Class 3

CHAPTER -3
Organizational Structure
 Introduction

An organizational structure is a system that outlines how certain

activities are directed in order to achieve the goals of an
organization. These activities can include rules, roles, and
responsibilities.
 Type of Organizational Structure

1. Simple Structure: It is low in complexity, has less formalization

and authority is centralized in a single person. It is more organic and
mechanistic in character. It is also called entrepreneurial organization.
 Type of Organizational Structure
2. Line Organization:
• Simplest and oldest type. It is also known as Scalar
organization/military type/vertical Type.
• Main characteristic is superior-subordinate relationship. Superior
delegates authority to another subordinate and so on, forming a
line from the very top to the bottom of the organization structure.
• Authority flows downward, responsibility moves upward in a
straight line.
• Scalar Principle and unity of command is strictly followed
Type of Organizational Structure
 Type of Organizational Structure

3. Line & Staff Organization:

• Extension of line organization. It follow vertical hierarchy with the
horizontal support.
• It is based on F W Taylor’s concept of “Functional
Foremanship”.
• Line of authority remains unbroken, but at the same time , staff is
also appointed to facilitate line persons.
Type of Organizational Structure
 Type of Organizational Structure

4. Functional Organization Structure:A functional organization is

a structure where each department or group is assigned a specific
function and reports to a functional manager.
 Type of Organizational Structure

5. Divisional Organization Structure:

• Extension of Functional structure.
• Based on product, market segments, geographies.
• SBU (Strategic Business Unit):A strategic business unit,
popularly known as SBU, is a fully-functional unit of a business
that has its own vision and direction. Typically, a strategic
business unit operates as a separate unit, but it is also an important
part of the company. first time General electric in 1960.
Type of Organizational Structure
 Type of Organizational Structure
6. Committee Organization : There is a committee for a particular
function or department. Ex. Instead of marketing manager , there may
be marketing committee for marketing activities. Comitte is also
known as Task force/quality circle/commission/board etc. “Group of
People”.They share authority among a group instead of one
manager

An ad hoc committee for a specific purpose and time period is

called “Task Force”
Type of Organizational Structure
 Type of Organizational Structure

7. Project Organization Structure :

• May be temporary
 Type of Organizational Structure

8. Matrix Organization :
• A matrix structure is a combination of two or more types of
organisational structures. It is a way of arranging your business
so that you set up reporting relationships as a grid, or a matrix,
rather than in the traditional hierarchy.
• Project organization is suitable for smaller number of large
projects. Matrix organization is suitable for large number of small
projects.
Type of Organizational Structure
 Type of Organizational Structure
9. Free Form Organization :
• Special Type of Team based organization without organizational
hierarchy and boss subordinate positions.
• Also called Naturalistic/ad-hoc/organic form of the organization.
• It reduces the emphasis on positions, departments and other formal
units and organizational hierarchy.
Type of Organizational Structure
 Type of Organizational Structure

10. Modern Forms Organization : Based on behavioral, systems and

contingencies theory.
a. Horizontal Organization: No Hierarchy, Flat organization. Direct information
sharing with participants, team based working, openness in dealings,
flexibility in decision making.
b. Network Organization: Based on horizontal coordination and collaboration,
beyond the boundaries of the organization. Also called dynamic organization.
Unique combination of strategy, structure and management processes.
c. Virtual Organization: Digital/dotcom organization.Connected via internet.
 Theories of Organizational Structure
1. Six Box Model :developed by Marvin Weisboard based on his book
“Organizational Diagnosis: A workbook of theory and Practice”.
6 Components:
a. Purposes: What “business” are we in?
b. Structure: How do we divide up the work?
c. Relationships: How do we manage conflict (coordinate) among people? With
our technologies?
d. Rewards: Is there an incentive for doing all that needs doing?
e. Leadership: Is someone keeping the boxes in balance?
f. Helpful Mechanism: Planning, controlling, budgeting, and other systems
that help the organization meet its goals
Theories of Organizational Structure
 Theories of Organizational Structure

2. Linking Pin Model :The linking pin model is an idea developed by

Rensis Likert. It presents an organisation as a number of overlapping
work units in which a member of a unit is the leader of another unit.
Member of a higher level group and leader of a lower level group.
 Theories of Organizational Structure

3. Tom Burns & G.M. Stalker – Mechanistic & Organic Systems :

Mechanistic Structure has a more rigid structure and is typically found
where the environment is stable and predictable.

Organic organization has much more fluid set of arrangements and is

an appropriate form for changing environmental conditions which
necessitate emergent and innovative responses.
Theories of Organizational Structure
 Principles of Organizing

1. Principles of unity of objectives:All obectives must be clearly

understood by all. They should support each other to attain objectives
in higher levels.
2. Division of labour and specialization: work should be divided and
assigned to workers according to their skills.
 Principles of Organizing

3. Authority, Responsibility and Accountability:

• Authority is the legitimate power assigned to a manager to make decisions,
issue orders and allocate resources on belahf of the organization to achieve
organizational objectives. Authority follows a top -down hierarchy.
• Authority and Responsibility must go hand in hand. Responsibility means
obligation to carry out the assigned task.Authprity without responsibility will
result in misuse of authority and responsibility without authority will result in
poor performance.
 Principles of Organizing

• Authority can be delegated.

• Accountability is an obligation to answer to a superior for carrying out
delegated responsibilities. Obligation to produce and account for results, in
terms of objectives or work which have been delegated. Accountability cannot
be delegated at all.
• The responsibility for making decisions can be delegated, but the responsibility
for the consequences of the decisions cannot be abdicated.
 Principles of Organizing

Basis Authority Responsibility Accountability

Meaning Right to Command Obligation to Answerability for
perform an outcome of the
assigned task assigned task
Delegation Can be delegated Cannot be entirely Cannot be
delegated delegated at all
Origin Arises from Arises from Arises from
Formal positions delegated responsibility
authority
Flow Flows downward Flows upward Flows upward
from superior to from subordinate from subordinate
subordinate to superior to superior
 Principles of Organizing

4. Delegation:Delegation is the assignment of authority to another person to carry

out specific activities. It is the process of distributing and entrusting work to
another person, and therefore one of the core concepts of management leadership
 Principles of Organizing
5. Chain of Command:
The definition of a chain of command is an official hierarchy of authority that
dictates who is in charge of whom and of whom permission must be asked.
An example of chain of command is when an employee reports to a manager who
reports to a senior manager who reports to the vice president who reports to the
CEO.
Based on 2 principles:
a. Unity of Command: One subordinate should have one boss.
b. Scalar Chain: Scalar chain is the line of authority running from top to lower
levels.Authority flows from top to bootm and responsibility flows from
bottom to top.Every person in the chain known his superior and subordinate.
 Principles of Organizing
6. Span of Control: The number of subordinate that a superior can effectively
supervise.
7. Balance:Balance between different principles of organizing
8. Flexibility: Changes in structure should be made according to changes in the
environmental factors.
9. Exception: Every matter should not report to the top managers.
10.Simplicity: Organization structure should be simple.
11. Co-operation: all the individual and departments should co-operate and help
the organization achieve its goals.
 Coordination

• “Co-ordination is the orderly arrangement of group efforts to provide unity of

action in the pursuit of common purpose”.
• Mary Parker Follett gave four main principles of coordination.
a. Principle of Early Stage: Coordination must start at early stage (planning) .
This will result in best plan and its success.
b. Principle of Continuity: Coordination must be a continuous process.It must
not be a one time activity.It must be done during planning, organizing,
directing, controlling.
c. Principle of Direct contact: All the mangaers must have a direct contact with
their subordinates.it reduce conflict, dispute, misunderstanding
 Coordination

d. Principal of Reciprocal Relations: The decision and action of all people and
department are interrelated. So decision and actions of one person/department
will affect all other persons and departments in the organization.
 Organizational Configuration
Framework by Mintzberg
5 Basic Configuration
1. The entrepreneurial organization (Simple organization): Flat structure,
controlled by owner.
2. The machine Organization (Beaurocracy): Tall, tight vertical structure
bringing the decision making to the top management , level by level.
3. The professional organization: Based on highly trained professional that
demand control of their own work.
4. The divisional organization: Many business unit and product line
5. The innovative organization (Adhocracy):
6. Idealistic Organization (Missionary Organization)
 Organizational Configuration
Framework by Mintzberg
5. The innovative organization (Adhocracy): New organization with innovation
or creativity based.
6. Idealistic Organization (Missionary Organization): Everyone functions
according to the same set of beliefs.
QUESTIONS & ANSWERS
 QUESTION & ANSWERS

1. Which of the following organize the activities of a business around

geographical, market or product groups?

a. Functional Organizational Structure

b. Divisional Organizational Structure
c. Project Organizational Structure
d. Matrix Organizational Structure
 QUESTION & ANSWERS

2. Matrix Organizational Structure is essentially a violation of the principle of

__

a. Unity of command
b. Scalar Chain
c. Unity of Direction
d. Division of labour
 QUESTION & ANSWERS

3. Which of the following does not come under the scope of line
and staff relationship?
a. The relationship between works manager and maintenance
engineer

b. The relationship between works manager and personnel manager

c. The relationship between personnel manager and development

engineer
d. The relationship between the public relation officer and the
public.
 QUESTION & ANSWERS
4. Departmentalization is ______
a. Structuring work to accomplish organizational goals
b. Visual display of organization structure
c. Grouping of jobs on some basis
d. Arranging jobs in a hierarchy

Codes:
A. a and b only
B. B and c only
C. a only
D. c only
5.With regard to changing nature of workQUESTION
organization “&Six
ANSWERS
old logic
principal” and “six new logic principles” were given by:
a. Henry Mintzberg
b. Douglus Mc Gregor
c. Chris Argyris
d. Charles handyKey points about Handy's "old" and "new" logic principles:
•Old Logic Principles:These principles often reflect the traditional
bureaucratic organizational structure, including concepts like strict division
of labor, rigid hierarchy, centralized decision-making, and specialized roles.
•New Logic Principles:These principles emphasize adaptability,
collaboration, empowerment, flexibility, and a focus on knowledge sharing in
a rapidly changing work environment.
 QUESTION & ANSWERS

6. Staff and line are names given to different types of functions in organization
. The functions of staff is?

a. Superior
b. Managerial
c. Authoritative
d. Advisory
 QUESTION & ANSWERS

7. The “Unity of Command” principle of management violates which of the

following organizational structure?

a. Functional Structure
b. Matrix structure
c. Divisional Structure
d. None of the Above
 QUESTION & ANSWERS

8.Organization structure primarily refers to

a. How activities are coordinated & controlled
b. How resources are allocated
c. The location of departments and office space
d. The policy statements developed by the firm
 QUESTION & ANSWERS

9. The Six box model of organizational structure and design comprises of six
components, which one of the following is not included
a. Relationships
b. Rewards
c. Behavior
d. Helpful Mechanism
 QUESTION & ANSWERS

10. Which of the following is not one of the principles of Co-ordination ,

according to Mary Parker Follett?
a. Principle of Early stage
b. Principles of continuity
c. Principles of direct contact
d. Principles of Dynamism
 QUESTION & ANSWERS
1. b
2.a
3.d
4.d
5.d
6.d
7.b
8.a
9.C
10.d
 QUESTION & ANSWERS

Fusion Thoery:fusion theory" refers to a concept that emphasizes the

integration of individual employee goals and aspirations with the overall
organizational objectives, essentially creating a unified vision where personal
and company goals work together seamlessly, often attributed to theorist
E.W Bakke and his "Fusion Theory of Organization.
 QUESTION & ANSWERS
Key points about fusion theory in HR:
•Alignment of goals:
•The core idea is to align individual employee needs and desires with the
strategic direction of the company, fostering a sense of shared purpose and
motivation.
•Socialization and personalization:
•Fusion theory suggests that both socialization processes (integrating
employees into the company culture) and personalization processes
(allowing for individual expression and development) need to occur
simultaneously and dynamically for optimal alignment.
 QUESTION & ANSWERS

•Dynamic interaction:

•This theory views the relationship between individual and organization as a

constantly evolving interaction, where both parties need to adapt and adjust
their goals over time.
Thank You