Handout 5: Elements of Organisational Structure / Structural Dimensions

i)

Work Specialization (Division of Labour)

Dates back to Frederick Taylors work and its conclusion that
specialization contributed to increased employee productivity.
Henri Fayol successfully used it in his production of vehicles and in the
1940s most manufacturing firms in the industrialized countries had
adopted the concept.
It is the degree to which tasks in an organization are divided into
separate jobs.
Job enlargement has been implemented to avoid/curb shortcomings of
work specialization i.e. boredom, fatigue, stress, low productivity, etc,
from employees who have stayed with the organization for a long time.

ii)

Departmentalization
Types of Departmentalization

a)

Functional Departmentalization
Is when the organisation is structured by functions performed.
e.g.

Manager
Engineering

Manager
Accounting

Plant Manager

Manager
Manufacturing

Manager
Human
Resources

Manager
Purchasing

Advantages
All the experts in a particular field are brought together, encouraging efficient
resource utilization while discouraging duplication of effort.
Coordination is improved due to employee area familiarity and rapport.
The structure is easily understood by those involved.

Potential Drawbacks
Very parochial viewpoints can arise.
Functional goals can be pursued at the expense of those of the whole
organisation, which usually results in sub-optional performance.
b)

Product / Service Departmentalization

Is when the organisation is structured by product line or by services
offered.
Each major product area in the cooperation is placed under the
authority of an executive who is a specialist dealing in everything to do
with the particular product line.
PM Institute

Education

Business Studies

Science & Technology

Arts

Social Sciences

Tourism Accounting Marketing Banking MBA

Disadvantages
People can concentrate on their own product / services, while overlooking
other products/ services.
There is a danger of over resourcing and duplication of effort since all
divisions want to control whatever affects them.
c)

Geographical Departmentalization

Is when the organisation is structured to show the executives who are

responsible for each physical area, for example
2

PQX Lda.
Vice President
For Sales

Sales Director
Beira

Sales Director
Maputo

Sales Director
Quelimane

Sales Director
Chimoio

Advantages

There is more effective and efficient handling of specific regional issues that
arise through the ability to cater for different local tasks.

There is a better service of the needs of unique geographic markets.

The organisation reduces transport costs for international operations, units can
adapt to different legal, political and economic constraints.

Disadvantages

Coordination and control of the whole organisation is made much more

difficult.

There is a risk of divided loyalty between regional and organizational demands.

Duplication of functions and employees can feel isolated from the whole
organisation.

d)

Process Departmentalization

Is when departments are classified by organizational processes that is activities

are grouped by product / service flow.

e.g.

T.T. Manufacturers

Plant manager

Manager
Shaving

Manager
Assembling

Manager
Finishing

Manager
Quality Control
& Shipping

Advantage

There is more efficient flow of work activities.

Manager
Planning
& Milling

Disadvantage

Can only be used with certain types of products.

e) Customer / Market Departmentalization

Is grouping by the type of customer the organisation seeks to reach e.g. office
supplies firm structure.

It is commonly used where the same basic product or service is provided for
distinct groups of customers
Director Sales

Manage Retail

Manager Wholesale

Manager - Government

Advantage
Specialist activities and/or resources can be used to fine tune the product or
service to the needs of different types of customers.

 Disadvantages
There is a possibility of duplication of effort.
Specialists in one customer area can be unaware of innovations in other areas.
(iii)

Chain of Command
Is an unbroken line of authority that extends from the upper levels of the
organisation to the lowest levels and clarifies the reporting hierarchy in an
organisation.

It influences an organisation structure.

For the chain of command to be effective there must be authority

responsibility and unity of command.

* Authority is that which gives managers the right to perform in the manner of
being able to give orders.
* Responsibility is the obligation and/or expectation to perform.
* Unity of Command Stipulates that a subordinate should have only one superior to
whom he is directly responsible.
(iv)

Span of Control
Refers to the number of subordinates a manager can effectively and efficiently
supervise.

The smaller the span the higher the efficiency or effectiveness.

Organisational levels also influence the span, with top management usually
having the smallest span.

Training and experience, similarity of subordinate tasks, complexity of tasks,

physical proximity of subordinates, the degree of procedure standardization,
complexity of management information system, and strength of an organisation
culture also influence the management span of control.

Of late large spans of control are favourable due to being cost effective (cut
overheads, speed up decision making, increase flexibility, closeness to
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customers, and empowerment of employees); and there has been an increased

investment in employee training.
Span of Control in an Organisation
Top Management
Middle Management

Lower Level Management

(v)

Centralisation/Decentralisation
Centralisation Is the degree to which decision making is concentrated
in the upper levels of the organisation.

Arguments for centralization include that:

Those at the top can coordinate the whole organisation more effectively.
Different parts of an organisation are prevented from duplicating resources,
resulting in more efficient resource utilization and economies of scale.
Common policies are easier to adopt throughout the organisation than
independent departmental/ sub-unit policies.
Decision - making tends to be faster due to the small number of people
involved.

Centralisation is favourable for an organisation when:

The environment is stable.

 Lower level managers are not as capable or experienced at making decisions as

upper level managers.
Lower managers do not want to have a say in decisions.
Decisions are significant.
The organisation is facing a crisis or the risk of company failure.
The company is large.
Effective implementation of company strategies depends on managers retaining
say over what happens.
Decentralisation
is the handing down of decision making authority to lower levels in the
organisation.

Arguments for Decentralization include that

Decisions are made closer to operational levels, and special circumstances can
be taken into account, which adds a degree of flexibility to the organisation.
Control is distributed more evenly which develops those lower down.
Management devotes more attention to strategic issues.
There is more participation in decision making which contributes positively to
the development of an organisations culture.
If decision making levels are made cost or profit centers, effectiveness,
efficiency and cost control are improved.

Decentralisation is favourable for an organisation when:

The environment is complex and uncertainty

Lower level managers are capable and experienced at making decisions

Lower level managers want a voice in decisions

Decisions are relatively minor

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Corporate culture is open and allows managers to have a say in what happens

The organisation is geographically dispersed.

Effective implementation of organizational strategies depends on managers

having involvement and flexibility to decision making.

(vi) Formalization
Refers to the degree to which jobs in an organisation are standardized.
It reflects the extent to which formal rules and procedures govern activities in
an organisation, which influences employee behaviour.
If a job is highly formalized, the employee has a minimum amount of discretion
over what is to be done, when it is to be done and how the job is done.
In high formalisation oganisations, there are explicit job descriptions,
numerous organizational rules, and clearly defined procedures covering work
processes.
Where formalisation is low, job behaviours are relatively unstructured and
employees have a great deal of freedom in how they do their work.
It is important to note that the degree of formalisation can vary widely
between organizations as well as within organizations (for example, jobs
performed by lecturers and administrators have different formalisation levels
though in the same college/university).