McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
9
Chapter
Managing the Structure and
Design of Organizations
Managing the Structure and
Design of Organizations
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
After reading this chapter, you should be able to:
z
Identify the vertical and horizontal dimensions of organization
structure.
z
Develop coordination across departments and hierarchical levels.
z
Differentiate between authority, responsibility, and
accountability.
z
Recognize when structural characteristics of centralization, span
of control, formalization, and chain of command should be used.
z
Apply the three basic approaches – functional, divisional, and
matrix – to departmentalization.
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Use organization structure and the three basic organization
designs – mechanistic, organic, and boundaryless – to achieve
strategic goals.
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Anticipate key strategic events likely to trigger a change in the
structure and design of an organization.

¾
Horizontal dimension
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
The Vertical Dimension of
Organization Structure
z
Unity of Command –a
subordinate should have only
one direct supervisor.
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A decision can be traced back
from the subordinates who
carry it out to the manager who
made it.
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
The Vertical Dimension of
Organization Structure
(continued)
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Authority – The formal right of a manager to make
decisions, give orders, and expect the orders to be
carried out.
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Line Authority
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Staff Authority
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Responsibility – the manager’s duty to perform an
assigned task.
z

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Span of control – the feature of vertical structure
that outlines:
¾
The number of subordinates who report to a manager.
¾
The number of managers.
¾
The layers of management within an organization.
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Smaller span – fewer employees supervised by a
manager – creates a tall vertical organizational
structure
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Larger span – greater number of employees
supervised – creates a flat organizational structure
McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.
The Vertical Dimension of
Organization Structure
(continued)
z
Centralization – the location of decision authority at
the top of the organization hierarchy.
z
Decentralization – the location of decision authority
at lower levels in the organization.
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Formalization – the degree of written
documentation that is used to direct and control
employees.