Organizational structure can play an important role in an organization’s success. The process of organizing—the second management function—is how an organization’s structure is created. No other topic in management has undergone as much change in the past few years as that of organizing and organizational structure. Traditional approaches to organizing work arebeing questioned and reevaluated as manager’s search out designs that will best support effectiveness and efficiency while maintaining the flexibility that’s necessary for success in today’s dynamic environment.
An organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated. Organizational design is the process of developing or changing anorganization’s structure. It involves decisions about six key elements: work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization. We need to take a closer look at each of these structural elements.
Work specialization is the degree to which tasks in an organization are divided into separate jobs. The essence of work specialization is that anentire job is not done by one individual but instead is broken down into steps, and a different person completes each step. Most managers today see work specialization as an important organizing mechanism but not as a source of ever-increasing productivity.
Once work tasks have been defined, they must be grouped together in some way through a process called departmentalization—the basis on whichjobs are grouped in order to accomplish organizational goals.
There are five major ways to departmentalize:
1. Functional departmentalization is grouping jobs by functions performed.
2. Product departmentalization is grouping jobs by product line.
3. Geographical departmentalization is grouping jobs on the basis of territory or geography.
4. Process departmentalization is grouping jobs on thebasis of product or customer flow.
5. Customer departmentalization is grouping jobs on the basis of common customers.
Large organization often combine most are all of these forms of departmentalization.
Two current trends in departmentalization include:
1. Customer departmentalization, which continues to be a highly popular approach because it allows better monitoring of customers’ needs andresponding to those changes in needs.
2. Cross-functional teams, groups of individuals who are experts in various specialties (or functions) and who work together.
For many years, the chain of command concept was a cornerstone of organizational design. Today it is far less important. Contemporary managers still need to consider its implications when considering organizational structure.
The chain ofcommand is the continuous line of authority that extends from the upper organizational levels to the lowest levels and clarifies who reports to whom.
Three related concepts include authority, responsibility, and unity of command.
1. Authority is the right inherent in a managerial position to tell people what to do and to expect them to do it.
2. Responsibility is the obligation or expectation toperform.
3. Unity of command is the classical management principle that a subordinate should have one and only one superior to whom he or she is directly responsible; that is, a person should report to only one manager.
How many employees can a manager efficiently and effectively manage? The concept of span of control refers to the number of subordinates a manager can supervise effectively andefficiently. The span of control concept is important because it determines how many levels and managers an organization will have.
What determines the "ideal" span of control? Contingency factors such as the skills and abilities of the manager and the employees must be considered. Next, the characteristics of the work being done, similarity of employee tasks, the complexity of those tasks, and the...