OTB Notes - Matovu Musa (PhD)

ORGANIZATIONAL STRUCTURES
Organization structure may be defined as the established pattern of relationships among the
components of the organization. Also, refers to the network of relationships among individuals
and positions in an organization. Organization structure is also known as the formal system of task
and reporting relationships that controls, coordinates and motivates employees so that they
cooperate and work together to achieve an organization’s goals. In fact, organization structure
describes the organization framework. An organizational structure consists of activities such as
task allocation, coordination and supervision, which are directed towards the achievement of
organizational aims. An organization can be structured in many different ways, depending on their
objectives. The structure of an organization will determine the modes in which it operates and
performs. Organizational structure allows the expressed allocation of responsibilities for different
functions and processes to different entities such as the branch, department, workgroup and
individual.

Organizational structure
This is how job tasks are divided, grouped and coordinated. These structure help to coordinate in
order to accomplish work. There are six elements which need to be addressed when addressing
organization structures, these include;
a) Specialization
b) Departmentalization
c) Chain of command
d) Span of control
e) Centralization and decentralization
f) Formalization

1. Specialization
This is assigning specific tasks to accomplish in the chain of the organization. Specialization can
be compared to division of labour. Division of labour in the degree to which tasks in the
organization are sub-divided. Specialization is where work done is divided to a group of people to
be done each concentrating on a given detail or details.

2. Departmentalization
This is the grouping of jobs of which are similar into a unit e.g. accountants, auditor, assistant
accountants into the accounts section. This help in controlling avoid duplication and easy
monitoring of the employees.

3. Chain of command
This is the unbroken line of authority that extends from the top managers in an organization to the
lowest employees. This is how workers report and to whom they report. The chain of command
depends on who has the highest position, and how information flows in an organization.
4. Span of control
This is the ability or the area of control a manager can administer effectively.
a) How many subordinates can a manager efficiently and effectively control?
b) Many employees can hinder the managers to control them effectively.

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5. Centralization and decentralization

a) Centralization refers to how decision making is concentrated at a single point in an
organization. This includes formal authority and much of the decision making is from top
to bottom.
b) Decentralization is where lower-level personnel provide input or are actually given the
discretion to make decisions. Power as regards decision making is spread away from a
central point to various points or centres.

6. Formalization: This refers to the degree to which problems in an organization are

standardized. Jobs in one department are different from those in another.
i. If jobs are formalized, there is little discretion between the employees in that section or
department. Employees handle the job in same way.
ii. There are human resource policies and laws that govern recruitment of employees.

Delegation: This is the process that makes management possible because management is the
process of getting results accomplished through others. Delegation is done by managers by
entrusting others with responsibility and authority, and to create accountability for results. It is an
activity of the organizing function. The organization function might comprise of;

i. Scalar principle/ chain of command/ hierarchy: A clear definition of authority in an

organization. This authority flows down the chain of command from the top level to the
first or lowest level in the organization or the unbroken line of authority that flows from
the top of the organization to the lowest level and clarifies as to who reports to whom?
ii. Centralization: This occurs in an organization when a limited amount of authority is
delegated, or the degree to which decision-making is concentrated in one or a small group
of individuals at the higher level of management
iii. Decentralization: This occurs when a significant amount of authority is delegated to lower
levels in the organization or the degree to which decision making power is extended to the
lower levels of management in the organization.
iv. Contingency approach: This approach in organizational structures states that the most
appropriate organizational structure depends on the situation, technology, environment and
many other dynamic forces.
v. Bureaucracy: A structure with highly routine operating tasks achieved through
specialization, laws, and formal rules and regulations. Bureaucratic structures usually rule
by the book, or law.
vi. Division of Labour: The degree to which tasks are sub-divided into separate jobs in the
organization.
vii. Organization: Two or more people who work together in a structured way to achieve a
specific goal or set of goals.
viii. Span of control/ management: The number of subordinates a manager can efficiently and
effectively direct.

1. Departmentalization: Grouping related functions into manageable units to achieve the

objectives of the organization in the most efficient and effective manner. The primary forms of
departmentalization are by function, process, product, market, customer, geographic area, and even
matrix. In many organizations departmentalization can be due to;

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a) Function: Perhaps the oldest and most common method of grouping related functions is
by specialized function, such as marketing, finance, and production (or operations).
Sometimes this form of departmentalization may create problems if individuals with
specialized functions become more concerned with their own specialized area than with
the overall business.
b) Process: Departmentalization can also take place by process. This type of
departmentalization, which often exists in manufacturing companies
c) Product: Whenever specialized knowledge of certain products or services is needed,
departmentalization by product may be best. This usually occurs in large diversified
companies.
d) Market: When a need exists to provide better service to different types of markets,
departmentalization by market may be the appropriate form.
e) Customer: Sometimes key or major customers warrant departmentalization by customer.
Departmentalization can be done to serve particular customers. For example, on plane
different hostesses serve different categories of customers.
f) Matrix: Departmentalization by matrix, or project, has received considerable use in
recent years, particularly in such industries as aerospace. In this method, personnel with
different backgrounds and experiences that bear on the project are assembled and given
the specific project to be accomplished within a certain time period. When the project is
completed, these specialized personnel return to their regular work assignments.
g) Combination approach: Many organizations, particularly large, physically dispersed
and diversified organizations, utilize several different forms of departmentalization.

Advantages of departmentalization
a) Specialization: Departmentalization leads to the benefits of specialization as various
organizational activities are grouped according to their relation with the specific functions
or objectives. Every departmental manager specializes in the tasks assigned to him.
b) Administrative control: Departmentalization helps in effective managerial control
because the standards of performance for each and every department can be laid down
precisely. Every department has a specific objective. This also facilitates keeping
expenditure within limits.
c) Fixation of responsibility: Since organization work is divided into manageable units, and
authority and responsibility are precisely defined, it is easier to fix the accountability of
different managers for the performance of various tasks.
d) Freedom or autonomy: The departments created through departmentalization are semi-
autonomous units. Their heads are given a sufficient degree of authority to run their
departments. This increases the efficiency of the departments.
e) Development of managers: Departmentalization helps in the development of managerial
personnel by providing them opportunities to take independent decisions and initiative.
The executives can develop themselves for promotion to higher jobs.
f) Span of Control: The departmentalization reflects the types of jobs which are grouped
together. Different persons are involved in performing these jobs. They are required to be
supervised closely. Span of control refers to the number of individuals a manager can
effectively supervise. Thus, it is expected that the span of control, that is, the number of

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subordinates directly reporting to a superior should be limited so as to make supervision

and control effective.

Span of control depends on a number of factors;

a) Nature of the Work: If the work is simple and repetitive, the span of control can be wider.
However, if the work requires close supervision the span of control must be narrow.
b) Ability of the Manager: Some managers are more capable of supervising large number of
people than others. Thus for a manager who possesses qualities of leadership, decision-
making ability and communication skill in greater degree the span of control may be wider.
c) Efficiency of the Organization: Organizations with efficient working systems and
competent personnel can have larger span of control.
d) Staff Assistants: When staff assistants are employed, contact between supervisors and
subordinates can be reduced and the span broadened.
e) Time Available for Supervision: The span of control should be narrowed at the higher
levels because top managers have less time available for supervision. They have to devote
the major part of their work time in planning, organizing, directing and controlling.
f) Ability of the Subordinates: Fresh entrants to jobs take more of a supervisor’s time than
trained persons who have acquired experience in the job. Subordinates who have good
judgement, initiative, and a sense of obligation seek less guidance from the supervisor.
g) Degree of Decentralization: An executive who personally takes many decisions is able to
supervise fewer people than an executive who merely provides encouragement and
occasional direction.

2. Delegation - The art of managing

Delegation is the process that makes management possible by getting results accomplished through
others. At the moment a job becomes too complex, too diverse, or too voluminous for one person,
the need for delegation arises. In its simplest form, imagine the sole administrator with objectives
and with no time to accomplish them.

Risks of delegation
(a). Loss of control: In giving over authority to another, the manager loses some control over the
proper completion of a project.

(b). Reverse delegation: An important consideration for the manager who tries to do everybody's
job. In revere delegation a manager assumes the responsibility for handling the task that he/ she

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delegated to the employees. This usually demotivates employees to whom the tasks were
delegated.
(c). Job loss: Over delegation might make the person delegated to lose his or her job. The person
delegated might display better performance than the person who has delegated. This might lead
the employing authority change their distribution of roles to the person delegated to hold the
position.

Delegation do's and don’ts

Do's
 Delegate as simply and directly as possible. Give precise instructions.
 Illustrate how each delegation applies to organizational goals.
 Mutually develop standards of performance.
 Clarify expected results.
 Anticipate the questions your employees may have and answer them in orderly manner.
 Seek employee ideas about how to do the job.
 Focus on the positive rather than the negative.
 Be supportive.
 Exhibit trust.
 Keep your promises.

Don'ts
 Do not threaten your staff.
 Effective delegation depends more on leadership skills than on position power.
 Do not assume a condescending attitude.
 Do not merely give answers. Show an employee how to do something and why it is done
that way.
 Do not over react to problems that are as a result of delegation.
 Refrain from criticizing an employee in front of others.
 Avoid excessive checks on progress. Wait for the end results to make judgements.

Centralization versus decentralization

The issues of centralization and decentralization involve the principle of delegation of authority.
When a limited amount of authority is delegated in an organization, it is usually characterized as
centralized. When a significant amount of authority is delegated to lower levels in the organization,
the business is characterized as decentralized. In a highly centralized organization, employees at
lower levels have a limited range of decision-making authority. The scope of authority to make
decisions in decentralized organizations, by way of contrast, is very broad for lower level
employees

Advantages of centralization
1) Closer control of operations
2) Uniformity of policies, practices, and procedures
3) Better use of centralized, specialized experts

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Advantages of decentralization
1) Faster decision-making without resort to higher level consultation
2) Excellent training experience for promotion to higher level management
3) Decisions better adapted to local conditions

Organizational effectiveness
The study of organizational structure is necessary to understand organizational effectiveness. You
must be aware that some organizations perform better and grow more rapidly than other. On the
other side, some organizations perform badly and within a short period of time and collapse. The
different components of organizational effectiveness can be found from the answer to the
following;
 Are the employees satisfied with the organization?
 Are the customers satisfied with the organization?
 Is the organization profitable?
 Is the organization growing in terms of profit, revenue, products, expansion, services, etc?
 Is the organization productive i.e., creating goods and services of high value at minimum
cost?
 Is the organization innovative or stale?

Determinants of organizational effectiveness

There are several determinants of organizational effectiveness. These include;

1. Managerial policies and practices: Managerial policies and practices integrate the entire
organization, maintain balance among the interest groups in the organization, and accommodate
them with the external environment. Managerial policies and practices have a direct bearing on the
Organizational effectiveness.

The major managerial policies and practices are as follow:

i. Strategy: A strategy is a plan for interacting with the competitive environment to achieve
organizational goals.
ii. Leadership: It is the process of influencing members towards the achievement of
organizational goals. It is said that managers are people who do things right and leaders are
people who do the right thing.
iii. Decision-making: Decision-making is how managers choose among alternatives to make
the organization succeed.
iv. Rewards: How does management support its team by way of compensating them for the
efforts and time they invest to make the organization achieve its goals.
v. Communication: It is the information flow from top to bottom, or bottom to the top. The
organizational structure should provide for a perfect communication among different
members of the organization.

2. Environmental characteristics
Organizational effectiveness is influenced to a great degree by the external environmental
characteristics. It is dependent on how is the external environment predictable, complex and hostile
to the organization and its activity. The major characteristics are as follow:

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i. Predictability: Predictability refers to how certain or uncertain an organization may be

towards supply of various resources; human, raw material etc. It is an element of external
environment.
ii. Complexity: Environment complexity refers to the heterogeneity and range of activities
which are relevant to an organization’s operations. How many diverse groups from external
environment the organizations have to deal with?
iii. Hostility: A hostile environment is one in which the underpinning of the organization is
threatened. How is an organization viewed by the people at large?

3. Employee characteristics
The characteristics of the human resource could make or break an organization. The employee
characteristics might make the organization to succeed or fail. The major characteristics are as
follow:
i. Goals: Goals define where the organization wants to go. Goals are intentions that an
individual or an organization would like to achieve in the course of their working.
ii. Skills: Skill is the ability to engage in a set of behavior that are functionally related to one
another and that lead to a desired performance in a given area. The skill can be technical,
managerial, behavioral etc.
iii. Motives: A motive is an inner state of a person that energizes activates, or moves and
directs towards the achievement of a pre-defined goal. The motivated employees have high
motives to perform better and achieve the targets.
iv. Attitudes: Attitudes are evaluative statements either favorable or unfavorable concerning
objects, events, or people. Attitudes influence job behavior and hence organizational
effectiveness.
v. Values: Values represent basic convictions or a specific mode of conduct. It generally
influences an individual’s attitude and behavior. The value that a person holds influences his
or her motivation and subsequently behavior.

4. Organizational Characteristics
Organizational characteristics refer to the general conditions that exist within an organization.
Various organizational characteristics influence organizational effectiveness. The major
characteristics are as follow;
i. Structure: An organizational structure defines how are job/ tasks formally divided,
grouped and coordinated. For organizational effectiveness, six elements need to be
addressed while designing organizational structure. These are: work specialization,
departmentalization, chain of command, span of control, centralization and
decentralization, and formalization.
ii. Technology: The term technology refers to how an organization transfers its inputs into
outputs. Every organization has at least one technology for converting financial, human
and physical resources into products or services. The choice of technology and its use
influences organizational effectiveness.
iii. Size: In a narrow sense organizational size refers to the number of people in an
organization. But, if we take a broader view, size refers to the physical capacity of the
organization, the personnel available to the organization, the organizational inputs or
outputs and the discretionary resources available to an organization. It is the size which
influences the structure which in turn influences organizational effectiveness

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 OTB Notes - Matovu Musa (PhD)

ORGANIZATIONAL CULTURE
Organizational culture is the behavior of humans who are part of an organization and the
meanings that the people attach to their actions. Culture includes the organization values, visions,
norms, working language, systems, symbols, beliefs and habits. Organizational culture refers to a
system of shared meaning/values/ethics held by members that distinguishes an organization from
other organization. It is also the pattern of such collective behaviors and assumptions that are
taught to new organizational members as a way of perceiving, and even thinking and feeling.
Organizational culture affects the way people and groups interact with each other, with clients,
and with stakeholders. Ravasi and Schultz (2006) state that organizational culture is a set of shared
mental assumptions that guide interpretation and action in organizations by defining appropriate
behavior for various situations. At the same time although a company may have their "own unique
culture", in larger organizations, there is a diverse and sometimes conflicting cultures that co-exist
due to different characteristics of the management team. The organizational culture may also have
negative and positive aspects.
Schein (2009), Deal & Kennedy (2000), Kotter (1992) and many others state that organizations
often have very differing cultures as well as subcultures.

Organizational culture
According to the different studies, there are seven characteristics that capture the essence of
organization culture.
a) Innovation and risk taking; this is the extent to which employees come up with new ideas and
the organization is ready to put them into practical.
b) Attention to details; the extent or degree to which employees are expected to exhibit precision
analysis and attention to details.
c) Outcome oriented; the degree to which management is focussed onto results or outcomes rather
than the technique or processes used to achieve the outcomes.
d) People orientation; degree to which management decisions take into consideration of the effect
of the outcome on people within the organization; Physically, financially and mentally.
e) Team orientation; the degree to which work activities are organized around teams rather than
individuals.
f) Aggressiveness; extent to which people in the aggressive and competitive rather than easy
going. Goal directed.
g) Stability; the extent to which organizational activities emphasize maintaining the status quo in
contrast to growth.
NB: All these characteristics exist on a continuum from low to high.

Advantages of organizational culture

a) Creates distinction between organizations
b) Creates a sense of identity among organizational members
c) Culture facilitates commitment rather than individual interest
d) Enhances system stability (because of uniqueness)
e) Holds organizational structures together
f) Culture serves as a sense making and control mechanism that guides shapes attitudes and
behaviours of employees.

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Disadvantages
a) When shared values do not agree with those that further the organizational effectiveness.
b) When the organizational culture does to favour the organizational environment
c) When the environment is undergoing change, some organizational values, culture may no
longer be appropriate.
d) Organizational culture might carry rigidness that failure to change despite of the changing
times.