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Lesson 6
N Organization and Management
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Learning Objectives
After accomplishing this module, you must be able to:
• describe six key elements in organizational design;
• know how to delegate work to others and develop your skill at delegating
• contrast mechanistic and organic structures;
• describe traditional organizational designs;
• differential formal from informal organization.
 Designing Organizational Structure
 Organizing – arranging and structuring work to accomplish an organization’s goals.

 Organizational Structure – the formal arrangement of jobs within an organization.

 Organizational chart – the visual representation of an organization’s structure.

 Organizational Design – a process involving decisions about six key elements:

 Work specialization

 Departmentalization

 Chain of command

 Span of control

 Centralization and decentralization

 Formalization
 Divides work to be done into specific jobs and
departments.

Assigns tasks and responsibilities associated with

individual jobs.

Purposes of Coordinates diverse organizational tasks.

Organizing
Cluster jobs into units.

Establishes relationships among individuals, groups,

and departments.

Establishes formal lines of authority.

Allocate organizational resources.

 Organizational Structure

1. Work specialization – dividing work activities into separate job tasks.

• Early proponents of work specialization believed it could lead to great increases in productivity.

• Overspecialization can result in human diseconomies such as boredom, fatigue, stress, poor
quality, increased absenteeism, and higher turnover.
 Organizational Structure

2. Departmentalization – the basis by which jobs are grouped together.

• Functional
– Grouping jobs by functions performed
• Product
– Grouping jobs by product line
• Geographical
– Grouping jobs on the basis of territory or geography
• Process
– Grouping jobs on the basis of product or customer flow
• Customer
– Grouping jobs by type of customer and needs

• Departmentalization trend
 Increasing use of customer departmentalization
 Cross-functional team – a work team composed of individuals from various functional specialties.
The Five Common Forms of Departmentalization
The Five Common Forms of
Departmentalization
The Five Common Forms of
Departmentalization
 Organizational Structure
3. Chain of Command – the continuous line of authority that extends from upper levels of an
organization to the lowest levels of the organization—clarifies who reports to whom.

 Authority– the rights inherent in a managerial position to tell people what to do and to expect them to
do it.
• Acceptance theory of authority – the view that authority comes from the willingness of subordinates to
accept it.
• Line authority – authority that entitles a manager to direct the work of an employee.
• Staff authority – positions with some authority that have been created to support, assist, and advise
those holding line authority.

 Responsibility – the obligation or expectation to perform.

 Unity of command – the management principle that each person should report to only one manager.
Chain of Command and Line Authority
Line VS Staff Authority
 Organizational Structure

4. Span of Control – the number of employees who can be effectively and efficiently supervised by
a manager.

5. Centralization – the degree to which decision-making is concentrated at the upper levels of the
organization.
• Decentralization – the degree to which lower-level employees provide input or actually make
decisions.

 Employee empowerment – giving employees more authority (power) to make decisions.

 Centralization or Decentralization

More Centralization More Decentralization

 Environment is stable  Environment is complex, uncertain
 Lower-level managers are making decisions as  Lower-level managers are capable and
upper-level managers experience at making decisions
 Lower-level managers do not want a say in  Lower-level managers want a voice in decisions
decision  Decisions are significant
 Decisions are relatively minor  Corporate culture is open to allowing managers a
 Organization is facing a crisis or the risk of say in what happens
company failure  Company is geographically dispersed
 Company is large  Effective implementation of company strategies
 Effective implementation of company strategies depends on managers having involvement and
depends on managers retaining say over what flexibility to make decisions.
happens.
 Organizational Structure

6. Formalization – the degree to which jobs within the organization are standardized and the extent
to which employee behavior is guided by rules and procedures.
– Highly formalized jobs offer little discretion over what is to be done.
– Low formalization means fewer constraints on how employees do their work.
Seat work
Identification. Write the correct answer.
Work Specialization Centralization Decentralization
Customer Functional Span of control Chain of command
Departmentalization Product Geographical Process
1. The continuous line of authority that extends from upper levels of an
organization to the lowest levels of the organization.
2. The degree to which decision-making is concentrated at the upper levels of the
organization.
3. Dividing work activities into separate job tasks.
4. The number of employees who can be effectively and efficiently supervised by
a manager.
5. The basis by which jobs are grouped together.
6. Grouping jobs by the type of customer need.
7. Grouping jobs by product line.
8. Grouping jobs on the basis of territory or geography.
9. Grouping jobs by functions performed.
10.Grouping jobs on the basis of product or customer flow.
 Mechanistic and Organic Structures

•Mechanistic organization – an organizational design that’s rigid and tightly controlled.

•Organic organization – an organizational design that’s highly adaptive and flexible.

Mechanistic Versus Organic Organizations

Mechanistic Organic

 High specialization  Cross-functional team

 Rigid departmentalization  Cross-hierarchical teams
 Clear chain of command  Free flow of information
 Narrow spans of control  Wide spans of control
 Centralization  Decentralization
 High formalization  Low formalization
 Simple structure – an organizational design with
Traditional low departmentalization, wide spans of control,
centralized authority, and little formalization.
Organizational
Designs
Functional structure – an organizational design
that groups together similar or related occupational
specialties.

Divisional structure – an organizational structure

made up of separate, semiautonomous units or
divisions
  Formal Organizations
- Formal organizations have formal structures. They
are officially created to accomplish specific
objectives. Members are bound to perform the job
Formal and or tasks assigned to them.
Informal - A formal structure has a documented organizational
Organizations chart of the officers and managers who direct the
organization.
- The types of organizational structures are formal
structures—functional, divisional, matrix, teams,
networks, and virtual organizations.
 Formal organizational structures may be described in terms of
three features:

o Formalization pertains to the degree to which the work tasks or jobs are standardized. If the
job is highly formalized, employees have a minimum discretion over what they have to do
and how they do it.
•
o Complexity is a characteristic of a formal structure that pertains to the degree of
differentiation between the units based on the tasks they perform. Different work tasks
depend on the occupation, training, and education of the members who perform them.
•
o Centralization is a characteristic of a formal structure that pertains to the degree to which
decision-making is concentrated in one area within the organization. It is concerned about
dispersion of authority within an organization.
• Decentralization where decision-making is shared with or spread down to the lower levels
in the organization.
 Informal Organizations or Groups
- Informal organizations or groups have informal structures. They are not officially
created but are freely formed by members who have a need for them.
- they are also called the “shadow” organization behind the formal organization
because relationships among members are not specified but can be observed.
- it is important because it is formed by members due to closer relationships
among them compared to other members.
- an informal organization is referred to as a “clique.” Office people who meet for
coffee, join sports clubs, or are seen more often together.
 Review Learning objective
• Describe six key elements in organizational design.
• The key elements in organizational design are:
• Work specialization
• Chain of command

Review • Span of control

• Departmentalization
• Centralization-decentralization
Learning • Formalization
• Contrast mechanistic and organic structures.

objective • Mechanistic organization – a rigid and tightly controlled structure.

• Organic organization – highly adaptive and flexible.
• Describe traditional organizational designs.
• Simple structure – low departmentalization, wide spans of control,
authority centralized in a single person, and little formalization.
• Functional structure – groups similar or related occupational specialties
together.
• Divisional structure – made up of separate business units or divisions.
• Differentiate formal and informal organization
• Formal organizations have formal structures.
• Informal organizations or groups have informal structures.
Thank you