Organizational structure

Organizational structure:

Formally dictate how jobs and tasks are divided and coordinated between individuals and groups within the company

Simple when a company has..

only 5 to 20 employees

Organizational structure can have significant impact in..

financial performance and ability to manage employees and products 

Elements of organizational structure

1.Work specialization
2. Chain of command m
3. Span of control
4. Centralization
5. Formalization

Work specializations:

• the degree to which tasks in an organization are divided into separate jobs 

(pros: efficiency; cons: reduced flexibility &
motivation).

Chain of command:

answers the question “who reports to whom” and signifies formal authority relationships

Span of control:

represents how many employees each manager in the organization has responsibility for.

(narrow → tall org; wide → flat
org). Best is moderate.

Centralization:

refers to where decisions are formally made in organization

Formalization:

the degree to which rules and procedures are used to standardize behaviors and decisions in an organization

(predictability vs stifles creativity)

Mechanistic organizations

are efficient, rigid, predictable, and standardized organizations that thrive in stable
environments.

Organic organizations

are flexible, adaptive, outward- focused organizations that thrive in dynamic
environments.

Common organizational forms

*Simple structure:
• Functional:
• Multi-divisional (M-form): 
• Matrix:

Simple Structures

Perhaps most common organizational design.
• Flat organization with one person as the central decision-
making figure.
• Example: manager-owned restaurant

Bureaucratic Structures

-Functional structures: employees grouped by function.

• Multi-divisional structures: employees grouped into
divisions based on products, geographic regions, or clients

ex: (marketing, finance)

Matrix structures:

try to take advantage of two types of structures at the same time.

Organizational design drivers

Business environment, strategy, technology, size → determine structure choices

Restructuring

-The process of changing an organization’s structure

-efforts can increase stress and jeopardize employees’ trust in the organization.

-Often flattens layers

-lowers commitment if poorly handled.

How Important Is Structure?

An organization’s structure provides the foundation for
almost everything in organizational behavior.

Difference in business environment, company strategies, technology and firm influence..

organization design