Organizational Structure

Submitted by: Mohd Hamza Ali Khan

Submitted to: Miss Hina Mubeen

 ORGANIZATIONAL STRUCTURE

DEFINITION:

Organizational Structure is the framework, typically hierarchical, within which an

organization sets its goals, lines of authorities and allocates rights and duties. A
manager sets these goals in order to meet the basic and fundamental needs of an
organization. The organizational structure determines how information flows
between levels of management.

THE SIX KEY ELEMENTS OF AN ORGANIZATIONAL

STRUCTURE

The six key elements of an organizational structure are as follows:

1. Work Specialization
2. Departmentalization
a) Functional Departmentalization
b) Product Departmentalization
c) Geographical Departmentalization
d) Process Departmentalization
e) Customer Departmentalization
3. Chain of Command
4. Span of Control
5. Centralization and Decentralization
6. Formalization
 1. Work Specialization

Describes the degree to which tasks in an organization are divided into separate
levels/jobs. The main idea of this organizational structure is that the whole task is
not the responsibility of one individual but it is divided into multiple steps which is
then performed by different individuals. Each employee has specialized in his/her
field rather than the entire task. For example, EA(Electronic Arts) is a game
producing giant, while making a game the task is distributed among its employees
which are masters in their own field, the graphic department produces graphics
which is then proceeded towards the animation department and so on and finally
the game is produced which is then tested and distributed in the market.

2. Departmentalization

This type of organizational structure defines how jobs are grouped together.
Departmentalization is further divided into five forms that are as follows:

a. Functional Departmentalization:

This departmentalization is one which groups jobs on the basis of functions

performed. For example, the different departments in an organization like the
accounts department, marketing department etc are examples of functional
departmentalization.
b. Product Departmentalization:

This departmentalization is one which groups jobs on the basis of product line.
For example in Engro Pvt. Ltd., there are different managers for different
products, like a separate manager for the food division, a separate manager
for the agricultural division etc.

c. Geographical Departmentalization:

This departmentalization is one which groups jobs on the basis of geographical

location or territory. For example, a multi-national organization is spread
throughout the country so it appoints different managers on the basis of
territory like there would be a manager of northern region, similarly there
would be managers of the southern, western, eastern, and central regions.

d. Process Departmentalization:

This departmentalization is one which groups jobs on the basis of product flow.
For example in an organization once a product is made then its proceeded
through different departments i.e packaging, finishing, shipping, assembling
etc.

e. Customer Departmentalization:

This departmentalization groups jobs on the basis of common customers. For

example an organization tries to sell their products to the wholesale
department,to the retail department etc.
 3. Chain of Command

A line of authority that extends from the top of the organization to the lowest
position in an organization and clarifies who reports to whom is known as chain of
command. It is like a pyramid starting from the lowest point and ending at the
highest and everyone communicates with each other. For example all the
employees(lower level) in an organization report to their manager(higher level)
who(manager) has the unity of command. Unity of command is that all the
employees are responsible to answer to one person only i.e the manager.

4. Span of Control

The number of employees a manager can efficiently and effectively manage and
direct is known as span of control. The larger or wider the span the more efficient
it is. For example, a master chef in a restaurant has a number of assistants whom
he controls through his efficiency to be more effective and produce good food.

5. Centralization and Decentralization

The height to which decision making is made at a single point is known as

Centralization. For example, a manager making all the decisions himself and
ordering managers under him to follow his orders. The height to which decision
making is made at all the points in an organization is known as Decentralization.
For example, a manager at a certain level making his decisions and all other
managers in the same organization but at different levels making their respective
decisions.

6. Formalization

The extent to which rules and regulations and procedures are followed in an
organization is known as formalization. Formalization varies from organization to
organization. In some organization it is very strict to be punctual and there are
clocks to note time of emplyees signing in and out to maintain discipline and in
some organizations the employees have the choice to set their on schedule.