Unit 3: Organising

Organisation Structure

Tall vs Flat Organisation Structure

Overview of Traditional Organisational Structure (Simple/Line organisational

Structure, Line and Staff, Functional and Divisional Organisational Structure)

Meaning and Types of Organisation Chart - Organogram

Prepared By:
Ms. Dhun
Assistant Professor
IPCW, DU
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ORGANIZATION STRUCTURE
• Organizational structure means “a system used to define a hierarchy within
an organization”.
• It identifies each job, its function and where it reports to within the
organization.
• An organizational structure defines how work gets delegated throughout an
organization.
• A structure is then developed to establish how the organization operates to
execute its goals.
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Flat versus tall organizational structure
• Combination of span of control and scalar chain
determines the overall shape of the org., and
whether the structure is flat or tall.

• A flat organizational structure features large span

of control.

• A tall organizational structure has narrow span of

control.

• A tall organizational structure is more hierarchical,

whereas a flat organizational structure requires
higher autonomy.

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Flat versus tall organizational structure

• Broad/large span of control + few

levels of chain = flat or wide
structure

• Narrow/small span of control +

more levels of chain (authority-
responsibility chain) = tall
structure

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Flat versus tall organizational structure
• The way that a company’s structure develops often
falls into a tall (vertical) structure or a flat
(horizontal) structures.

• Tall structures are more of what we think of when

we visualize an organizational chart with the CEO at
the top and multiple levels of management.

• Flat organizational structures differ in that there are

fewer levels of management and employees often
have more autonomy.

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Tall Organizational Structure
• Large, complex organizations often require a taller hierarchy.
• In its simplest form, a tall structure results in one long chain of command
similar to the military.
• As an organization grows, the number of management levels increases
and the structure grows taller. In a tall structure, managers form many
ranks and each has a small area of control.
• Although tall structures have more management levels than flat
structures, there is no definitive number that draws a line between the two.

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Flat Organizational Structure
• Flat structures have fewer management levels, with each level
controlling a broad area or group.

• Flat organizations focus on empowering employees rather than

adhering to the chain of command.

• By encouraging autonomy and self-direction, flat structures attempt

to tap into employees’ creative talents and to solve problems by
collaboration.

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 ORGANOGRAM
• An organizational chart, also
called organogram, or organizational
breakdown structure (OBS) is a diagram that
shows the structure of an organization and the
relationships and relative ranks of its parts and
positions/jobs.

• An organogram is an organizational chart that

shows the structure of an organization.

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 ORGANIZATIONAL ORGANOGRAM
• Organogram shows the correlation among organizational unit in the form of graphics and it provides great convenience
for people to view detailed information on organizational units as well as the associated position and personnel.

Purposes of Creating an Organogram

a. Displays function division.

b. Allows people to know whether right and responsibility are set

properly or not.

c. Assist people in finding if there is someone undertaking

relevant work and staying idle.

d. Help managers to identify if some talented workers haven’t

been able to draw out the best in themselves.

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Traditional Organizational Structure Modern Organizational Structure
• A traditional organizational structure • A modern organizational structure does
follows a system in which power flows not have a hierarchical, top-down power
upward through the organization, and all arrangement.
employees follow a chain of command. • Also referred to as a contemporary
• The traditional organizational chart may organizational structure, it removes the
look like a pyramid. departmental boundaries between
• The chief executive officer would sit at employees and has them work on projects
the top, and the layer underneath would together in pursuit of the business's goals.
consist of department managers who • Employees working on projects receive
report to the CEO and oversee the overall requirements and productivity goals but
operations of their department. Next have the power to determine for
would be first-line managers, or themselves the best way to complete the
supervisors, who manage the daily project. Typically, this structure promotes
operations of their department or teams sharing skills and resources across the
and below are the non-management organization to reach its goals.
employees who report to them.
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 TRADITIONAL ORGANISATIONAL STRUCTURE
• Traditional organization represent the organizational structure in a business is hierarchical, meaning power flows vertically
and upward, and employees are departmentalized. All employees follow a chain of command. It is classified as:

LINE

TRADITIONAL
ORGANIZATION

LINE AND STAFF FUNCTIONAL

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1. Line Organization:

line-authority responsibility relationship is found excluding any other type of relationship. This type of organization
presumably first originated in the military. Hence, this type of organization is historically also called as the “military
organization”.

Features of Line Organization

i. The scalar chain principle (or the line of command)

ii. Unity of command,

iii. Span of management, according to which principle, the number of subordinates, under one superior, is kept limited; in
view of the managerial competence, of that particular superior.

• NOTE: In a line organization, there is no scope for managerial specialisation whatsoever- Each manager, located at a
particular point in management hierarchy, is supposed to undertake all functions, pertaining to his area of functioning i.e.
each manager would look after production, finance, marketing and other functions within his area of authority. Hence, such
a type of organization is suited only where routine type of business is conducted-not requiring much of specialization.
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2. Functional Organization:
All business work is divided among various activities or functions; and each of the function is entrusted to a specialist.
Each such specialist is known as a functional specialist, by virtue of, his expertise in the function entrusted to him; and
the authority possessed and enjoyed by each specialist is known as his functional authority.
A functional organization is regulated by the ‘multiple-command-system’ (i.e. an absolute violation of the unity of command);
as each subordinate in the organization is subject to multiple orders by different functional specialists – each one of the latter
commanding the former pertaining to the area of his specialisation.
Functional Organisation Chart

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 2. Functional Structure

• A functional organizational structure organizes its hierarchy around traditionally functioning departments.

• A functional structure groups employees into different departments by work specialization. Each department has
a designated leader highly experienced in the job functions of each employee supervised by them.

• Most often, it implements a top-down (centralized) decision-making process where department managers report
to upper management. Ideally, leaders of different teams communicate regularly and coordinate their strategies
while lower-level employees have little idea of the processes taking place outside their department.

• Most small-to-medium-sized businesses implement a functional structure. Dividing the firm into departments
consisting of marketing, sales, and operations is the act of using a bureaucratic organizational structure.

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3. Line and Staff Organization:
• seeks to combine the positive side of both - line and
functional organizational, in a unique manner.
• Line and staff organization are one, in which there is basic
Line and Staff Organisation Chart

departmentation for primary business functions, operated on

the concept of the scalar chain; and

• there is a provision for specialised activities performed

through staff officers, the latter acting ordinarily in an
advisory capacity.

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4. Divisional or Multidivisional Structure
• In divisional organizational structures, a company’s divisions have control over their own resources,
essentially operating like their own company within the larger organization.

• Each division can have its own marketing team, sales team, IT team, etc.

• A divisional structure organizes employees around a common product or geographical location.

Divisions may also be designated geographically in addition to specialization. For instance, a global
corporation may have a North American Division and a European Division.

• Divisional organizations have teams focused on a specific market or product line. A good
example of this structure is Johnson & Johnson. With thousands of products and lines of business,
the company structures itself so each business unit operates as its own company with its own
president.

• This structure works well for large companies with several SBU’s as it empowers the various
divisions to make decisions without everyone having to report to just a few executives.

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 Variations in divisional organization structure
Product-based divisional org chart

a) Market / product based divisional org

structure

• Divisions are separated by market, industry,

or customer type. A large consumer goods
company, like Target or Walmart, might
separate its durable goods (clothing,
electronics, furniture, etc.) from its food or
logistics divisions.

• Divisions are separated by product line. For

example, a tech company might have a
division dedicated to its cloud offerings,
while the rest of the divisions focus on the
different software offerings—e.g., Adobe
and its creative suite of Illustrator,
Photoshop, InDesign, etc.
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 Variations in divisional organization structure

b) Geographic divisional org structure

• Divisions are separated by region, territories, or

districts, offering more effective localization and
logistics. Companies might establish satellite offices
across the country or the globe in order to stay close
to their customers.

• Example- McDonald’s. Brands split the entire

organization by location to be able to adjust their
strategies for audiences representing different
markets.

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