Chapter Nine: Organizational

Design and Structure

11/24/2022 By Aman A. (PhD) 1

 Introduction
• Organization is the process of combining the work,
which individuals and groups have to perform with the
facilities necessary for its execution, that the duties so
performed provide the best channels for the efficient,
systematic, positive and coordinated application of the
available efforts (Sheldon)
• Koontz and Donnel have defined organizational
structure as ‘the establishment of authority
relationships with provision for coordination
between them, both vertically and horizontally in
the enterprise structure’.
11/24/2022 By Aman A. (PhD) 2
Characteristics of good organizational structure
• The structure must lay down formal reporting hierarchy right
from the lowest level to the highest level of hierarchy
• Grouping of identical activities in one department so that
equipment, machines, processes and expertise can be developed at
one place under the guidance of one departmental head.
• Coordination of various activities be laid down and coordinating
authority specified.
• Individual, group and departmental goals should be laid down
with specific time frame.
• Instructions, policies, procedures, rules and regulations should
exist in an organization.

11/24/2022 By Aman A. (PhD) 3

 Forms of organization structure
1. Mechanistic form of organizational structure: An
organizational structure based on formalized system that is
relatively rigid in nature.
 This is generally applicable to those organizations that are
not influenced by technological, product, market
changes and generally maintains a constant pattern.
 authority is centralized at the top level of management and
has a rigid hierarchy of authority.
 Decision making is generally reserved at the top level.
 The tasks are well defined so that the goals set by the top level
management are attained smoothly.
 The structure is characterized by plenty of written orders and
instructions.
11/24/2022 By Aman A. (PhD) 4
 Forms of organization structure
2. Organic form of organizational structure:
• Organizations those are subject to change due to
environmental factors like technology, market
changes and product development generally adopt
organic form of organizational structure.
• In such structures authority is delegated to various
functional levels/individuals.
• Decentralized decision making is practiced that allows
people to make their own decisions based on the
environment

11/24/2022 By Aman A. (PhD) 5

 Mechanistic vs Organic structure
Mechanistic Structure Organic Structure
• Centralized work culture • Decentralized work structure
• Highly formalized (exhaustive • Formalization is very low(very
written orders) few written instructions)

• High specialization • Low level of specialization (team

work
• Standardized job structure • Fluctuation in work culture

• Narrow span of management • Wide span of management

• Tall organizational structure • Flat organizational structure with
with number of organizational few tiers
tiers
• Centralized decision making • Decentralized decision making
11/24/2022 By Aman A. (PhD) 6
 Centralization and Decentralization
• Centralization refers to reservation of authority for
decision making at top level of management.
– Lower levels are responsible for implementing the decisions
• Decentralization on the other hand refers to authority
being delegated to various levels of organization for
making appropriate decisions.
– Centralization and decentralization is not opposite to each
other but two ends of continuum

11/24/2022 By Aman A. (PhD) 7

 Span of Management
• In a classical organization, effectiveness and
efficiency is determined by number of people a manager
can handle effectively.
• Span of management is also known as span of control.
• The basic principle of span of management is an ability
of a manager to effectively supervise a finite number of
people.
• It has been established that at higher levels a manager
can control 4-8 people while at lower levels 8-15
people can be supervised.

11/24/2022 By Aman A. (PhD) 8

 Span of Management
• Wide Span: Wide span of management is suitable where
work is delegated to work groups and teams and there is
near autonomy in work environment.
– Clear policies are laid down and subordinates display a high
degree of sense of responsibility
• Narrow Span: Organizations having narrow span can
achieve fast communication, close command and control
and keep track on the pulse on the progress of the work.
– In narrow span there are number of organizational layers and
each of the individual is accountable to his leader.

11/24/2022 By Aman A. (PhD) 9

 Designing of Organizational Structure
• Good organizational structure facilitates the following
1. Every individual has to perform certain activities in the
organization
2. Identical activities are grouped together in order to facilitate
efficient functioning and achievement of results
3. It is necessary that idle machine time is avoided, capacity is
fully utilized and operations of production in particular and
other functions are regulated to achieve utilization of
resources. Bottlenecks are avoided and smooth flow of
activities is achieved

11/24/2022 By Aman A. (PhD) 10

 Steps in Formation of Organizational
Structure
1. Determination of organizational goals and identification
of related activities:
Based on the goals all activities that are required should be identified and
broken down into smallest possible sub activities that may be assigned as a
task or a job to the worker.
2. Grouping of activities:
All identical activities should be grouped keeping in mind formation of
various departments or divisions. Set of activities could further be sub-
divided and assigned to a particular section of a department.
3. Delegation of authority:
A person can not perform his duties unless he has been given adequate
authority to accomplish the assigned task. He can not be made responsible
and accountable if requisite authority has not been given.

11/24/2022 By Aman A. (PhD) 11

 The following processes are necessary in
formation of Organizational structure

1. Determination of course of action to meet the

organizational objectives.
2. Division of various activities into appropriate
segments to be handled by individuals appropriate to
their skills.
3. Assignment of tasks to individuals and delegating
necessary powers and resources.
4. Coordination to ensure that resources are adequately
utilized and that there is no overlap or gap in task
accomplishment
11/24/2022 By Aman A. (PhD) 12
 Types of organizational structure
• There are different organizational structures based on
different criteria. The most common ones are:
1. Functional organizational structure
2. Divisional organizational structure
3. Geographical organizational structure
4. Matrix organizational structure

11/24/2022 By Aman A. (PhD) 13

 Functional Organizational Structure

An organization in which similar and related occupational

specialties are grouped together(e.g., marketing, production)

CEO

Finance Production Marketing

11/24/2022 By Aman A. (PhD) 14

 Divisional organization Structure
Organizes employees around outputs, clients, etc (An
organization made up of self-contained units)

CEO

Lighting Consumer
Healthcare
Products Lifestyle

11/24/2022 By Aman A. (PhD) 15

 Geographic/Territorial Organizational
structure
Organizes employees around a geographical area/territory

CEO

North Region South Region East Region

11/24/2022 By Aman A. (PhD) 16

Matrix Organizational Structure (Project-based)
Employees are temporarily assigned to a specific
project team and have a permanent functional unit

CEO

Game1 Game2 Game3

Project Leader Project Leader Project Leader

Art Dept
Leader

Software
Dept Leader

Audio Dept
Leader

11/24/2022 By Aman A. (PhD) 17

 Job Design
• Job design is related to deliberately structuring
technical, social and human aspect of a job.
• It is related to organizing (assembling) the components
of job to enable participation by all group members to
accomplish the same.
• Jobs can be highly complex or very simple in terms of
use of employee skills.
• Once a job is designed, it must give satisfaction to the
worker and he should be able to experience ‘Worth’ in
doing the same.
11/24/2022 By Aman A. (PhD) 18
 Types of job design
1. Job Simplification: In this technique, jobs are broken
down into very small parts where a fragment called
“task” is repeatedly done over and over again by the
same individual.
– Thus the worker achieves high level of proficiency.
– Quality of the product and high volume is produced in a
limited time frame. Employee therefore is paid higher
rewards.
– On the organizational side, the productivity is high.

11/24/2022 By Aman A. (PhD) 19

 Types of job design
2. Job Enlargement: Job Enlargement means where two
or more simple tasks are combined and allotted to an
employee.
– Giving a worker a larger portion of the total task by
horizontal loading
• As in the case of vehicle driver, apart from driving he
can undertake the job of maintenance of the vehicle. In
this situation it adds more tasks to a job so that the
worker has variety of simple tasks to perform.
• The advantage of this method is more variety in
a job and acquiring additional proficiency.
11/24/2022 By Aman A. (PhD) 20
 Types of job design
3. Job Rotation: Job rotation refers to a technique where
the employee is periodically rotated from one job to
another within the work design.
• It involves moving employees among different jobs over
a period of time.
• In this system workers do not get bored and problem of
job enlargement is automatically taken care of.
• In job rotation workers get opportunities to do different
jobs within a span of few weeks / months as he is
rotated from one job to another.
11/24/2022 By Aman A. (PhD) 21
 Types of job design
4. Job Enrichment: Job enrichment refers to the technique
of job design in which variety of skills are required to be
possessed by the individual.
– Increasing responsibility for planning and coordination
tasks by vertical loading
• Job enrichment entails skills development and a
challenge.
• It entails inbuilt motivation, absolute control over the
job and opportunities for growth and learning.
• Enriched jobs offer an intrinsic value to the worker and
promotes motivation among the individuals doing the job.
11/24/2022 By Aman A. (PhD) 22
 Job Design and Quality of Work Life
• Quality of work life refers to high level of satisfaction an
employee enjoys by virtue of job design.
• Quality of work life is measured by factors like job
involvement, job satisfaction, competence, job
performance and productivity.
• People must ensure that the job they are doing is central
to individual’s life and they display maximum
involvement.
• Studies indicate that challenging jobs that have skill
variety, influence employees to get involved in their jobs
11/24/2022 By Aman A. (PhD) 23
 Job Satisfaction
• Job satisfaction indicates the positive and affective responses of
employees to their job environment. More specifically, job
satisfaction indicates employees satisfaction with:
1. Nature of work they do
2. Quality of supervision they receive
3. Co-workers
4. Pay and
5. Promotional opportunities
 Job satisfaction is correlated to job characteristics (skill variety,
autonomy etc) and to job involvement. Sekaran (1977) in his work
indicated that job stress decreases job satisfaction. Job stress could
result from role ambiguity, role conflict, role overload or role
difficulty.
11/24/2022 By Aman A. (PhD) 24
Competence, Job Performance, and Productivity

1. Competence
• Competence involves knowledge, skill and ability.
• When an individual attains competence he is more
involved in his job because he is intrinsically
motivated.
• By greater involvement the individual achieves higher
degree of competence.
• Hence greater the involvement greater is competence.
Thus, competence and involvement re-enforces each
other.
11/24/2022 By Aman A. (PhD) 25
Competence, Job Performance, and Productivity
2. Job Performance
• Job performance increase with the increase in Job satisfaction, Job
involvement and job competence.
• Job performance and Job satisfaction are inter-related.
3. Productivity
• Productivity increases when there is a perfect fit of personality
predisposition and the job itself.
• All the core factors of job design, predisposition of the individual
give rise to productivity and quantum of output which is for the
social good.
• It is therefore safe to conclude that job design is singularly
responsible for growth, quality of work life of employee
and the society
11/24/2022 By Aman A. (PhD) 26