Organizational Structure and Design

Organizational Structure:
– The formal pattern of how people and jobs are
grouped in an organization.
Organizational Design
– The decisions and actions that result in
organizational structure.
What Determines Organizational Structure?
• To what degree are tasks 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?
• To what degree will there be rules and regulations to direct employees and managers?
The Basics of Organizational Structure
• Organizational structure defines how job tasks are formally divided, grouped, and coordinated.
• The organization chart is a visual representation of this division, grouping, and coordination.
Early in the twentieth century, Henry Ford used this concept in an assembly line where every Ford
worker was assigned a specific, repetitive task. By breaking jobs into small standardized tasks, which
could be performed over and over again, Ford was able to produce cars at the rate of one every 10
seconds, while using relatively low-skilled workers.
Today we use the term work specialization to describe the degree to which tasks in an organization are
divided into separate jobs. The essence of work specialization is that an entire job is not done by one
individual but instead is broken down into steps, and each step is completed by a different person.
Individual employees specialize in doing part of an activity rather than the entire activity.