WHAT IS ORGANIZATIONALWHAT IS ORGANIZATIONALSTRUCTURE?STRUCTURE? According to STEPHEN P ROBBINS “An organizationalAccording to STEPHEN P ROBBINS “An organizationalstructure defines how job tasks are formally divided,structure defines how job tasks are formally divided,grouped and coordinated.”grouped and coordinated.” According to FRED LUTHANS “Organization structureAccording to FRED LUTHANS “Organization structurerepresents the skeleton framework for organizationalrepresents the skeleton framework for organizationalbehavior.”behavior.” Organizational structure is defined as “the framework ofOrganizational structure is defined as “the framework oftasks, reporting and authority relationships within which antasks, reporting and authority relationships within which anorganization functions.”organization functions.”
NEED FOR FORMALNEED FOR FORMALORGANIZATION STRUCTUREORGANIZATION STRUCTURE Facilitating ManagementFacilitating Management Encouraging GrowthEncouraging Growth Optimum Use of Technological ImprovementOptimum Use of Technological Improvement Encouraging Human Use of Human BeingsEncouraging Human Use of Human Beings Stimulating CreativityStimulating Creativity
Work SpecializationWork SpecializationWork Specialization or Division Of LaborWork Specialization or Division Of Laborrefers to the degree to which activities in anrefers to the degree to which activities in anorganization are subdivided into separateorganization are subdivided into separatejobs.jobs.In essence, individuals specialize in doingIn essence, individuals specialize in doingpart of an activity rather than the entirepart of an activity rather than the entireactivity.activity.
DepartmentalizationDepartmentalizationThe basis by which jobs are grouped togetherThe basis by which jobs are grouped togetheris called Departmentalization.is called Departmentalization.The various ways by whichThe various ways by whichDepartmentalization can be done are:-Departmentalization can be done are:- FunctionalFunctional ProductProduct CustomerCustomer GeographicGeographic
Chain of CommandChain of CommandWho reports to whom?Who reports to whom?
Span of ControlSpan of ControlHow many people can a manager manage?How many people can a manager manage?
FormalizationFormalizationIt refers to the degree to which the jobs withinIt refers to the degree to which the jobs withinthe organization are standardized.the organization are standardized.The degree of formalization can vary widelyThe degree of formalization can vary widelybetween organizations and withinbetween organizations and withinorganizations.organizations.
The Degree of FormalizationThe Degree of FormalizationHigherEmployeeFreedomHighFormalizationLowFormalizationHigherLowerStandardizationLower
Formal decision making authority is heldFormal decision making authority is heldby a few people, usually at the topby a few people, usually at the topCentralizationCentralizationDecision making authority isDecision making authority isdispersed throughout the organizationdispersed throughout the organizationDecentralizationDecentralizationCentralization and Decentralization
FORMS OF ORGANIZATIONALFORMS OF ORGANIZATIONALSTUCTURESSTUCTURES The Line and Staff Organization StructureThe Line and Staff Organization Structure The Functional Organization StructureThe Functional Organization Structure The Divisional Organization StructureThe Divisional Organization Structure The Matrix StructureThe Matrix Structure The Project Organization StructureThe Project Organization Structure Free form Organization StructureFree form Organization Structure Network Organization StructureNetwork Organization Structure
Line and Staff Organization Structure Line Departments – Substantive (direct) in its contribution toorganization’s overall objective Staff Departments – Objective (indirect) in its contribution toorganization’s overall objectiveLine and Staff conflictReasons of conflict are:• Difference in view points• Lack of Demarcation between Line and Staff• Lack of proper understanding of authority• Different background
Functional Organization Structure Traditional concept of organizing. The basis of departmentation is the variousfunctions to be performed by theorganization. Widely used in medium and largeorganizations.
Divisional Organization Structure Also known as Profit Decentralization. Organization is divided into fairly autonomous units. Each unit is self contained and directly accountableto the organization.Basis of Divisionalisation Product Divisionalisation Territorial Divisionalisation Strategic Business Divisionalisation
Free Form Organization Also known as naturalistic, organic form oforganization structure. Free form structures reduce the emphasis onpositions, departments and other formalunits, and on the organizational hierarchy. Free form organizations are suitable for thoseindustries which have to work in highlydynamic environments.
2323Network organization structureA recent innovation in organizationalarchitecture is the use of network structures.A network structure is a cluster of differentorganizations whose actions arecoordinated by contracts and agreementsrather than through a formal hierarchy.