Organizational Design and Organizational Structure
Organizational Design and Organizational Structure
1. Organizational Design
- management decisions and actions that result in a specific organization structure.
Four Design Decisions
1. Division of Labor – process of dividing work into relatively specialized jobs to achieve advantages of specialization.
Division of labor in organization can occur in three different ways:
a. Work can be divided into different personal specialties.
b. Work can be divided into different activities necessitated by the natural sequence of the work the organization does.
c. Work can be divided along the vertical plane of an organization.
2. Departmentalization – process in which organization is structurally divided by combining jobs in departments according to some shared characteristics or basis.
Some of the more widely used departmentalization bases are the following:
a. Functional departmentalization
b. Territorial departmentalization
c. Product departmentalization
d. Customer departmentalization
3. Span of Control – number of individual who report to a specific manager.
Three important factors in determining the managers span of control:
a. Required contact
b. Degree of specialization
c. Ability to communicate
4. Delegation of Authority – process of distributing authority downward in an organization.
Decision Guidelines
a. How routine and straightforward are the job’s or unit’s required decisions?
b. Are individuals competent to make the decision?
c. Are individuals motivated to make the decision?
d. Do the benefits of decentralization outweigh its costs? Models of Organization Design
1. The Mechanistic Model – organizational design emphasizing importance of achieving high levels of production and efficiency through extensive use of rules and procedures, centralized authority, and high specialization of labor.
2. The Organic Model - organizational design emphasizing importance of achieving high levels of flexibility and
1. Organizational Design
- management decisions and actions that result in a specific organization structure.
Four Design Decisions
1. Division of Labor – process of dividing work into relatively specialized jobs to achieve advantages of specialization.
Division of labor in organization can occur in three different ways:
a. Work can be divided into different personal specialties.
b. Work can be divided into different activities necessitated by the natural sequence of the work the organization does.
c. Work can be divided along the vertical plane of an organization.
2. Departmentalization – process in which organization is structurally divided by combining jobs in departments according to some shared characteristics or basis.
Some of the more widely used departmentalization bases are the following:
a. Functional departmentalization
b. Territorial departmentalization
c. Product departmentalization
d. Customer departmentalization
3. Span of Control – number of individual who report to a specific manager.
Three important factors in determining the managers span of control:
a. Required contact
b. Degree of specialization
c. Ability to communicate
4. Delegation of Authority – process of distributing authority downward in an organization.
Decision Guidelines
a. How routine and straightforward are the job’s or unit’s required decisions?
b. Are individuals competent to make the decision?
c. Are individuals motivated to make the decision?
d. Do the benefits of decentralization outweigh its costs? Models of Organization Design
1. The Mechanistic Model – organizational design emphasizing importance of achieving high levels of production and efficiency through extensive use of rules and procedures, centralized authority, and high specialization of labor.
2. The Organic Model - organizational design emphasizing importance of achieving high levels of flexibility and
References: Lorenzana, C.C. (2002), Management Theory and Practice, Manila, Rex Book Store, Inc. Gutierrez, H., Pura, J.M., Jr., Garcia, R.M., Business Organization and Management, 6th Ed, Quezon City, R. M. Garcia Publishing House. Gibson, ,et al., ( ), Organization: http://www.cliffsnotes.com http://www.hrmguide.net/