Organizational Structure PPT 2

Presented by:
Ismail Arshad
Hashim Shahid
Adnan Ahmed
Yasir Abbas
Organizational structure
• An organization is a social unit of individuals
that is designed to achieve specific goals.
• Every organization has its own typical
management structure that defines and
governs the relationships between the various
employees, the tasks that they perform, and
the roles, responsibilities and authority
provided to carry out different tasks.
Understanding organizational
structure:
• All businesses use organizational structure
heavily. They define a specific hierarchy within
an organization.
• Organizational structures are normally
illustrated in some sort of chart or diagram like a
pyramid, where the most powerful members of
the organization are at the top, while with least
amount of power are at the bottom.
• https://youtu.be/wO_-MtWejRM
Why it is important:
• Better defines levels of authority and
responsibility
• Shows to whom each person reports to or
whom to talk to about specific projects.
• Gives each employee a specialty
• Creates fellowship between employees within
the same department
Slide Title
• Not having a formal structure in place may prove difficult for

certain organizations.
• For instance, employees may have difficulty knowing to whom
they should report. That can lead to uncertainty as to who is
responsible for what in the organization.
• Having a structure can help with efficiency and provide clarity
for everyone at every level.
Keys elements of organizational structure:
Work Departmentalization Chain of

Specialization command
Span of control Centralization / Formalization

Decentralization
1. Work Specialization:
• It is the first element of organization structure. Business leaders
must consider the job tasks and specific duties associated with given
positions.
• It ensures that all employees have specific duties that they are
expected to perform based on each employee's work experience,
education and skills. This prevents an expectation that employees
will perform tasks for which they have no previous experience or
training and to keep them from performing beneath their capacities.
• If we take the division of labor into several
small tasks ensures employees to complete
their work in time.
• For example; At KFC, work specialization is
implemented in such a way that the cashier
takes the order the chef prepares the food as
the branch manager supervises the whole
process.
2. Departmentalization:
• It refers to how the organizational structure groups the company's
functions, offices and teams.
• Once activities are divided based on work specialization common
tasks are to be grouped together. Those individual groups are typically
referred to as departments. Departments are usually sorted on the
basis of the kinds of tasks the workers in each department perform.
• For eg. Marketing department, human resource department, Finance
department, production department.
The objectives of departmentalization
• Maintaining control
• Simplifying the operational process in the
company
• Grouping the specialized activities under one
umbrella
• Increasing the efficiency of management and
ultimately the organization.
• Fixing responsibilities and of course
accountability.
3. Chain of command:
• Chain of command is the continuous line of authority that
extends from upper organizational levels to the lowest levels
and clarifies who reports to whom. It helps employees answer
questions such as “who do I go to if I have a problem?” or “To
whom am I responsible?
• This helps eliminate inefficiencies by having each employee
report to a single manager, instead of to several bosses.
• An example of chain of
command in any
organization 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.
4. Span of control: • This limit varies upon
situations. It depends on a
• It refers to the number of number of factors, including the
employees a supervisor can
effectively manage. size of the workforce or how
the company is divided into
departments.
 Ali was recently hired as a Supply Chain Manager in a
cupcake manufacturer. It has been a little difficult for
him to perform his job correctly because some of his
team members are also employed by other
departments of the company and they have been
procrastinating the activities that Ali handles to them.
This has caused a poor performance for the Supply
Chain Department.
• In order to correct this, Ali asked the CEO to clarify his
span of control. After the situations was evaluated,
Ali’s department ended up with 4 team members that
will work with him only. This has increased Ali’s
department performance considerably.
5. Centralization / Decentralization:
• Centralization describes the degree to which decision-
making is concentrated at a single point in the
organization.
• In some organizations, top managers make all the
decisions and lower-level mangers & employees simply
carry out their directives. At the other extreme, decision
making is also pushed down to the lower-level managers
or employees. The former organizations are highly
centralized.
 Centralizing authority in a business means that middle management
typically is left with little or no input in decision making. This system is
typical in larger corporate organizations, as well as at companies in
more conservative industries. In this type of organizational structure, all
decisions and processes are handled by the top management.
• Apple is an example of a business with a centralized management
structure. Within Apple, much of the decision-making responsibility lies
with the CEO. Apple has viewed as an organization that maintains a
high level of centralized control over the company’s strategies such as
new product development, markets to operate in, etc.
 On the other hand, a decentralized system allows all levels of management the
opportunity to give input in some types of decision making. Larger, company-
wide decisions are still generally reserved to C-level officers, but departmental
managers enjoy a greater degree of latitude in how their teams operate.
• For Example; the HR Manager has to finalize a deal with a vendor. If his
organization is a centralized one, then he will first seek senior management
permission to finalize the deal and wait for their approval. If there is a delay by
the management, he might lose the deal. However, if his company is
decentralized, then, he has authority to close the deal all by himself with the
vendor without seeking any approval from the management which, in turn,
results in finalizing cost-effective and quick decision-making.
6. Formalization: • It is the element that determines
the company’s rules and
guidelines as adopted by
management. It also determines
company culture aspects, such as
whether employees have to sign in
and out, how many breaks workers
can take and how workers at all
levels are expected to dress for
work.
• While formalization reduces ambiguity and provides direction
to employees. A high degree of formalization may actually lead
to reduced innovativeness because employees are used to
behaving in a certain manner.
• In fact, strategic decision making in such organizations often
occurs only when there is a crisis. A formalized structure is
associated with reduced motivation and job satisfaction as well
as a slower pace of decision making.
Thank you

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• Not having a formal structure in place may prove difficult for

Work Departmentalization Chain of

Span of control Centralization / Formalization

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