Organizational Structure & Culture

Organizational Structure

What is Organizational Structure?
Defines how job tasks are formally
– Divided – Grouped – Coordinated

Six key elements
– – – – – – Work specialization Departmentalization Chain of command Span of control Centralization & decentralization Formalization

Controls, coordinates & motivates employees

Work Specialization
Degree to which tasks in organization are subdivided into separate jobs Efficiency gains
– Payment related to skill-level required skill– Increase in performance in specific task – Encouraging creation of special inventions

Efficiency losses
– – – – – Boredom Fatigues Stress Poor quality High absenteeism & turnover
Productivity

specialization

Departmentalization
The basis by which jobs are grouped together Possible ways
– By functions performed
E.g., engineering, accounting, personnel….

– By type of product
E.g., fuel, waxes, chemicals

– On basis of geography
E.g., western, southern, midwestern, eastern…

– On basis of process
E.g., Casting, press, tubing, finishing, inspect, pack, ship….

– By type of customer
E.g., Service retail, wholesale, government customers

Large companies might combine the forms!

The Chain of Command & Span of Control
Chain of command
– Line of authority from top of the organization to lowest part – Specifies who reports to whom – Each managerial position is given its place & degree of authority – Unity of command principle preserves unbroken line of command

Span of Control
– – – – Number of subordinates a manager directs Wider spans more efficient in terms of costs When span too large, performance suffers Small spans make communication complex & encourage

Centralization & Decentralization
Centralization
– degree to which decision making is concentrated at a single point – Only with respect to formal