The key elements in organization structure and design are:
Elements of Organizational Structure and Design
elements in organization structure and design are:
2. Chain of command
3. Span of control
4. Centralization and decentralization
We will now examine each one of them and see how they affect the design
What type of arrangement is suitable for the
effective functioning of the organization?
Should the chain of command be long or short?
Should it allow lateral relationships?
How many employees should a
Should the decision authority be
concentrated at the top or diffused?
Should there be informal work
Once activities are divided based on work
specialization common tasks are to be grouped together. This is called
departmentalization. There are five bases for departmentation.
Figure 18.1 to 18.5 illustrate the arrangements along with advantages
Efficiencies from putting
together similar specialties and people with common skills, knowledge, and
Coordination with functional area
Poor communication across functional areas
Limited view of organizational goals
More effective and efficient
handling of specific regional issues that arise
+ Serve needs of unique geographic markets better - Duplication
of functions - Can feel
isolated from other organizational areas
Company’s Annual Report
Allows specialization in particular products and
Managers can become experts in their industry
Closer to customers
Duplication of functions
Limited view of organizational goals
More efficient flow of work activities
Can only be used with certain types of products
+ Specialists can meet Customers’ needs and problems
view of organizational goals
Chain of Command
Chain of command is the continuous line of authority that extends from upper organizational levels to
the lowest levels and clarifies who reports to whom. It helps employees answer
questions such as “who do I go to if I have a problem?” or “To whom am I
You can’t discuss the chain of
command without discussing the other concepts: authority, responsibility and
unity of command. Author-ity refers to the rights inherent in a managerial
position to tell people what to do and to expect them to do it. This obligation
or expectation to perform is known as responsibility. Finally, the unity of
command principle (one of Fayol’s 14 principles of management) helps preserve
the concept of a continuous line of authority. It states that a person should
report to only one manager.
Span of Control Span of control (or supervision
or management) refers to the number of employees a supervisor can effectively
manage. Organizational levels exist since there is a limit to the number of
people one can supervise effectively. This limit varies upon situations. Figure
18-6 shows span types and Table 18-1 discusses their advantages and
disadvantages.. A wide span is associated with few levels in the
organization and a narrow span, many levels. The number of subordinates a
manager can effectively supervisor ranges from three to eight. The number of
people who directly report to a manager represent the manager ‘span of control’.
Ex: Sears, Roebuck & Co, etc, reported good
results with spans of control of over six. There were 36 managers reporting to
one boss and five reporting to one and both worked. Wider spans are preferred
today for less administrative expense and more self-management.
Centralization and decentralization In some organizations, top
managers make all the decisions and lower-level mangers and employees simply
carry out their directives. At the other extreme are organizations in with
decision making is pushed down to the managers who are close to the scene of
action. The former organizations are highly centralized, and the latter are
decentralized. Centralization describes the degree to which decision-making is
concentrated at a single point in the organization. In contrast, the more that
lower-level employees provide input or actually make decisions, the
decentralization is more. Table 18-2 lists some of the features and factors
that have been identified as influencing the amount of centralization or
decentralization an organization.
Formalization refers to the degree to which jobs within the
organization are standardized and
the extent to which employee behavior is guided by rules and procedures. If a
job is highly formalized, then the person doing that job has a minimum amount
of discretion over what is to be done, when it’s to be done, and how he or she
could do it.
Tags : Strategic Management - Strategy Implementation
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