Means bringing people and resources together to achieve a common objective. An organizational structure identifies the different functions in an organization and sets out the power structure. This can be represented in an organizational chart.
The simplest organizational chart is the functional structure, which divides a business according to management functions at senior, middle management and junior levels.
There are three layers of management in this chart: top, middle, and junior management.
- It indicates where authority and responsibility have been delegated.
- It illustrates the chain of command, i.e., who is answerable to whom.
- It shows the managing director’s span of control (the number of people reporting directly to a manager).
- It simplifies the structure.
- It increases the speed and accuracy of internal communication, which means the organisation can respond more rapidly to change.
- De-layering gives more power to subordinates. This increase in responsibility can release creativity and initiative.
- It reduces the total wage bill paid to managers.
- Senior managers have to deal with a wider span of control and an increased workload. This may cause stress.
- Managers’ jobs may be lost through redundancies and this may lead to industrial relations problems.
- Control becomes more difficult as the span of control increase.