Organization Structure

and Design

Sarder Arifuzzaman
Sr. Lecturer
Department of pharmacy
World University of Bangladesh
 Learning Outcomes:
1. IDENTIFY THE BASIC ELEMENTS OF ORGANIZATIONS

2. DESCRIBE THE BUREAUCRATIC PERSPECTIVE ON ORGANIZATION DESIGN

3. IDENTIFY AND EXPLAIN KEY SITUATIONAL INFLUENCES ON

ORGANIZATION DESIGN

4. DESCRIBE THE BASIC FORMS OF ORGANIZATION DESIGN THAT

CHARACTERIZE MANY ORGANIZATIONS

5. IDENTIFY AND DESCRIBE EMERGING ISSUES IN ORGANIZATION DESIGN

THE BASIC ELEMENTS OF
ORGANIZING

Organizations are made up of a series of

elements:
Designing jobs
Grouping jobs/departmentalization
Establishing reporting relationships
Distributing authority
Coordinating activities
Differentiating between positions
Designing jobs

 job specialization
The degree to which the overall task of the organization is broken down and
divided into smaller component parts
 job rotation
An alternative to job specialization that involves systematically moving
employees from one job to another
 job enlargement
An alternative to job specialization that increases the total number of tasks
that workers perform
 job enrichment
An alternative to job specialization that attempts to increase both the
number of tasks a worker does and the control the worker has over the job
Designing jobs

 job characteristics approach

An alternative to job specialization that suggests that jobs should be
diagnosed and improved along five core dimensions, taking into account
both the work system and employee preferences
1. Skill variety, the number of things a person does in a job
2. Task identity, the extent to which the worker does a complete or identifiable
portion of the total job
3. Task significance, the perceived importance of the task
4. Autonomy, the degree of control the worker has over how the work is performed
5. Feedback, the extent to which the worker knows how well the job is being
performed
Designing jobs

work teams
An alternative to job specialization that allows an entire
group to design the work system it will use to perform
an interrelated set of tasks
Grouping Jobs: Departmentalization

Departmentalization
 The process of grouping jobs according to some logical arrangement
1. Functional departmentalization
Grouping jobs involving the same or similar activities (eg.- PMD, QC, QA, SCM)
2. Product departmentalization
Grouping activities around products or product groups (e.g- Card Care, Neurocare)
3. customer departmentalization
Grouping activities to respond to and interact with specific customers or customer
groups (Qualified doctor, Non-qualified doctor)
4. Location departmentalization
Grouping jobs on the basis of defined geographic sites or areas (eg.- City area, Urban)
Establishing Reporting Relationships

The third basic element of organizing is the establishment of

reporting relationships among positions. The purpose of this activity
is to clarify the chain of command and the span of management.
1. Chain of command
A clear and distinct line of authority among the positions in an
organization
2. Span of management
The number of people who report to a particular manager
Distributing Authority

Another important building block in structuring organizations

is the determination of how authority is to be distributed
among positions.
1. Authority
The power that has been legitimized by the organization
2. Delegation
The process by which a manager assigns a portion of his or
her total workload to others
Distributing Authority

Decentralization
The process of systematically delegating power and
authority throughout the organization to middle- and
lower-level managers
Centralization
The process of systematically retaining power and
authority in the hands of higher-level managers
Coordinating Activities

The fifth major element of organizing is coordination. Coordination is that

departments and work groups are interdependent
The three major forms of interdependence are pooled, sequential, and reciprocal
Pooled interdependence
 When units operate with little interaction; their output is pooled at the
organizational level
Sequential interdependence
 When the output of one unit becomes the input for another in a sequential fashion
reciprocal interdependence
 When activities flow both ways between units
Structural Coordination Techniques

 Because of the obvious coordination requirements that

characterize most organizations, many techniques for
achieving coordination have been developed. Some of the
most useful devices for maintaining coordination among
interdependent units are the managerial hierarchy, rules and
procedures, liaison roles, task forces, and integrating
departments
Electronic Coordination

 Electronic Coordination Advances in information technology are also

providing useful mechanisms for coordination. E-mail, for example,
makes it easier for people to communicate with one another.
 This communication, in turn, enhances coordination. Similarly, many
people in organizations today use electronic scheduling, at least
some of which is accessible to others.
 Hence, if someone needs to set up a meeting with two colleagues, he
or she can often check their electronic schedules to determine their
avail-ability, making it easier to coordinate their activities.
 THE BUREAUCRATIC MODEL OF
ORGANIZATION DESIGN
Bureaucracy
 A model of organization design based on a legitimate and formal system of authority
The ideal bureaucracy exhibits five basic characteristics:
1. The organization should adopt a distinct division of labor, and each position should be
filled by an expert.
2. The organization should develop a consistent set of rules to ensure that task
performance is uniform.
3. The organization should establish a hierarchy of positions or offices that creates a
chain of command from the top of the organization to the bottom.
4. Managers should conduct business in an impersonal way and maintain an appropriate
social distance between themselves and their subordinates.
5. Employment and advancement in the organization should be based on technical
expertise, and employees should be protected from arbitrary dismissal.
SITUATIONAL INFLUENCES ON
ORGANIZATION DESIGN

 Four basic situational factors—technology, environment, size, and

organizational life cycle.
 Technology
Technology consists of the conversion processes used to transform inputs (such as
materials or information) into outputs (such as products or services). Most organizations
use multiple technologies, but an organization’s most important one is called its core
technology. Although most people visualize assembly lines and machinery when they
think of technology, the term can also be applied to service organizations.
Example: Square uses SAP technology for Managing organization
Environment

 Mechanistic organization
Similar to the bureaucratic model, most frequently found in
stable environments
 Organic organization
Very flexible and informal model of organization design, most
often found in unstable and unpredictable environments
Apple (facing both technological change and constant change in
consumer tastes) both use organic designs
Environment

 organizations could be characterized along two primary dimensions.

 One of these dimensions, differentiation, is the extent to which the
organization is broken down into subunits. A firm with many subunits is highly
differentiated; one with few subunits has a low level of differentiation. The
second dimension, integration, is the degree to which the various subunits
must work together in a coordinated fashion.
 For example, if each unit competes in a different market and has its own
production facilities, they may need little integration. Lawrence and Lorsch
reasoned that the degree of differentiation and integration needed by an
organization depends on the stability of the environments that its subunits
face.
Organizational Size and Life Cycle

Organizational size
 Organizational size as the total number of full-time or full-
time–equivalent employees.
Organizational life cycle
 Progression through which organizations evolve as they grow
and mature
Organizational Size and Life Cycle

Organizations progress through a four-stage organizational life cycle

1. The first stage is the birth of the organization.
2. The second stage, youth, is characterized by growth and the expansion of
organizational resources.
3. Midlife is a period of gradual growth evolving eventually into stability.
4. Finally, maturity is a period of stability, perhaps eventually evolving into decline.
Firms like Netflix and Starbucks, for instance, are still in their youth stage; Halliburton
and Chevron are in midlife; and Ford and Boeing are in maturity. (A key challenge for
managers, of course, is to avoid allowing a mature organization to begin to decline.
Hence, they must be alert for opportunities to reenergize the organization with new
products and new markets.)
BASIC FORMS OF ORGANIZATION
DESIGN

Many organizations today adopt one of

five organization designs:
 Functional (U form)
 Conglomerate (H form)
 Divisional (M form)
 Matrix

 Otherorganizations use a hybrid design

derived from two or more of these basic
designs.
Functional (U form)
Conglomerate (H form)
Divisional (M form)
Matrix
 Hybrid Designs
 Some organizations use a design that represents a hybrid of two or
more of the common forms of organization design
 For example, an organization may have five related divisions and one
unrelated division, making its design a cross between an M form and
an H form
 Indeed, few companies use a design in its pure form; most firms have
one basic organization design as a foundation for managing the
business but maintain sufficient flexibility so that temporary or
permanent modifications can be made for strategic purposes
 Ford, for example, used the matrix approach to design the Focus and
the newest Mustang, but the company is basically a U-form
organization showing signs of moving to an M-form design
EMERGING ISSUES IN ORGANIZATION
DESIGN
Three emerging issues in organization design are the following:
Team organization
Some organizations today are using the team organization, an approach to
organization design that relies almost exclusively on project-type teams, with
little or no underlying functional hierarchy.
Virtual organization
One that has little or no formal structure
Learning organization
One that works to facilitate the lifelong learning and personal development of all
its employees while continually transforming itself to respond to changing
demands and needs