CLASS TEST

1. Explain what is meant by Organizational structure

2. Distinguish between the following;

i. Line and line and staff Organizational structure

ii. Functional and Matrix Organizational structure

 MARKING SCHEME

1. Organizational structure is the framework within which an

organization’s activities are carried out. (3mrks)

2. Line organizational structure is a type of organization where

authority and responsibility flow in a direct line from top managers

to bottom managers while line and staff is a type of organization

that functional specialists are added to the line. (2mrks)

Functional organizational structure is a horizontal or

lateral organization which is made up of people who are

specialist in their own field but Matrix organization is a

structure of an organization where teams are formed for

a specific project which affects a particular departments.

(2mrks)
3. Any 3 for 3mrks (1mrk each)

I. It establishes a framework in which individuals and groups interact and

work together to achieve organizational goals.

ii. It establishes the network of relationships so that authority

responsibility and communication can be controlled.

iii. It establishes responsibilities of members in an organization.

iv. It spells out the clear position of every member in an organization.

v. It spells out the formal communication channels in an organization.

vi. A complete picture of the organization is provided in a way that is

simple to understand.
CENTRALIZATION

WHAT IS CENTRALIZATION?
• Centralization is the process whereby power and
authority is concentrated or retained at the top level
management of an organization.

• This is a situation where power and authority for

decision making is in the hands of a single high-level
executive or members of top level management of an
organization.
• Centralization refers to a setup in which the decision –

making powers and authority is retained in few leaders

at the top leaders of the organizational structure.

Decisions are made at the top and communicated to

lower-level managers for implementation.

• Centralization refers to the concentration of management and

decision-making power at the top of the organizational

hierarchy for the purpose of coordinating financial, human

and other business resources.

 ADVANTAGES OF CENTRALIZATION

• An effective centralization offers the following advantages:

1. A clear chain of command: A centralized

organization benefits from a clear chain of
command because every person within the
organization knows who to report to.
• On the other hand, senior executives follow a clear plan of

delegating authority to employees who excel in a specific

functions. The executives also gain confidence in mid-level

managers and other employees they have delegated.

• It is beneficial when the organization needs to execute decision

quickly and in unified manner.

2. Quick implementation of decisions: In a centralized

organization, decisions are made by a small group of people

and then communicated to the lower-level managers.

The involvement of only few people makes the decision-

making process more efficient since they can discuss the

details of each decision in one meeting.

• If lower-level managers are involved in a decision making

process, the process will take longer because some managers

may object to decisions if their input is ignored and conflicts

may arise.
3. Improved quality of work: The standardized

procedures and better supervision in a centralized

organization results in improved quality of work. There

are supervisors in each department who ensure that the

outputs are uniform and of high quality.

• The use of advanced equipment reduces potential wastage

from manual work and also helps guarantee high quality

work.

• Standardization of work also reduces the replication(copying)

of task that may result in high labor cost.

4. Reduced Cost: A centralized organization adheres to

standards procedures and methods and methods that guide the

organization, which helps reduce office and administrative

cost.

The main decision are housed at the company’s need office

and therefore there’s no need for deploying more departments

• Also, the organization does not need to incur extra cost to
hire specialist for its branches since critical decisions are
made at the head office and then communicated to the
branches.

The clear chain of command reduces the duplication of

responsibilities that may result in additional cost to the
organization.
 DISADVANTAGES

1. Bureaucratic Leadership: Centralized management

resembles a dictatorial form of leadership where

employees are only expected to deliver results

according to what top managers assign them.

• Employees are unable to contribute to decision making process of the

organization and they are merely implementers of decisions made at a

higher level.

• When employees face difficulties in implementing the decisions, the

executives will not understand because they are only decision makers

not implementers.

• This is a decline in performance because employees lack motivation

2. Delays In work: Centralization results in delays in work as

records are sent to and from the head office.

Employees rely on the information communicated to them from top,

and there will be a loss in man-hours if there are delays in relaying

the records.

This means that employees will be less productive if they need to

wait long periods to get guidance on their next projects.

3. Lack of Employee Loyalty: Employees become loyal to an

organization when they are allowed personal initiatives in the

work they do. They can introduce their creativity and suggest

ways of performing certain task. However, in centralization,

there’s no initiative in work because employees perform task

conceptualized by top managers. This limits their creativity

and loyalty to the organization due to strictness of work.

4. Remote Control: The organization’s executives are

under tremendous pressure to formulate decisions for

the organization and they lack control over the

implementation process. The failure of executives to

decentralize the decision making process adds a lot of

work on their desks.

• The executives suffer from a lack of time to supervise

the implementation of the decisions.

• This leads to reluctance on the part of employees.

• Therefore, the executives may end up making too

many decisions that are either poorly implemented or

ignored by the employees.

 DECENTRALIZATION

WHAT IS DECENTRALIZATION?
Decentralization refers to a form of an

organizational structure where there is delegation

of authority and responsibility by top management

to middle and lower management of an

organization.
Decentralization is the practice of delegating

decision making authority to middle and lower

levels of management and even to individual

employees within an organization towards the

same goal.
• The overall authority is still maintained by

top level managers, who make policies that

influence the major decision of the company

but most decision making responsibility is

delegated to the lower level.

 ADVANTAGES OF DECENTRALIZATION

1. The primary advantage of a decentralized organization is

that managers are able to make quick decisions that can save

the company money. By empowering your managers, you

trust their instinct and abilities because you know they

understand the daily work process better than you do .

2. It Lightens the workload: Another merit is that it lightens

top managers workload and free them up to develop strategic

plans for the future. If top managers are constantly having to

interfere the daily activities, they will quickly become

overloaded with problems and conflicts which leaves them

with little time to deal with major strategies that will guide
• When you empower your managers, you

also motivates them to work harder because

they want to prove that your trust in them is

well placed.
Increased motivation can lead to better

communication between managers and staff

members and greater morale in the

workplace.
 DISADVANTAGES

1. Coordination is Difficult: When managers have different

agenda from yours which can create schism between the goals

you want to and the goals they want to advance. For example;

a mid-manager may be more interested in growing his

department than meeting performance standards.

2. Difficult to Control: One of the disadvantages of

decentralization is that top managers may loose control over

the day-to-day activities of the company. Giving authority to

mangers means that you trust their instincts, skills and talents.

However, that can backfire, if your managers aren’t up to task

which can cause conflict between managers and staff and

between you and the manager.

3. Lack of uniformity: There is lack of uniformity

in the policies followed since every head will

claim that his condition is different.

• 4. Difficulty in Spreading Innovative Ideas: There is

difficulty in spreading innovative ideas and lower

managers don’t always see the bigger picture which

can have an impact on the goal clarity as well as

consistency and similarity of actions with desired

goals
THE END

MERCI