Organizational Theory and Design


An organization is a collection of people working together under a defined structure for the purpose of achieving predetermined outcomes through the use of financial, human, and material resources. There are a number of approaches to the structure and management of organizations.

Classical or Scientific Theory

The oldest theory of management  has a focus on efficiency and production. Evolved into classical organizational theory with the principals of chain of command, unity of command, span of control,  specialization, and the use of a scalar chain or vertical levels of authority.The organizational design is bureaucracy.

Classical Theory

Characteristics of Bureaucratic Structures

Bureaucratic Structure

Complex Organizations

Flat Structures

Less complex organizations have flat structures where authority is decentralized and the span of control is wider.

Other Classical Designs

Simple structure consists of a strategic apex ( executive- level management ) and an operating core ( the individuals responsible for the organizational work ). An example is a private physician’s office.

Classical Designs

Human Relations Era

Neoclassical or Humanistic Theory

Neoclassical Theory

Systems Theory

Learning Organizations

Contingency Theory

Chaos Theory

Health Care Organizations


Hospitals are classified by length of stay and type of service. Most are acute care facilities in which the average length of stay is less than 30 days; chronic or long-term hospitals have longer lengths of stay. The services offered may be general or special care such as pediatric or rehabilitative.

Long Term Care Facilities

Ambulatory Care Centers

Physicians’ offices, birthing centers, surgical centers, and imaging centers are examples of ambulatory care.

Home Health Care Agencies

Home health care is the temporary delivery of health care in the home by nurses, therapists, or aids. Some agencies also provide durable medical equipment.

Temporary Service Agencies

These agencies provide nurses and other health care workers to hospitals and individual patients in a variety of settings.

Managed Health Care Organizations

Health Maintenance Organizations

Inter-organizational Relationships


Future Trends

Organizational Structure

Matrix Structure


Key Concepts related to Organizational Structure

Strategic and Operational Planning:Strategic planning extends 3 to 5 years into the future and involves an analysis of the internal and external environment so as to determine the direction of the organization. Operational planning is short range and concerned with daily activities.

Key Concepts

Organizational Climate and Culture

Components of Organizations: Review

Organizational Charts are the visual representation or blue print of an organizational structure showing how resources, departments, and personnel are grouped horizontally and vertically into lines of authority, communication, delegation, and decisions.


Chain of Command

The chain of command is the formal line of authority and communication. In bureaucratic structures or hierarchies authority and communication flow from the top downward.


Centrality indicates the location of a position in an organization where frequent communication occurs.It is determined by organizational distance as depicted by the chart.

Unity of Command

Unity of command represents the managerial dictum of “ one person, one boss “. It is represented by the vertical solid line between positions on the organizational chart.

Span of Control

Span of control or span of management is the number of people the manager directs.The optimal span of management is highly variable. In general, managers in bureaucratic structures have a narrow span of control while those in flat structures have a broader span.

Centralized versus Decentralized

Centralization refers to the area where decisions are made. In autocratic structures decisions are made at the top and flow downward. There is a small span of control resulting in many layers of management and a tall structure.Decentralized structures are flat and decisions are made at the level where they occur.

Unit Level Organization