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Organizational Structures Dr Fred Mugambi Mwirigi JKUAT 1.

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Presentation on theme: "Organizational Structures Dr Fred Mugambi Mwirigi JKUAT 1."— Presentation transcript:

1 Organizational Structures Dr Fred Mugambi Mwirigi JKUAT 1

2 Introduction  Organizational designing and structuring are key components of organizational planning  Good structures must be flexible and adaptive yet predictable with regard to the support they offer organizational operations  Firms must take time to study their operations in order to develop structures that reflect and respond to the needs of their organizations 2

3 Centralization & Decentralization  Structures reflect various degrees of centralization or decentralization of operations  Centralization- authority to make important decisions is retained by managers at the top of the hierarchy  Decentralization- authority to make important decisions is delegated to managers at all levels in the hierarchy 3

4 What Is an Organizational Structure?  An illustration showing how job tasks are formally divided, grouped, and coordinated.  Also called an organogram 4

5 Questions to consider when Structuring  To what degree are articles subdivided into separate jobs?  On what basis will jobs be grouped together?  To whom do individuals and groups report?  How many individuals can a manager efficiently and effectively direct?  Where does decision-making authority lie? decentralization  To what degree will there be rules and regulations to direct employees and managers? 5

6 Key pillars of organizational structuring  Work specialization  Departmentalization  Authority vs responsibility  Chain of command  Unity of command  Span of control  Centralization vs decentralization 6

7 Work Specialization  The degree to which tasks in the organization are subdivided into separate jobs.  Makes efficient use of employee skills  Increases employee skills through repetition  Less between-job downtime increases productivity  Specialized training is more efficient  Allows use of specialized equipment 7

8 Departmentalization  The basis by which jobs are grouped together. Activities grouped by: Function Product Geography Process Customer 8

9 Authority Balance Chain of Command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. Authority The rights inherent in a managerial position to give orders and to expect the orders to be obeyed. Unity of Command A subordinate should have only one superior to whom he or she is directly responsible. 9

10 Span of Control Narrow Span Drawbacks: Expense of additional layers of management. Increased complexity of vertical communication. Encouragement of overly tight supervision and discouragement of employee autonomy. Narrow Span Drawbacks: Expense of additional layers of management. Increased complexity of vertical communication. Encouragement of overly tight supervision and discouragement of employee autonomy. Concept: Wider spans of management increase organizational efficiency. Concept: The number of subordinates a manager can efficiently and effectively direct. 10

11 Centralization vs decentralization Centralization The degree to which decision making is concentrated at a single point in the organization. Formalization The degree to which jobs within the organization are standardized. Decentralization The degree to which decision making is spread throughout the organization. 11

12 Factors That Influence Structure  Strategy  Organization Size  Technology  Environment 12

13 Common Organization Designs Simple Structure A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization. 13

14 Common Organization Designs (cont’d) Bureaucracy A structure of highly operating routine tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command. 14

15 The Bureaucracy  Strengths Functional economies of scale Minimum duplication of personnel and equipment Enhanced communication Centralized decision making  Weaknesses Subunit conflicts with organizational goals Obsessive concern with rules and regulations Lack of employee discretion to deal with problems 15

16 Matrix Structure Key Elements: + Gains the advantages of functional and product departmentalization while avoiding their weaknesses. + Facilitates coordination of complex and interdependent activities. – Breaks down unity-of-command concept. Key Elements: + Gains the advantages of functional and product departmentalization while avoiding their weaknesses. + Facilitates coordination of complex and interdependent activities. – Breaks down unity-of-command concept. A structure that creates dual lines of authority and combines functional and product departmentalization. 16

17 11/9/2015 Matrix Structure CEO Vice President Engineering Vice President Finance Vice President Purchasing Vice President Sales and Marketing Vice President Research and Development Product A Manager Product B Manager Product C Manager Product D Manager Product Team Two-boss employee 17

18 Modern Design Options Characteristics: Breaks down departmental barriers. Decentralizes decision making to the team level. Requires employees to be generalists as well as specialists. Creates a “flexible bureaucracy.” Characteristics: Breaks down departmental barriers. Decentralizes decision making to the team level. Requires employees to be generalists as well as specialists. Creates a “flexible bureaucracy.” Team Structure The use of teams as the central device to coordinate work activities. 18

19 Virtual Organization Advantage: Provides maximum flexibility while concentrating on what the organization does best. Disadvantage: Reduced control over key parts of the business. Advantage: Provides maximum flexibility while concentrating on what the organization does best. Disadvantage: Reduced control over key parts of the business. A small, core organization that outsources its major business functions. Highly centralized with little or no departmentalization. 19

20 Mechanistic Vs Organic Structures Mechanistic Model A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization. Organic Model A structure that is flat, uses cross-hierarchical and cross- functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making. 20

21 Mechanistic Versus Organic Models 21

22 Mechanistic v/s Organic Structure Contd. MechanisticOrganic Individual SpecializationJoint Specialization Simple IntegrationComplex integration CentralizationDecentralization StandardizationMutual Adjustment 11/9/201522

23 In summary Associated with 23

24 Thank you 24


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