Design Structure based on teams, often self-managed
Employee-empowerment
No clear line of authority/hierarchy
Clear direction, goals are critical

17. Matrix Design
Combines functional and product/process/customer/place departmentalization
Uses cross-functional project teams
Organic design:
emphasis on integration of activities
breaks rule of “unity of command”
Decentralized decision-making
Requires good communication skills

18. Project Design Work designed completely around projects
“cross-functional” teams without the “functions”
No other hierarchy or structure
Managers serve as coaches, mentors, resource providers

19. Web (or Network) Design
Organization contracts out some or all operating functions
Maintains only core competencies internally
Coordinates activities through a centralized “hub”
Authority is centralized
Implementation is decentralized

20. Shamrock Design
Reflects three different types of employment relationships
the professional “core” of full-time, permanent employees
contract workers/organizations
flexible labor force (part-time and temporary workers)

21. New Ideas in Organizational Design
“Boundarylessness”
Learning organizations

22. Issues
Constant restructuring
Belief that there is a “right” structure

23. Summary Defined management task of “organizing” Elements of structure
Mechanistic vs. organic designs
Factors that influence organizational design
Different organizational designs
Basic concepts
Advantages and disadvantages