BUSINESS ENVIRONMENT

LO 2 : Session 01: Organizational Structure

Introduction to organizing

Organizing is the deployment of organizational resources to achieve

strategic goals.

Organizing is deciding how best to group organizational activities and

resources so that the organization will achieve its goals.

Purposes of organizing

Divides work to be done into specific jobs and departments

Assigns tasks and responsibilities associated with individual jobs

Establishes relationships among individuals, groups and departments

Establishes formal lines of authority

Allocates and deploys organisational resources

Organisational structure

Organizational structure is the formal arrangement of jobs within an

organization.

The design of systems to ensure effective coordination of employees across departments

The set of formal tasks assigned to individuals and departments

Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control

The design of systems to ensure effective coordination of employees across departments

Organization chart

The organization chart shows departments and job titles , with lines linking

senior executives to the departments of people for whose work they are

responsible.

This shows who people report to, and clarifies four features of the formal

structure:

Tasks – the major activities of the organization

Subdivisions – how they are divided

Levels – the position of each post within the hierarchy

Lines of authority – these link the boxes to show who people report to

Organizations chart

Organizational design

A process that involves decisions about six key elements

Work specialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization

Work specialization

Dividing work activities into separate job tasks.

Also known as division of labour

People become more expert in one task than they could be in several and

are more likely to come up with improved ideas or methods.

01

Departmentalization

Process of grouping jobs together to ensure coordination of tasks in known

as departmentalization.

Departmentalization identifies

what job tasks will be done by whom?

Common work activities

Common form of departmentalization:

Functional departmentalization

Geographical departmentalization

Product departmentalization

Customer departmentalization

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Chain of command

The lines of authority show the links between people – who they report to

and who reports to them.

In particular chain of command shows who they can ask to do work, who

they can ask for help and who will be expecting results from them.

03

The span of control

The span of control is the number of subordinates reporting directly to the

person above them in the hierarchy.

04

The span of control

Factors associated with less supervisor involvement and larger span of

control.

Work is stable and routine

Subordinates perform similar work

Highly trained and need little direction

Rules and procedures are defined

Little supervision is required

04

Tall vs. flat organizational structure

Tall versus flat organizational structure

Many layers of management

between lowest and highest

levels

Small span of control

Close supervision

Better communication

Reduce delegation

Fewer levels in hierarchy

Wider span of control

Subordinates greater decision

making authority

Few management cost

Greater employee motivation but

less control

Characteristics of tall structure Characteristics of flat structure

Centralization and decentralization

Centralization is when a relatively large number of decisions are taken by

management at the top of the organization.

Decentralization is when a relatively large number of decisions are taken

lower down the organization in the operating units.

05

Formalization

Formalization refers to how standardized an organization’s jobs are and the

extent to which employee behavior is guided by rules and procedures

These include rules, procedures, instruction manuals, job descriptions

(things which people must do)

06

Contemporary organizational design

Contemporary Organizational Design

Team Structure

Matrix- Project Structure

Boundaryless Structure

Learning Structure

Team Structure

A structure in which the entire organization is made up of work groups or

teams.

Advantages : Employees are more involved and empowered.

Reduced barriers among functional areas.

Disadvantages : No clear chain of command

Pressure on teams to perform

01

Matrix Structure

Matrix is a structure that assigns specialities from different functional areas

to work on projects who then return to their areas when the project is

completed.

Advantages : Fluid and flexible design that can respond to environmental

changes

Faster decision making

Disadvantages : Complexity of assigning people to projects

Task and personality conflicts

02

Boundaryless organization

A structure nod defined by or limited to artificial or horizontal, vertical, or

external boundaries; includes virtual and network types of organizations.

Advantages : Highly flexible and responsive

Utilizes talent wherever it’s found

Disadvantages : Lack of control

Communication difficulties

03

A small core organization that outsources major

business functions.

Highly centralized

Little or no departmentalization

Outsource the primary functions of the business

The core of the organization is a small group of

executives whose job is to oversee directly any

activities done in house and to coordinate

relationships with the other organizations

3.1

Consists of a small core of full-time employees and outside specialists

temporarily hired as needed to work on projects.

3.2

Learning organization

A structure in which employees continually acquire and share new

knowledge and apply that knowledge.

Advantages : Sharing of knowledge through organization

Sustainable source of competitive advantage

Disadvantages : Reluctance on part of employees to share knowledge for

fear of losing their power

Large number of experienced employees on the border

of retiring.

04

Flexible work arrangements

Telecommuting : is a work arrangement in which employees work at home

and are linked to the workplace by computer.

Compressed work week : A workweek where employees work longer hours

per day but fewer days per week.

Flexitime/ Flexible work hours : A scheduling system in which employees

are required to work a specific number of hours a week but are free to vary

those hours within certain limits.

Job sharing : The practice of having two or more people split a full time job.

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Thank You!