Organizational structure refers to how tasks are divided, grouped and coordinated within an organization. There are two fundamental processes in organizational structure - division of labor, which divides work into jobs, and coordination, which involves integrating work activities. An organizational structure has four main elements - span of control, which is the number of direct reports; centralization, which is the concentration of decision making; formalization, which are standardized rules and policies; and departmentalization, which is how employees are grouped. Common types of departmentalization include functional, divisional, matrix and team-based structures.

1. ORGANIZATIONAL
STRUCTURE

2. Organization is when
two or more person
work together with a
common goal.

3. ORGANIZING
 to achieve coordinated effort by
defining task and authority
relationships
 determining who does what and who
reports to whom
 that involves developing an
organizational structure

4. ORGANIZATIONAL
STRUCTURE
 refers to the division of labor as well as
the patterns of coordination,
communication, work flow, and formal
power that direct organizational
activities
 Organizational design- process of
creating and modifying organizational
structures.

5. ORGANIZATIONAL
STRUCTURE (cont’d)
TWO FUNDAMENTAL PROCESSES
 Division of Labor
 Coordination
FOUR MAIN ELEMENTS




Span of Control
Centralization
Formalization
Departmentalization

6. TWO FUNDAMENTAL
PROCESSES
Division of Labor
• subdivision of work into
separate jobs assigned
to different people
• leads to job
specialization
• increases work
efficiency

7. TWO FUNDAMENTAL
PROCESSES (cont’d)
Coordinating Work Activities • Informal Communication
– Sharing information on mutual tasks
• Direct communication
• Integrator roles
• Formal Hierarchy
– Assigning legitimate power to
individuals
• Direct supervision
• Corporate structure
• Standardization
– Creating routine patterns of
behavior or output
• Standardized skills
• Standardized processes
• Standardized output

9. FOUR MAIN ELEMENTS:
SPAN OF CONTROL
 The number of people directly reporting
to the next level in the organizational
hierarchy.
 Tall Structure
 Flat Structure

10. FOUR MAIN ELEMENTS:
SPAN OF CONTROL (cont’d)
Tall Structure

14. FOUR MAIN ELEMENTS:
DEPARTMENTALIZATION
• The organizational chart represents the fourth
element in the structuring of organizations
• Specifies how employees and their activities are
grouped together
• It is a fundamental strategy for coordinating
organizational activities
• Establishes the chain of command
• Creates common measures of performance
• Encourages coordination through informal
communication among people and sub units.

15. FOUR MAIN ELEMENTS:
DEPARTMENTALIZATION (cont’d)
Five Types:
• Simple Structure
•
•
•
•
Functional Structure
Divisional Structure
Matrix Structure
Team-Based (Lateral) Structure

16. FOUR MAIN ELEMENTS:
DEPARTMENTALIZATION (cont’d)
Simple Structure
• Most companies/
organizations begin with
simple structure
• There is minimal hierarchy
• Flexible but they usually
depend on the owner’s
direct supervision to
coordinate work activities.
• Difficult to operate under
complex conditions
Functional Structure
• Organizes employees
around specific knowledge
or other resources
• Foster professional
identity and clarify
career paths
• Tend to have higher
dysfunctional conflict and
poorer coordination with
other work units

17. FOUR MAIN ELEMENTS:
DEPARTMENTALIZATION (cont’d)
Divisional Structure
• Groups employees around
geographic areas, clients,
or outputs.
• Accommodates growth
and focuses employee
attention on services or
customers rather than
tasks.
• This structure creates
silos of knowledge and
duplication of resources.
Matrix Structure
• Overlays two
organizational forms in
order to leverage the
benefits of both
• Requires more
coordination than
functional or pure
divisional, may dilute
accountability and
increases conflict.

18. FOUR MAIN ELEMENTS:
DEPARTMENTALIZATION (cont’d)
Team-Based (Lateral) Structure
• Flat hierarchy and relatively little formalization,
consisting of self directed work teams
responsible for various work processes.
Management
Team
Employee
Employee
Employee
Employee
Employee
Employee
Employee
Employee

19. Thank You!
Reference:
Organizational Behavior by McShane and Von Glinow
Third Edition