CHAPTER 11

DESIGNING ORGANIZATIONAL STRUCTURE

Organizing is a crucial process in achieving organizational goals, and it involves
designing an organization's structure. Organizational structure refers to the formal
arrangement of jobs within an organization, which can be depicted in an organizational
chart. Managers engage in organizational design when creating or changing the
structure, and this process involves decisions about six critical elements.
The first element is work specialization, which involves dividing work into separate
tasks and assigning them to different employees. Departmentalization, the second
element, refers to grouping jobs into logical units, such as by function, product, or
geography. The third element, chain of command, outlines the authority and
communication flow within the organization, from top to bottom.
The fourth element, span of control, concerns the number of employees that a
manager can effectively supervise. Centralization and decentralization, the fifth
element, involve the degree to which decision-making authority is centralized at the
top or distributed throughout the organization. Finally, formalization, the sixth
element, is the degree to which rules, procedures, and processes govern employees'
behavior.
Effective organizational design balances these elements to achieve the organization's
goals, meet its stakeholders' needs, and adapt to changing conditions. By creating or
changing the structure, managers can align employees' efforts, facilitate
communication and collaboration, and increase efficiency and effectiveness.