Org. structure by Neeraj Bhandari ( Surkhet.Nepal )
Organizing: Arranging and structuring work
to accomplish an organizational’s goals.
Organization chart: The visual
representation of an organatization’s
Organizational Structure: The formal
arrangement of jobs within an organization.
Organizational Design: Creating or
changing an organization’s structure.
Work specialization: Dividing work activities
into separate job tasks.
Departmentalization: The basis on which
jobs are grouped together.
Formalization: How standardized an
organization’s jobs are and the extent to
which employee behavior is guided by rules
Establishing such relationships among
various parts of the organization that they
all together pull in the direction of the
Clear definition of authority-responsibility
Unity of direction
Unity of command
Organizational Structure: is the formal
arrangement of jobs within organization.
This structure, which can be shown visually
in an organization chart.
Organizational Design: When managers
create or change the structure, they are
engaged in organizational design, a
process that involves decisions about six key
elements: work specialization,
departmentalization, chain of command,
span of control, centralization and
decentralization, and formalization.
Chain of command: The line of authority
extending from upper organizational
levels to the lowest level, which clarifies
who reports to whom.
Span of Control: The number of
employees a manager can efficiently
and effectively manage.
Number of employees who report to a
› Traditional view = seven subordinates per
› Lean organizations today = 30+ subordinates
› must be closely involved with subordinates,
the span should be small
› need little involvement with subordinates, it
can be large
Unbroken line of authority that
links all persons in an
Shows who reports to whom
Associated with two underlying
Unity of Command
Following are the different approaches to
1. Functional Organizational Structure
2. Product Organizational Structure
3. Geographical Organizational Structure
4. Matrix Organizational Structure
5. Team Organizational Structure
6. Virtual Organizational Structure
7. Line & Staff Organizational Structure
structure is based
on functions of
A functional structure would be effective
in single business firms where key
activities revolved around well- defined
skills and areas of specialization.
The functional structure is most
appropriate when firms compete on the
basis of technical specialization or
efficiency in a relatively stable
The departmental members may see the
activities from the narrow view point of
the department rather than the total
organization. This aspect results in poor
coordination and cooperation.
Delay in decision making or ineffective
This structure is
based on the
produced by the
Appropriate for organizations with
Suited for more dynamic environment.
Moves decisions close to the problem
Clarifies profit/ loss accountability.
Involves difficulty in allocating overheads
Results in duplication of equipment and
This structure is based
operations of the
Improves functional coordination within
the target market.
Takes advantage of economies of local
Adds another layer of management to
run the geographic units.
Can result in duplication of staff services
at head-quarters and regional levels,
creating a relative cost disadvantage.
Matrix is a hybrid grid structure wherein
pure project organization is
superimposed on a functional structure.
It combines vertical and horizontal lines
The matrix structure is commonly used in
the firms whose technological change is
This structure has considerable flexibility.
The personnel can be transferred from
one project to the other depending
upon the need of the project.
Greater administrative cost associated
with its operation.
Personnel spend much time in
exchanging information to coordinate
functional areas with projects.
This structure is based on the business
Same advantages as
Reduced barriers among
Quicker response time
Dual loyalties and
Time and resources
spent on meetings
These structures are not visible but their
presence is felt wherever necessary.
An organizational structure that
disaggregates major functions to
separate companies that are brokered
by a small headquarters organization.
Can draw on expertise
Work force flexibility
Lack of control, weak boundaries
Greater demands on managers
Employee loyalty weakened
Line Authority = individuals in
management positions have the
formal power to direct and
control immediate subordinates
Staff Authority = granted to staff
specialists in their area of
Line and staff organization is a
combination of line and functional
structures. Under it, line authority flows in
a vertical line in the same manner as in
the line organization. In addition, staff
specialists are attached to line positions
to advise them on important matters.
These specialists do not have power of
command over subordinates in other
departments. They are purely of advisory