Elements of Organizational Structure

Organizational structure is a formal system of working relationships that both separates and
integrates functions and duties in an organization. It shows how people, tasks, and resources are
arranged and coordinated to achieve the organizational goals. There are six basic elements of
organizational structure that managers can use to design and organize their organizations.
First, we have designing jobs. This element involves defining the tasks, responsibilities, and
expectations for each individual or group of employees. It also involves deciding how to divide
the work into specialized or general roles, and how to balance the autonomy and feedback of the
workers. A good example of this can be found in a manufacturing company. The Production
Supervisor will be assigned to oversee the assembly line, ensuring quality control, and meeting
production targets.
The second element is departmentalization. This involves grouping jobs into units or departments
based on some common criteria, such as function, product, geography, customer, or process.
Departmentalization helps to create clear boundaries and coordination among different units and
facilitates specialization and standardization of activities. For instance, the marketing manager,
social media strategist, and graphic designer, are placed in the Marketing Department based on
their functions.
Third, we have establishing reporting relationships. This element involves defining who reports to
whom and who has the authority to make decisions and direct others. It creates a hierarchy or a
chain of command that clarifies the roles and responsibilities of each level of management. A good
example would be the Chief Financial Officer who has the authority to make financial decisions
and direct the Finance department.
The fourth element is distributing authority. This involves deciding how much power and control
to delegate to lower-level employees or units, and how much to centralize or decentralize in the
organization. It affects the speed and quality of decision-making, as well as the motivation and
empowerment of the workers. For example, senior management can make strategic decisions for
the entire organization.
Moving on, we have coordinating activities as the fifth element. This element involves designing
the formal and informal mechanisms that integrate the work of different units or individuals in the
organization. It includes creating rules, policies, procedures, committees, teams, or communication
systems that facilitate information sharing and collaboration among different parts of the
organization. An example of this would be Quality Assurance team establishes guidelines for
product testing and inspection.
Finally, we have differentiating among positions. This element involves distinguishing the roles
and status of different employees or units in the organization based on their level of authority,
responsibility, or expertise. It helps to create a sense of identity and belonging for the workers, as
well as to recognize and reward their performance. An example of this would be promoting a
Senior Engineer to the position of Technical Lead due to their specialized knowledge and
experience.