Organizational Structure

Organizational Structure
Defines how job tasks are formally divided, grouped, and
coordinated
Elements of Organizational Structure
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and Decentralization
Formalization
 Work specialization/ Division of labor - The degree to which
activities in the organization are subdivided into separate jobs
Improved skills through repetition
Easier and less costly to find and train workers
Increases efficiency and productivity

Can result in boredom, fatigue, stress, increased absenteeism

etc
 Departmentalization - The basis by which jobs in an
organization are grouped together

Basis for departmentalization

Functions
Product or service
Geography
Process
Customer type
 Chain of Command - The unbroken line of authority that
extends from the top of the organization to the lowest
echelon and clarifies who reports to whom
Authority - The rights inherent in a managerial position to
give orders and to expect the orders to be obeyed
Unity of command - The idea that a subordinate should
have only one superior to whom he or she is directly
 Span of control - The number of subordinates a manager
can efficiently and effectively direct
Wide span are more efficient in terms of cost
Narrow span can maintain close control
But narrow span adds more levels
Slows down decision making
Overly tight supervision and discourage employees autonomy
 Centralization - The degree to which decision making is
concentrated at a single point in an organization
Decentralization - the degree to which decision making is
dispersed
 Decentralized organization can act more quickly to solve
problems
More people provide input into decisions
More flexible and responsive
 Formalization - The degree to which jobs within an
organization are standardized
 Work specialization contributes to higher employee
productivity but at the price of reduced job satisfaction
No evidence to support a relationship between span of
control and employee satisfaction and performance
Manager's job satisfaction increases as number of employees
supervised increases
 Less centralized organizations have a greater amount of
autonomy
 Dont select employers randomly. They are attracted to, are
selected by, and stay with organizations that suit their personal
characteristic