1. ORGANIZATIONAL
STRUCTURE & DESIGN
HARISH.M

2. WHAT IS AN ORGANISATIONAL
STRUCTURE
• The organisational structure defines the
organisation’s hierarchy of people and
departments as well as how information flows within
the organization.
• The organisational structure determines how and
when information is distributed as well as who
makes what decisions based on the information
available.
• How job tasks are formally divided, grouped and
coordinated.

3. THE IMPORTANCE OF THE
ORGANIZATIONAL STRUCTURE
• The Organisational Structure is important because it
ensures that there is an efficient operation of a
business and it clearly defines its workers and their
functions.
• The organisational structure also helps define the
hierarchy and the chain of command.

4. THE CONCEPT OF ORGANISATION
STRUCTURE
 Structure helps influence behaviour and
relationships of jobs and functions
Structure defines recurring activities and processes.
Structure provides a purposeful and goal-oriented
behaviour.

5. THE DESIGNING THE PROCESS CONT…
1. Develop a clear mission statement for the
organization. Focus the organisation structure
around the mission statement.
2. The mission statement should include the interrelationship between workers at every level as well
as inspiring innovation and ensuring efficiency.

6. THE DESIGNING THE PROCESS CONT…
3. Decide whether the organisation structure will be
centralized and formal or decentralized and
informal. For centralized and formal organisations,
the organisation structure takes more of a topdown approach with strictly defined work roles.
For decentralized and informal organizations, there
is more of a cooperative approach with workers
often performing a wide range of functions.

7. THE DESIGNING PROCESS CONT…
4. The organisation structure can be department
based or based on a particular project or process.
Department -based organization structure is often
divided into line functions (such as manufacturing)
and staff functions (such as human resources).

8. THE DESIGNING PROCESS CONT…
5. Design the overall chain of command for the
organisation. If there is a single overall director or
leader, determine the title for that role. If there are
dual or multiple leaders, divide the overall company
function between the various roles in a way that
there is a clear unity of command.

9. THE DESIGNING PROCESS CONT…
7. Add subordinate roles to the chain of command.
Determine the process of reporting from
subordinate to supervisor and make allowances for
special circumstances (such as an emergency).
Indicate if and how interactions across departments
or projects will take place.

10. DESIGNING THE PROCESS
8. Determine the authority and responsibility to be
assigned to each position in the organization
structure. Attempt to achieve a minimum of
overlapping functions. Also, attempt to minimize
any possible confusion by subordinates concerning
which supervisors to consult with on specific issues.

11. THE EFFECTS OF STRUCTURE ON
INDIVIDUAL AND GROUP
The structure of any organisation will affect the
following:1. Behaviour of how people act and work
2. Motivation of workers
3. Performance
4. Teamwork and cooperation
5. Intergroup and interdepartmental relationships

12. TYPES OF STRUCTURES
I.
Functional structure – this kind of organisational
structure classifies people according to the
function they perform in the organization. The
organisation chart for a functional based
organisation consists of: Vice President, Sales
department, Customer Service Department,
Engineering or production department,
Accounting department and Administrative
department.

13. FUNCTIONAL STRUCTURE CONT.
• Product structure – a product structure is based on
organizing employees and work on the basis of the
different types of products. If the company
produces three different types of products, they will
have three different divisions for these products.

15. TYPES OF ORGNAZATIONAL
STRUCTURES CONT…
II. Line Structure: This has a very specific line of
command. The approvals and orders in this kind of
structure come from top to bottom in a line. Hence
the name line structure. This kind of structure is suitable
for smaller organizations. This is the sort of structure
allows for easy decision making, and is very informal
in nature. They have fewer departments, which makes
the entire organization a very decentralized one.

17. TYPES CONT..
III. Line and Staff Structure: Line and structure
combines the line structure where information and
approvals come from top to bottom, with staff
departments for support and specialization. Line
and staff organizational structures are more
centralized. Managers of line and staff have
authority over their subordinates, but staff
managers have no authority over line managers
and their subordinates.

18. LINE & STAFF STRUCTURE CONT.
• The decision making process becomes slower in this
type of organizational structure because of the
layers and guidelines that are typical to it, and the
formality involved.

21. IV MARKET STRUCTURE
• Market Structure – market structure is used to group
employees on the basis of specific market the
company sells in a company could have three
different markets they use and according to this
structure, each would be a separate division in the
structure.

23. V GEOGRAPHIC STRUCTURE
• Geographic structure – large organizations have
offices at different place, for example there could
be a north zone, south zone, west and east zone.
The organizational structure would then follow a
zonal region structure.

25. VI. MATRIX STRUCTURES
• Matrix Structures
This is a structure, which has a combination of
function and product structures. This combines both
the best of both worlds to make an efficient
organizational structure. This structure is the most
complex organizational structure.

28. COMPONENTS OF
ORGANIZATIONAL STRUCTURE
Organizational Design
Management decisions and actions that
result in a specific organization structure and
work specification including:1. Work Specification: Specify to what
degree the tasks are subdivided into
separate jobs
2. Departmentalization: The basis in which
jobs will be grouped together
3. Chain of Command: To whom do
individuals and groups report to.

29. ORGANIZATIONAL STRUCTURE
CONT..
4. Span of Control: The number of people that a can
a manager efficiently and effectively direct.
5. Centralization and Decentralization: Where is the
decision making authority?
6. Formalization: To what degree will there be rules
and regulations to direct employees and
managers?

30. DIVISION OF
LABOUR/SPECIALIZATION
1.
This is a process of identifying the specific jobs that
need to be done and designing the people who
will perform them. Job specialization can occur in
3 different ways:
Personal Specialties: occupational and
professional specialties e.g. accountants,
engineers, scientists.

31. DIVISION OF LABOUR CONT..
2.
3.
Horizontal Specialties: work is divided by the
natural sequence order e.g. manufacturing plants
divide work into fabricating and assembly.
Vertical Specialties: Work is divided along the
vertical plane of an organization from the lowest
level manager to the highest level manager.

32. DELEGATION OF AUTHORITY
Process of distributing authority downward
in an organisation. Whether an
organisation chooses to centralize or
decentralize will be guided by:
1. How routine and straightforward are the
job’s required decisions?
2. Are individuals competent to make
decisions?
3. Are individuals motivated to make the
decisions?

33. DELEGATION OF AUTHORITY
CONT..
Reasons to Decentralize Authority: It encourages the development of professional
managers.
 Managers are able to exercise more autonomy but
it can lead to a competitive climate.

34. DELEGATION OF AUTHORITY
CONT…
Reasons to Centralize Authority:1. When the managers are not skilled enough and
would need further training which can be
expensive.
2. When there are new administrative costs because
new divisions need to be formed.
3. Decentralization can mean duplication of
functions.

35. DEPARTMENTAL BASES
•
•
1.
2.
3.
The process of grouping jobs into logical units.
The process in which an organization is structurally
divided by combining jobs in departments
according to some shared characteristics.
Functional Departmentalization
Geographical
Product

36. MULTIPLE FORMS OF
DEPARTMENTALIZATION
President
Functional Departmentalization
Vice President
Marketing
Vice President
Production
Vice President
Finance
Vice President
Training
Geographical Departmentalization
Nairobi Plant
Manager
Mombasa Plant
Manager
Johannesburg Plant
Manager
Bulawayo Plant
Manager
Product Departmentalization
Consumer Products
Industrial Products
Marketing Products
Training Products

37. SPAN OF CONTROL
This is the number of individuals who report to a
specific manager.
Three factors are important in determining optimum
span of control:Required Contact
Degree of Specialization
Ability to communicate

39. ORGANIZING CONT…
NB: The Importance of structure:
“Good
organization structure does not by itself produce
good performance but poor organization
structure makes good performance impossible no
matter how good the individual managers may
be”. (Drucker, 1989)

40. GROUP EXERCISE
1. Draw an organogram of an organization ensuring
that it has clear units that ensure good
communication, avoid duplication or overlapping,
and avoid an unclear span of control.
2. What are the disadvantages of the tall
organizational structures as opposed to flat
organizational structures?