An organization structure defines how job tasks are formally divided, grouped and coordinated. There are six elements that mangers need to address when they design their organization’s structure. These are :- a) Work specialization. b) Departmentalization. c) Chain of command. d) Span of control. e) Centralisation & Decentralization. f) Formalisation
Work Specialization: – refers to the degree to which tasks in the organization are subdivided into separate jobs. The essence of work specialization is that, rather than an entire job being done by one individual, it is broken down into a number of steps, with each step being completed by a separate individual.
Departmentalisation:– Once the jobs have been divided through work specialization, these jobs have to be grouped together so that common tasks can be coordinated. The basis by which jobs are grouped together is called departmentalization.
The activities can be grouped by functions performed. A Manufacturing manager might organize his plant by separating engineering, accounting, manufacturing, personnel and supply specialists into common departments. Functional departmentalization seeks to achieve economics of scale by placing people with common skills and orientations into common units.
Tasks can also be departmentalized by the type of product the organization produces. Each major product is placed under the authority of an executive who has complete global responsibility for that product. The major advantage of this type of grouping is increased accountability for product performance, since all the activities related to a product are under the direction of a single manager.
Another way to departmentalize is on the basis of geography or territory. The sales function, for instance, may have western, southern, eastern region. Each of these regions is in effect, a department organized around geography. If an organisation’s customers are scattered over a large geographic area and have similar needs based on their location, then this form of departmentalization.
A final category of departmentalization is to use the particular type of customer. An organization can organize itself around customer groups like corporates, retail, government etc.
- Chain of Command is an unbroken line of authority that extends from the top of the organization to the lowest level and clarifies who reports to whom. It answers questions for employees such as” To whom do I go if I have a problem?” and ‘ To whom am I responsible?”
The unity of command principle helps preserve the concept of an unbroken line of authority. It states that a person should have one and only one superior to whom he or she is directly responsible. If the unity of command is broken, an employee might have to cope with conflicting demands or priorities from several superiors.
Span of control refers to the number of subordinates a manager can efficiently and effectively direct. Span of control is important because, to a large degree, it determines the number of levels and managers and organization has all things being equal the wider or larger the span, the more efficient the organization. Narrow span has three major drawbacks. First, they are expensive because they add to the levels of management. Second, they make vertical communication in the organization more complex. The added levels of hierarchy slow down decision making and tend to isolate upper management. Third, narrow spans of control encourage overly tight supervision and discourage autonomy.
Centralisation and Decentralisation Centralisation refers to the degree to which decision making is concentrated at a single point in the organization. The concept includes only formal authority that is, the rights inherent to one’s position. Typically, it’s said that if top management makes the organisation’s key decision with little or no input from lower-level personnel, then the organization is centralized. In contrast, the actually given the discretion to make decision, the more decentralisation there is. An organization characterized by centralization is an inherently different structural entity from one that is an inherently different structural entity from one that is decentralized. In a decentralized organization, action can be taken more quickly to solve problem, more people provide input into decisions and employees are less likely to feel alienated from those who make the decisions that effect their work lives. Consistent with recent management efforts to make organization more flexible and responsive, there has been a marked trend toward decentralizing decision making. In large companies, lower-level managers are closer to “the action” and typically have more detailed knowledge about problems than do top management.
Formalisation refers to the degree to which job within the organization are standardized. If a job is highly formalized then the job incumbent has a minimum amount of discretion over what is to be done, when it is to be done and how it is to be done. Employees can be expected always to handle the same input in exactly same way, resulting in a consistent and uniform output. There are explicitly job description lots of organizational rules, and dearly defined procedures covering work processes in organizations in which thee is high formalization. Where formalization is low, job behaviors are relatively non-programmed and employees have a great deal of freedom to exercise discretion in their work. Because an individual’s discretion on the job is inversely related to the amount of behavior in that job that is preprogrammed by the organization, the greater the standardization and the less input the employee has into how his or her work is to be done. Standardization not his/her work is to be done. Standardization not only eliminates the possibility of employees engaging in alternative behaviors, but it even removes the need for employees to consider alternatives.