Foundations-of-Organization-Structure.ppt

PPT on foundations of Organisation

1. Foundations of Organization
Structure
Asit Das

2. Nature and Purpose-Organization Structure
An organizational structure isn’t a static,
rigid prescription for how the company
operates. Instead, it acts as a resource to
describe how specific tasks are allotted,
how information is communicated
between teams and departments, and how
decisions are made.
The organizational structure clarifies
reporting responsibilities and establishes a
hierarchy of authority for enforcing
company policies and procedures.

3. Elements of an Organizational Structure
Hierarchy of authority
Divisional segmentation
Job roles
Span of control
Level of formalization
Company culture

4. Formal & Informal
Organizations

5. NATURE OR CHARACTERISTICS OF ORGANIZING
Division of Work
Coordination
Plurality of Persons
Common Objectives
Well-defined Authority and Responsibility
Organization is a Structure of Relationship
Organization is a Machine of Management
Organization is a Universal Process

6. Key characteristics of formal
organisations Formal organisations exhibit several distinct
characteristics that set them apart:
•Clear hierarchical structure: They have well-defined
levels of authority and responsibility, typically visualized
through organisation charts
•Established rules and procedures:  They operate
according to codified protocols, policies, and standard
operating procedures
•Defined roles and responsibilities: Each position
within the organisation has specific duties, authorities,
and accountabilities
•Official communication channels: Information flows
through prescribed pathways, such as reporting
relationships
•Goal orientation: They exist primarily to achieve
specific objectives or purposes

7. Key characteristics of Informal
organizations 
Spontaneous formation: 
They emerge naturally
through social interactions rather than by design
Personal relationships: 
They are based on
friendship, shared interests, and mutual trust
Unofficial communication: 
Information flows
through informal channels like personal
conversations, gossip, and social media
Fluid boundaries: 
Membership and participation can
change frequently and may cross formal departmental
lines
Social need fulfillment: 
They primarily satisfy
members’ social and psychological needs for
belonging and recognition

8. Line and Staff Authority

9. Line Authority
The work of an employee is directed with the help of
line authority. It takes the form of an employer-
employee relationship that moves from top to bottom.
 So certain decisions are made by the line manager
without consulting any other person. In some cases,
line managers are differentiated from the staff
managers by using the word “line”.
 Hence the manager whose functions are linked
directly with the achievement of organizational
objectives is called line manager.

10. Staff Authority
Staff authority is the right to advise or counsel those
with line authority. For instance, human resource
department staff assists other divisions by selecting
and developing a qualified workforce.
A quality control manager helps a production
manager by confirming the acceptable quality level of
products or services, initiating quality programs, and
executing statistical analysis to ensure compliance
with quality standards.
Therefore, staff authority provides staff personnel the
right to offer advice in an effort to improve line
operations.

11. Key Elements of Organizational Structure?
Key Elements:
1.Work specialization
2.Departmentalization
3.Chain of command
4.Span of control
5.Centralization and
decentralization
6.Delegation of Authority
Organizational Structure
Defines how job tasks are
formally divided, grouped,
and coordinated.
There are six key elements
that managers need to
address when they design
their org.’s structure.

12. Work Specialization
Division of labor:
•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.
The degree to which tasks in the organization are
subdivided into separate jobs.

13. Division of Labor
Benefits include:
–Increasing levels of skill
–Less time is wasted moving from job to job
–Training is less costly
–Increased focus

14. 2- Departmentalization
Grouping Activities By:
•Function
•Product
•Geography
•Process
•Customer
The basis by which jobs are grouped together.

15. Functional Departmentalization
•Advantages
•Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
•Coordination within functional area
•In-depth specialization
•Disadvantages
•Poor communication across functional areas
•Limited view of organizational goals

16. Product Departmentalization
+Allows specialization in particular products and services
+Managers can become experts in their industry
+Closer to customers
–Duplication of functions
–Limited view of organizational goals

17. Geographical Departmentalization
•Advantages
•More effective and efficient handling of specific
regional issues that arise
•Serve needs of unique geographic markets better
•Disadvantages
•Duplication of functions
•Can feel isolated from other organizational areas

18. Process Departmentalization
+More efficient flow of work activities
–Can only be used with certain types of products

19. Customer Departmentalization
+ Customers’ needs and problems can be met by specialists
- Duplication of functions
- Limited view of organizational goals

20. Departmentalization
Real-World Examples of Departmentalization
Example 1: Amazon (Product & Geographical
Departmentalization)
Amazon has different divisions for
 retail, AWS (cloud
services), advertising, and Prime Video. It also
operates through regional offices to serve customers
across different countries.
Example 2: Coca-Cola (Geographical
Departmentalization)
Coca-Cola operates in different regions worldwide,
such as North America, Latin America, and Asia-
Pacific, tailoring its marketing and distribution
strategies accordingly.

21. 3 - Chain of Command
The continuous line of authority that extends from upper
levels of an organization to the lowest levels of the
organization and clarifies who reports to whom.
Chain of Command involves three
other concepts:
•Authority
•Responsibility
•Unity of Command

22. 3 - Chain of Command……continued
Authority
–Refers to the rights inherent in a managerial position to tell
people what to do and to expect them to do it.
–An org.’s managers, who are in the chain of command, are
granted a certain degree of authority to do their job of
coordinating & overseeing the work of others.
Responsibility
–The obligation or expectation to perform any assigned duties.
–As managers assign work to employees, those employees
assume an obligation to perform any assigned duty.
Unity of Command
–The concept that a person should have one boss and should
report only to that person.( Fayol’s 14 Principles of
Management)
–Without unity of command, conflicting demands & priorities
from multiple bosses can create problems.

23. Span of Control
Span of Control can be defined as the total number
of direct subordinates that a manager can control or
manage. The number of subordinates managed by a
manager varies depending on the complexity of the
work.
Number of Employees: 50
Number of Managers: 5
Span of Control= 50/5 =10:1

24. 5 - Centralization & Decentralization
Centralization
–The degree to which decision-making is concentrated
at a single point in the organizations.
•Organizations in which top managers make all the
decisions and lower-level employees simply carry out
those orders.
Decentralization
–Organizations in which decision-making is pushed
down to the managers who are closest to the action.
Employee Empowerment
–Increasing the decision-making authority (power) of
employees.

25. Advantages of Centralization
Centralization offers several strong benefits,
especially in stable or tightly regulated environments:
Clear decision-making: 
Reduces confusion and
overlaps in authority.
Consistency: 
Ensures uniform policies, procedures,
and messaging.
Strong control: 
Top leaders can maintain full
oversight and strategic focus.
Efficiency: 
Prevents duplication of effort across
departments or units.
Cost-effective: 
Often reduces administrative
overhead and infrastructure costs.

26. Disadvantages of Centralization
Despite its strengths, centralization has some notable
downsides, especially in fast-moving or diverse
environments:
Slower decisions: 
Local teams must wait for approval
from the top.
Reduced flexibility: 
Local or frontline managers have
less freedom to respond to immediate needs.
Low employee morale: 
Staff may feel disconnected
from decisions that affect their work.
Bottlenecks: 
Too much responsibility at the top can
overload leadership.
Limited innovation: 
Lack of autonomy can discourage
initiative and creative problem-solving.

27. Advantages of Decentralization
Decentralization offers many benefits, especially for
large or growing organizations:
Faster decisions: 
Local teams don’t need to wait for
approval.
More flexibility: 
Teams can quickly adjust to
customer or market needs.
Higher motivation: 
People feel trusted and take
ownership of their work.
More innovation: 
Teams often come up with
creative ideas and solutions.
Less pressure on top leaders: 
Senior managers
focus on strategy, not daily tasks.

28. Centralization vs Decentralization with
Examples
Decision-Making Authority
In a centralized system, top-level managers and executives
make most of the decisions. Employees at lower levels follow
orders and have little say in key matters. This creates a clear
chain of command and strong control from the top.
Centralization Example: In
a traditional bank, the head
office
decides on all loan policies. Branch managers follow
strict
rules and cannot change loan terms without approval.
.
Decentralization Example: In
a retail chain like Walmart,
individual
store managers can adjust pricing or inventory
based
on local demand, within general company guidelines.

29. Delegation of Authority
The systematic process of assigning tasks, providing
the necessary resources, and granting decision-
making rights to subordinates while ensuring
accountability. It is a structured way of dividing work
to increase operational Efficiency in an organization.
Example: In a corporate setting, the department
manager might delegate the task of preparing the
monthly reports to the senior employee in the
organization. This also saves the workload of the
manager and gives the subordinate an opportunity to
build analytical and leadership skills.
A factory supervisor delegates machine maintenance
to a technician but regularly checks reports to ensure
maintenance schedules are followed.

30. Example: A branch manager delegates the task of
handling customer complaints to an assistant but
also grants them the power to resolve minor
issues without constant approval.
A project manager assigns a task to a team
member and meets regularly to monitor progress,
discuss problems, and provide necessary
guidance
 A finance manager outsources tax filing to an
accountant but is accountable for accuracy and
compliance with the law

31. Thank you