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Organizational Structure. Business?. Economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth.
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Business? • Economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. • Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis.
Organisation? • Definition 1 • Non-random arrangement of components or parts interconnected in a manner as to constitute a system identifiable as a unit. • Definition 2 • Sequential or spatial (or both) form in which a body of knowledge, data, people, things, or other elements, is purposefully arranged. • Definition 3 • Social unit of people systematically arranged and managed to meet a need or to pursue collective goals on a continuing basis. • All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks. • Organizations are open systems in that they affect and are affected by the environment beyond their boundaries.
Organizational Structure? • Formal and informal framework of policies and rules, within which an organization arranges its lines of authority and communications, and allocates rightsand duties.
Organizational Structure? • Organizational structure determines the manner and extent to which roles, power, and responsibilities are delegated, controlled, and coordinated, and how information flows between levels of management. • This structure depends entirely on the organization's objectives and the strategy chosen to achieve them.
Organizational Structure? • In a centralized structure, the decision making power is concentrated in the top layer of the management and tight control is exercised over departments and divisions. • In a decentralized structure, the decision making power is distributed and the departments and divisions have varying degrees of autonomy. • An organization chart illustrates the organizational structure.
Social Structure • The duality of structure: • Constrains the choices about activities • But structures are created by the activities • Enabling interaction: • Can be seen as fixed immovable • Or as a moment of ever-changing interactivity
Two purposes Social structure is giving a picture of: • The differentiation between work activities • And at the same time indicating the major challenges of integrating the same activities
Organization Chart The Organizational chart is a representation of: • The hierarchy of authority: • the vertical structure or • the chain of command • The division of labour: • the horizontal coordination or • the work specialization
Chain of Command • Unbroken line of authority that links all persons in an organization. • Shows who reports to whom. • Associated with two underlying principles. • Unity of Command. (no one has more than 1 boss) • Scalar Principle. (communication follows chain of command)
Work Specialization • Tasks are subdivided into individual jobs. • Division of labor concept. • Employees perform only the tasks relevant to their specialized function. • Jobs tend to be small, but they can be performed efficiently. • Many organizations are moving away from this principle.
Authority • Formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes. • Authority is distinguished by three characteristics: • Authority is vested in organizational positions, not people. • Authority is accepted by subordinates. • Authority flows down the vertical hierarchy.
Span of Control • The number of employees reporting to a supervisor. • Traditional view, seven or so per manager. • Many organizations today, 30 or more per manager. • Generally if supervisors must be closely involved with employees, span should be small.
Tall versus Flat Structure • Span of control used in an organization determines whether the structure is tall or flat. • Tall structure has a narrow span and more hierarchical levels. • Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels. • The trend has been toward wider spans of control.
Five structural alternatives • Vertical functional approach. People are grouped together in departments by common skills. • Divisional approach. Grouped together based on a common product, program, or geographical region. • Horizontal matrix approach. Functional and divisional chains of command. Some employees report to two bosses. • Team-based approach. Created to accomplish specific tasks. • Network approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere.
