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Departmentalization by simple numbers
• Definition: group people who are to perform same duties under
the supervision of a manager
• useful when it is the number of people that is critical to finish a task
• Low specialization
• Low efficiency
Departmentalization by time
• Group people based on time
• Extended services
• Suitable when certain processes can’t be interrupted or certain expensive
equipment can be used more than 8 hours a day
• Lacks supervision during the night shift
• Fatigue
• Affects coordination and communication among different shifts
Simple structure
• Characteristics:
A low degree of departmentalization
Wide span of control
Centralized authority
Little formalization
A flat structure
Inexpensive to maintain the structure
A clear accountability
Popular in small business owned and managed by same person
Risky as the organization grows
• Characteristics:
– High specialized operating task
– Formalized rules and regulations
– A clearly defined hierarchy
– Level of managers are created to coordinate activities
• Divisional structure
– An organization is made up of self-contained units
– Characteristics:
• Each division is generally autonomous
• Central headquarters provide financial and legal services to the divisions
• Central headquarters coordinate and control various divisions
• Focuses on end results
• Headquarters concentrate on long-term and strategic issues
• Duplications of personnel and equipment
Matrix organization
• Definition: assign people from functional departments to work
on one or more projects led by a project manager
• Is oriented toward end results
• Professional identification is maintained
• Pinpoints product-profit responsibility
• Cross-functional coordination
• Conflict in organization authority exists
• Possibility of disunity of command exists
• Requires managers effective in human relations
Team-based structure
Definition: the entire organization consists of work groups or team
that perform the organization’s work
 No rigid chain of command
 Team member has authority to make decisions
Is flexible
Empower workers
Encourages cooperation
Oriented toward end results
• Lack of responsibility
• Central control may be difficult
• Requires managers effective in human relations
The Boundaryless Organization
• An organization that is not defined or limited by boundaries or
categories imposed by traditional structures
• Characteristics:
Minimize the chain of command
Replaces departments with empowered team
Participative decision-making
Coordination among occupational specialties
• Functional structure
– An organization in which similar and related occupational specialties
are grouped together
– Characteristics:
Work specialization
Minimizes duplication of personnel and equipment
Follows principle of occupational specializing
Simplifies training
Furnishes means of tight control at top
Factors that affect structure
• Organizational factors
– Strategy (structure should fit organizational strategy)
• Growth strategy
• Stability strategy
• Retrenchment strategy
– Size and age
Larger organizations tended to be more specialized and standardized, and
formalized but less centralized than smaller organizations
– Culture (i.e., a system of shared meaning within an organization that determines, to
a large degree, how employees act)
• Strong culture substitute for the rules and regulations that formally guide employees
• Environmental factors
– Technology (i.e., the sequence of physical techniques, knowledge, and equipment
used to turn organization inputs into outputs)
• Define organizational structure
• Define new roles (e.g., CIOs)
– Economic situation
• Strong/weak economy
• Dynamic/static economy
– Social/political situation
Building an effective organization design
Align with organizational goals
Make clear individual roles
Make clear sub-goals and policies
Be flexible
Make staff work effective
– Make line listen staff
– Keep staff informed
• Recognize the importance of informal organization and grapevine
Evaluating effective organizational structure
Effective two-way communication
Align with organizational goals
Clarify authority and responsibility
Respond to environmental changes promptly
Why do we need organizational design?
• Achieve goals
• Make the best use of people’s experiences, knowledge, skills,
and expertise, etc.
• Provide a smooth communication channel
• Reduce uncertainty
• Encourage cooperation