flowchart TB
subgraph Tall [Tall structure — narrow span]
T1[CEO] --> T2[VP-1]
T1 --> T3[VP-2]
T2 --> T4[Mgr]
T2 --> T5[Mgr]
T3 --> T6[Mgr]
T3 --> T7[Mgr]
end
subgraph Flat [Flat structure — wide span]
F1[CEO] --> F2[Mgr]
F1 --> F3[Mgr]
F1 --> F4[Mgr]
F1 --> F5[Mgr]
F1 --> F6[Mgr]
F1 --> F7[Mgr]
end
classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;
6 Organisation Structure and Design — Types, Authority, Centralisation, Span of Control
6.1 Structure vs Design — the Distinction
Organisation structure is the formal arrangement of jobs, authority and reporting relationships. Organisation design is the active process of building that structure to fit strategy, environment, technology and people. Robbins and Coulter: “managers are designing or redesigning organisational structures” whenever they group jobs, define authority, set spans of control, or decide how decisions will be made.
TipSix Building Blocks of Organisation Design (Robbins)
| Block | The question it answers |
|---|---|
| Work specialisation | How finely is a job divided? |
| Departmentation | On what basis are jobs grouped? |
| Chain of command | Who reports to whom? |
| Span of control | How many subordinates per manager? |
| Centralisation / Decentralisation | Where are decisions made? |
| Formalisation | How rule-bound is the work? |
NoteTwo halves
The first three blocks answer who does what; the last three answer who decides and how.
6.2 The Six Building Blocks
6.2.1 Work specialisation (Division of labour)
The division of work into smaller, repeatable tasks. Adam Smith’s pin factory (Wealth of Nations, 1776) and Frederick Taylor’s time-and-motion studies both rest on it. Specialisation raises efficiency up to a point, beyond which boredom, alienation and quality problems set in (Hackman & Oldham’s Job Characteristics Model prescribes the antidote — see OB chapter).
6.2.2 Departmentation
TipSix Bases of Departmentation
| Basis | Group jobs by | Strength | Weakness |
|---|---|---|---|
| Functional | Function (production, marketing, finance) | Specialisation, economies of scale | Silos, slow cross-function response |
| Product / Divisional | Product line | Focus on product; clear P&L | Duplication of resources |
| Geographic | Region / territory | Local responsiveness | Coordination overhead |
| Customer | Customer type | Customer focus | Underused capacity if customers shrink |
| Process | Stage of work | Process efficiency | Limited to manufacturing-like flows |
| Matrix | Two bases together (function × project) | Flexibility, dual focus | Two bosses; conflict |
6.2.3 Chain of command and unity of command
The unbroken line of authority that links every position to the top — Fayol’s scalar chain. Fayol’s unity of command (one subordinate, one boss) is its cornerstone. The matrix structure deliberately violates unity of command; the price is paid in coordination and conflict. Fayol’s gangplank allows same-level officers in different chains to communicate horizontally with prior permission — an exception that prevents pure-hierarchy paralysis.
6.2.4 Span of control (Span of management)
How many subordinates a manager can effectively supervise.
TipNarrow vs Wide Span
| Feature | Narrow span (4–6) | Wide span (10+) |
|---|---|---|
| Structure shape | Tall | Flat |
| Levels of management | Many | Few |
| Per-manager workload | Low | High |
| Subordinate autonomy | Low | High |
| Communication cost | Higher (more layers) | Lower |
| Suits | Complex, novel tasks | Routine tasks; capable subordinates |
NoteGraicunas formula (1933)
\(R = n(2^n/2 + n - 1)\) → for n=5 subordinates, relationships = 100; for n=6, 222. The combinatorial explosion is the classical argument for narrow span.
6.2.5 Centralisation and Decentralisation
TipCentralised vs Decentralised
| Dimension | Centralised | Decentralised |
|---|---|---|
| Decision locus | At the top | Pushed down |
| Pace | Slower | Faster |
| Coordination | Easier (one centre) | Harder (many centres) |
| Local responsiveness | Lower | Higher |
| Risk of duplication | Lower | Higher |
| Manager development | Lower | Higher — more decision exposure |
| Suits | Small firm, stable environment | Large firm, dynamic environment |
Delegation, decentralisation and devolution are commonly confused:
- Delegation — transfer of authority for specific tasks to a specific subordinate. Temporary.
- Decentralisation — systematic push of decision authority down the hierarchy as a structural choice.
- Devolution — transfer to autonomous units (in public administration: local self-government).
6.2.6 Formalisation
The degree to which jobs are standardised and behaviour is rule-bound. High formalisation suits routine work (call-centre scripts); low formalisation suits creative work (R&D, design). Burns & Stalker’s mechanistic organisations are high on formalisation; organic ones are low.
6.4 Types of Organisation Structure
6.4.1 Classical Structures
TipSix classical structural forms
| Structure | Defining feature | Best for |
|---|---|---|
| Line / Military | Pure scalar chain; line authority only | Small firms; military |
| Line and Staff | Line + advisory staff specialists | Medium and large firms |
| Functional | Departments by function (P/M/F/HR) | Stable, single-product firm |
| Divisional / Product | Departments by product / market | Multi-product firms; GM under Sloan |
| Matrix | Two-boss system: functional manager × project manager | Aerospace, consulting, projects |
| Committee | Decisions by a body of persons | Board, jury, panel |
6.4.2 Modern Structures
TipModern / Contemporary forms
| Structure | Defining feature | Iconic example |
|---|---|---|
| Team / Team-based | Decisions by self-managed teams; lateral coordination | Whole Foods, ICU teams |
| Network / Virtual | Small core that contracts out most functions | Nike, Asian Paints (outsourcing) |
| Boundaryless | Eliminates internal and external boundaries | GE under Jack Welch |
| Modular / Hollow | Internal modules sub-contracted | Bharti Airtel (network outsourced to Ericsson, IBM) |
| Holacracy | Authority distributed across roles, no managers | Zappos |
| Cellular / Spaghetti | Free-form, project-led | Oticon |
6.4.3 Mechanistic vs Organic — Burns & Stalker (1961)
Tom Burns and G.M. Stalker (The Management of Innovation, 1961) distinguished two ideal-type structures.
TipMechanistic vs Organic
| Dimension | Mechanistic | Organic |
|---|---|---|
| Specialisation | High | Low (people share tasks) |
| Formalisation | High | Low |
| Hierarchy | Rigid; tall | Flexible; flat |
| Communication | Vertical (top-down) | Lateral, network |
| Decision-making | Centralised | Decentralised |
| Best environment | Stable | Dynamic / turbulent |
6.5 Mintzberg’s Five Configurations (1979)
Henry Mintzberg (The Structuring of Organizations, 1979) identified five basic parts and five basic configurations. The five parts:
TipMintzberg’s five parts of any organisation
| Part | Role |
|---|---|
| Strategic Apex | Top management — overall direction |
| Middle Line | Linking managers between apex and core |
| Operating Core | Workers producing goods/services |
| Technostructure | Analysts standardising work (HR, IE, IT-architects) |
| Support Staff | Indirect services (legal, mailroom, canteen) |
flowchart TB
SA[Strategic Apex] --- TS[Technostructure]
SA --- SS[Support Staff]
SA --> ML[Middle Line]
ML --> OC[Operating Core]
TS --- ML
SS --- ML
classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;
TipMintzberg’s five configurations
| Configuration | Key coordinating mechanism | Dominant part | Example |
|---|---|---|---|
| Simple Structure | Direct supervision | Strategic apex | Start-up, small shop |
| Machine Bureaucracy | Standardisation of work processes | Technostructure | Auto plant, government office |
| Professional Bureaucracy | Standardisation of skills | Operating core | Hospital, university |
| Divisionalised Form | Standardisation of outputs | Middle line | Multi-divisional firm (GM, J&J) |
| Adhocracy | Mutual adjustment | Support staff (with operating core) | NASA, ad agency, R&D lab |
Mintzberg later added a sixth — Missionary — coordinated by standardisation of norms / ideology (e.g., Greenpeace).
6.6 Contingency Approach to Organisation Design
The right structure is contingent on situational variables. The four classic studies:
TipFour landmark contingency studies
| Study | Variable studied | Key finding |
|---|---|---|
| Joan Woodward (1958, South Essex) | Technology (unit, mass, process) | Successful firms had structures appropriate to their technology |
| Burns & Stalker (1961) | Environment (stable / dynamic) | Mechanistic suits stable; organic suits dynamic |
| Lawrence & Lorsch (1967) | Environmental uncertainty by department | Higher uncertainty → more differentiation → need more integration |
| Aston Group (Pugh et al., 1968) | Size | Size predicts structural variables more strongly than technology |
6.6.1 Alfred Chandler — “Structure follows Strategy”
In Strategy and Structure (1962), Alfred D. Chandler Jr. studied DuPont, GM, Standard Oil and Sears and concluded that as firms diversified their strategy, they had to adopt the multidivisional (M-form) structure. His thesis: “Structure follows strategy”. Hall and Saias later argued the reverse — strategy follows structure — because existing structure constrains strategic moves.
6.7 Practice Questions
Q 01
Building Blocks
Easy
Which of the following is not one of Robbins's six building blocks of organisation design?
View solution
Correct Option: C
Robbins's six blocks: Work specialisation · Departmentation · Chain of command · Span of control · Centralisation/Decentralisation · Formalisation. Motivation is an OB topic, not a design block.
Q 02
Departmentation
Medium
A company is organised into North, South, East and West zones. This is departmentation by:
View solution
Correct Option: C
Grouping by region or territory is geographic departmentation — chosen for local responsiveness.
Q 03
Span
Easy
A narrow span of control typically produces a structure that is:
View solution
Correct Option: B
Narrow span → more layers needed → tall. Wide span → fewer layers → flat.
Q 04
Authority
Easy
A legal counsel who advises but does not command line departments exercises which type of authority?
View solution
Correct Option: B
Staff authority is advisory. Line authority commands the chain; functional authority is a limited grant of command in a specialist area.
Q 05
Delegation
Medium
Which of the following cannot be delegated?
View solution
Correct Option: C
Authority can be delegated; responsibility and accountability cannot. The manager remains liable to the superior.
Q 06
Barnard
Medium
"Authority becomes real only when the subordinate accepts it" — the acceptance theory of authority is associated with:
View solution
Correct Option: B
Chester Barnard, The Functions of the Executive (1938) — also introduced the zone of indifference.
Q 07
French-Raven
Medium
In French and Raven's framework, the senior engineer whose technical opinion is followed by colleagues exercises:
View solution
Correct Option: C
Expert power — derives from specialised knowledge or skill. French & Raven (1959). Legitimate / Reward / Coercive = position power; Expert / Referent = personal power.
Q 08
French-Raven
Medium
Which of the following is not one of French and Raven's original five bases of power?
View solution
Correct Option: C
French & Raven's five: Legitimate · Reward · Coercive · Expert · Referent. Charisma is part of *Referent* power, not a separate base.
Q 09
Mechanistic-Organic
Medium
The distinction between *mechanistic* and *organic* structures was developed by:
View solution
Correct Option: A
Tom Burns and G.M. Stalker, The Management of Innovation (1961). Mechanistic for stable, organic for dynamic environments.
Q 10
Woodward
Medium
Joan Woodward's South Essex studies (1958) found that the most important determinant of effective structure is:
View solution
Correct Option: B
Woodward classified technology into Unit, Mass and Process production and showed successful firms structured themselves accordingly. The Aston Group (1968) later argued size matters more.
Q 11
Lawrence-Lorsch
Hard
The dual concepts of *differentiation* and *integration* in organisation design were proposed by:
View solution
Correct Option: B
Paul Lawrence and Jay Lorsch, Organization and Environment (1967). Greater environmental uncertainty across sub-units requires both more differentiation (specialisation) and more integration (coordination).
Q 12
Chandler
Easy
"Structure follows strategy" is the central thesis of:
View solution
Correct Option: A
Alfred D. Chandler Jr., Strategy and Structure (1962). Hall and Saias later proposed the reverse — strategy follows structure.
Q 13
Mintzberg parts
Medium
In Mintzberg's five parts of an organisation, the analysts who standardise work processes belong to the:
View solution
Correct Option: C
The Technostructure contains HR analysts, IE engineers, IT architects and others who standardise work. Support staff provides indirect services (legal, mailroom).
Q 14
Mintzberg configs
Hard
Match each Mintzberg configuration with its coordinating mechanism:
| (i) | Simple Structure | (a) | Standardisation of skills |
| (ii) | Machine Bureaucracy | (b) | Direct supervision |
| (iii) | Professional Bureaucracy | (c) | Mutual adjustment |
| (iv) | Adhocracy | (d) | Standardisation of work processes |
View solution
Correct Option: A
Simple — direct supervision; Machine bureaucracy — work processes; Professional bureaucracy — skills; Adhocracy — mutual adjustment.
Q 15
Matrix
Medium
The matrix structure deliberately violates which Fayolian principle?
View solution
Correct Option: B
A matrix has a *two-boss* system — functional manager + project manager — violating Unity of Command. Used in aerospace, consulting, projects.
Q 16
Centralisation
Easy
Which is least likely in a highly centralised organisation?
View solution
Correct Option: A
Centralisation pushes decisions to the top — quick *local* response suffers. Decentralisation is what produces it.
Q 17
Modern Structures
Medium
The "boundaryless organisation" concept is most associated with:
View solution
Correct Option: A
Jack Welch at GE popularised the *boundaryless* organisation. Hsieh → holacracy; Kolind → cellular/spaghetti.
Q 18
Aston
Hard
The Aston Group studies (1968) found which variable to be the strongest predictor of structural variables?
View solution
Correct Option: C
The Aston Group (Pugh, Hickson and colleagues, 1968) found size predicts structure more strongly than technology. Woodward had argued for technology.
Q 19
Authority Sources
Medium
Match the source of authority with its theorist:
| (i) | Formal / Top-down | (a) | Barnard |
| (ii) | Acceptance | (b) | Mintzberg |
| (iii) | Competence | (c) | Fayol / Weber |
| (iv) | Adhocracy | (d) | Expert |
View solution
Correct Option: A
Formal/Top-down — Fayol/Weber; Acceptance — Barnard; Competence — Expert; Adhocracy — Mintzberg.
Q 20
Zone of Indifference
Hard
Barnard's "zone of indifference" refers to:
View solution
Correct Option: A
Barnard's zone of indifference — the band of orders that lie within the subordinate's pre-accepted range of compliance, obeyed without question. Outside the zone, authority must be re-negotiated.
6.7.1 Advanced Format Questions
AR 1Assertion-ReasonHard
A: Matrix structures violate unity of command.
R: Employees report to both functional and project bosses.
View solution
Correct Option: A
AR 2Assertion-ReasonMedium
A: Mechanistic structures suit stable environments.
R: Organic structures suit dynamic environments (Burns & Stalker 1961).
View solution
Correct Option: B
Both true but R describes the complementary case, not the reason for A.
S 1Statement-basedMedium
Structure types: (i) Functional. (ii) Divisional. (iii) Matrix. (iv) Network/Virtual.
View solution
Correct Option: A
S 2Statement-basedHard
Mintzberg's 5 configurations include: (i) Simple structure. (ii) Machine bureaucracy. (iii) Adhocracy. (iv) Divisional form.
View solution
Correct Option: A
5 = Simple, Machine, Professional, Divisional, Adhocracy.
6.8 Quick Recall
ImportantQuick recall
- Six Robbins blocks: Work specialisation · Departmentation · Chain of command · Span of control · Centralisation/Decentralisation · Formalisation.
- 6 bases of departmentation: Functional · Product · Geographic · Customer · Process · Matrix.
- Span: Narrow → tall; Wide → flat. Graicunas (1933) R = n(2ⁿ/2 + n−1); n=5 → 100.
- Authority (delegable, flows down) vs Responsibility / Accountability (non-delegable, flow up).
- 3 sources of authority: Formal (Fayol/Weber top-down) · Acceptance (Barnard 1938 — zone of indifference) · Competence (expertise).
- 3 authority types: Line · Staff · Functional.
- French & Raven (1959) — 5 bases of power: Legitimate · Reward · Coercive · Expert · Referent (Raven added Informational in 1965). Position = first 3; Personal = last 2.
- Mechanistic vs Organic (Burns & Stalker, 1961) — mechanistic for stable, organic for dynamic environments.
- Mintzberg’s 5 parts: Strategic Apex · Middle Line · Operating Core · Technostructure · Support Staff (later +Ideology).
- Mintzberg’s 5 configurations: Simple (direct supervision) · Machine Bureaucracy (work processes) · Professional Bureaucracy (skills) · Divisionalised (outputs) · Adhocracy (mutual adjustment).
- Contingency studies: Woodward 1958 (Technology — unit/mass/process) · Burns-Stalker 1961 (Environment) · Lawrence-Lorsch 1967 (Differentiation-Integration) · Aston 1968 (Size).
- Chandler (1962) — “Structure follows strategy”; later Hall-Saias reversed it.
- Matrix violates unity of command; boundaryless popularised by Jack Welch at GE.