Elements of Organizational Structure

Organizations are groups of people who work

interdependently toward some purpose.

Org.l structure refers to the division of labour, the patterns of coordination, communication, workflow, and formal power that direct org.l activities.

An org.l structure reflects its culture and power relationships.

Thus an org. is defined as, “the planned coordination of the activities of s number of people for the achievement of some common, explicit purpose or goal, through division of labour and function, and through a hierarchy of authority and responsibility.”

Elements of Organizational Structure

• Every org. is configured in terms of four basic elements of org.l structure.

1. Span of Control2. Centralization3. Formalization4. Departmentalization

Span of Control= the number of people directly reporting to the next level in the org.l hierarchy.

i.e., the number of subordinates a manager can efficiently and effectively direct. This element of organizational structure also outlines the number of

mangers an organization needs, which is typically determined based on the number of employees and departments a company has.The size of an org’s hierarchy depends on both the average span of control and the number of people employed by the org.

A tall structure has many hierarchical levels, each with a relatively narrow span of control,

whereas a flat structure has few levels, each with a wide span of control. Larger org.s that depend on hierarchy for coordination necessarily develop

taller structures.

Centralization

= the degree to which formal decision authority is held by a small group of people, typically those at the top of the org.l hierarchy.

Most org.s begin with centralized structures, as the founder makes most of the decisions and tries to direct the business toward his or her vision.

But as org. grow, they diversify and their environments become more complex.

Consequently, larger org.s tend to decentralize, i.e. they disperse decision authority and power through the org.

The optimal level of centralization or decentralization depends on several contingencies.

Formalization

It is the degree to which org.s standardize behaviour through rules, procedures, formal training, and related mechanisms.

Companies tend to become formalized as they get older and larger.

External influences such as govt safety legislation and strict a/cing rules, also encourage formalization.

Formalization may increase efficiency and compliance, but it can also create problems.

Becz. Rules and procedures reduce org.l flexibility, so emp.es follow prescribed behaviours even when the situation calls for a customized response.

Departmentalization

It specifies how emp.es abd their activities are grouped together.

It is a fundamental strategy for coordinating org.l activities becz it influences org.l behaviour…1. it establishes the chain of command2. focuses pple around common mental models or ways of thinking, such as serving clients, developing products, or suporting a particular skill set, etc.3. encourages coordination through informal communication among pple and subunits.

Organization structure

Once a group of pple has established an org to accomplish shared goals, org.l structure evolves to increase the effectiveness of the org.’s control of the activities necessary to achieve its goals.

Org. structure is the formal system of task and authority relationships that control how pple coordinate their actions and use resources to achieve org.’s goals.

The principal purpose of org. structure is one of control: to control the means used to motivate people to achieve these goals.

To any org, an appropriate structure facilitates effective responses to problems of coordination and motivation – problmes that can arise for any number of environmental, technological, or HR.

As org.s grow and differentiate, the structure likewise evolves.

Org. structure can be managed and changed through the process of org design.

Org. design is the process by which managers select and mange elements of structure so that an org can control the activities necessary to achieve its goals.

Org. structure is the means the org uses to achieve its goals. Org. design is about how and why various means are

chosen. T is a task that requires managers to strike a balance b/w external pressures from the org’s environment and internal pressures from it choices. Ex: technology.

Achieving the proper balance helps a firm ensure that the org will survive in the long run.

Role of organization Strucuture

1. Facilitating Management Action2. Encourages efficiency3. Communication4. Optimum use of org.l Resources5. Stimulating Creativity6. Job satisfaction

Determinants of org.l Structure

Each org structure must suit the situation and be optimally useful in meeting the org.l objectives.

Good org. design is the function of number of factors including the environment, technology and size of the company.

These three factors determine the philosohy and strategy of central mgmt that forms the foundation of the org.l structure.

1. Environment:

org.s are open systems that continuously interact with outside environment.

the macro-environment of business today has considerable impact on the internal oprations of the org, especially if the org is a large one.these external factors include the customers, cultural and economic conditions as well as international environment.

2. Technology

Has a major influence on org.l structure that would depend upon whether the technology is simple and routine requiring few repetitive tasks, in which case a mechanistic structure would be desirable.

However, when the technology is advanced and intensive and complex requiring high interdependence among members of the workforce, then the organic structure would be operationally more effective.

3. Size

The size of the org, as measured by the number of pple working in the org would determine as to which type of structure would be more effective for it.

As the org grows in size, it increases the number of functional depts, the number of managerial levels, extent of specialization, number of empl.es with diversified responsibilities resulting in increase in the degree of coordination required among members of the org and this further results in increase in related problems

4. Strategy of the Organization

Strategy is typically defined as “ the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

Two basic strategies:1. Stability strategy 2. Growth Strategy: it involves expansion. Hence elements

of complexity and uncertainty exist.