organization management

1. Chapter 7
Organizational Structure
and Design
By: Daniel Angelo G. Bacayo
MBA Student

2. Organization
It is a structured group or entity
formed with a specific purpose or goal
in mind. Organizations can take many
forms, including businesses, non-
profit entities, government agencies,
educational institutions, and more.

3. Organizational
Structure
 It is the way in which an organization arranges its roles,
responsibilities, and relationships to achieve its goals and
objectives efficiently.
 It is like the blueprint or framework that outlines how
various parts of the organization work together.
 Organizational structure defines how information flows,
who makes decisions, and how different functions or
departments are organized within the organization.

4. Four Types of
Organiational Stucture
1.Functional Structure
2.Divisional Structure
3.Matrix Structure
4.Flat Structure

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Four Types of
Organizational Structure
1. Functional
- A functional structure is the
most traditional approach. It
calls for grouping together
people who do similar tasks
based on their area of
specialty.

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Four Types of
Organizational Structure
2. Divisional
- In a divisional structure, people are
grouped together based on the
product or service they provide, not
the work they do.
- For example, a large corporation
such as General Electric has
divisions for electronics,
transportation, and aviation, each
with its own team of accountants,
marketers, etc.

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Four Types of
Organizational Structure
3. Matrix
- A matrix structure is a hybrid of the
functional and divisional structures. It may
involve employees reporting to different
bosses depending on their current
assignment.
- For example, a software design specialist
may report to her boss in IT, but she’s also
brought onto specific projects because of
her expertise. When that happens, she will
report to a different boss as long as that
project continues.

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Four Types of
Organizational Structure
4. Flat
- The flat structure dispenses with
the usual hierarchy of a functional
structure, decentralizing
management and doing away with
the need for middle manager
bosses. Employees essentially act
as their own boss, giving them the
ability to communicate directly
with peers on ideas and projects.

9. What type of organizational
structure do your organization
have?

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 Faster decision making
 Multiple business locations
 Improved operating efficiency
 Greater employee performance
 Eliminates duplication of work
 Reduced employee conflict
 Better communication
Benefits of
Organizational Structure

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ORGANIZATIONAL
DESIGN
 It is the process of structuring and arranging an organization's
resources, people, and activities to achieve its goals and
objectives effectively.
 It involves making deliberate decisions about how the
organization's various parts are structured, how authority and
responsibility are distributed, and how information flows within
the organization.
 Organizational design is a critical aspect of strategic
management and can have a significant impact on an
organization's performance and ability to adapt to changing
circumstances.

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Common Organization
Design Models
1.McKinsey’s 7S Design Model
- The 7S model is one of the
most referenced for
organizational design. It was
developed by Robert H.
Waterman, Jr. and Tom Peters for
McKinsey & Company in the
1980s, and it focuses on the
seven “S”s inherent in most
organizations.

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Common Organization
Design Models
2. Jay Galbraith’s Star Model
- Of the most common models, Jay
Galbraith’s is the oldest. The late
organizational theorist developed the
Star Model in the 1960s and honed it
throughout his life.
- Less of a focus on company culture and
more attention paid to employee
incentives, rewards, or compensation.

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Common Organization
Design Models
3. The Center for
Organizational Design
Transformation Model
- The Transformation Model is a
framework created and used by the
Center for Organizational Design. It
focuses on eight main variables and
seeks to address the limitations of
the 7S and Star models.

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Example:
- With the Transformation Model applied, the sales,
engineering, and production control departments
work together to respond to customer desires. By
deconstructing silos and including customer
feedback in the org design, the company is better
prepared to adapt to changing customer tastes
with each production cycle.
- The example is a real design implemented by a
company in the aluminum industry. With the help
of these high-level changes, the
company increased sales of a product line by
50% and increased margins by 25%.

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Strategy dictates the
strategic priorities of an
organization.
Five Factors affecting
Organizational Design
1. Strategy

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The environment a
company operates in
influences its strategy but
also dictates how it
positions itself.
Five Factors affecting
Organizational Design
2. Environment

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Information technology is a
key enabler for decision
making. The state of IT
impacts organizational design
as well.
Five Factors affecting
Organizational Design
3. Technology

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The organizational size and life
cycle also impact the
organizational structure and
design. A 20-person company has
very different challenges when it
comes to design compared to a
200,000-person company.
Five Factors affecting
Organizational Design
4. Size and Life cycle

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Every organization has its own
unique culture based on their
values, assumptions, beliefs,
attitudes, feelings, stories,
heroes, symbols, language,
and habits.
Five Factors affecting
Organizational Design
5. Culture

22. THANK
YOU!