Organizational design aims to structure a business so productivity is enhanced, communication is smooth, innovation is encouraged and the business can achieve its overall goals and mission. Organizational design encompasses many facets of a business but typically focuses in on six core elements common to all enterprises.
Specialization
Specialization refers to the extent that organizational design divides the work done into discrete jobs. A custom woodworker, for example, performs all of the cutting, assembly and finish work on a cabinet. In a cabinet factory, on the other hand, one person might cut the cabinets and another person glues them together, while a third person applies stain to the wood. The more an organization divides the work, the more specialized each job is.
Departmentalization
Departmentalization occurs when an organization reaches sufficient size that related jobs get grouped together into a unit that operates somewhat independently of other units. Organizations can departmentalize on the basis of product, geography or process, for example. The most common approach creates departments by function, such as sales, human resources and information technology.
Chain of Command
Chain of command defines the structure of authority within an organization. It formally or informally determines who answers to whom. In smaller businesses with a limited staff, the entire staff may answer only to a manager or the owner. In larger organizations, the chain of command may comprise numerous levels that involve supervisors, multiple managers and executives.
Centralization/Decentralization
Centralization occurs when the authority to make decisions rests with only a small group of individuals. When a business owner makes most decisions for all employees, the business employs centralized decision making. Decentralization aims to delegate decision making to the lowest practical level of the organization. If staff members receive only general goals to meet and maintain broad discretion in deciding how to achieve those goals, the business employs decentralized decision making.
Span of Control
Span of control describes how many employees report to an individual manager. When a large number of employees report to a single manager, the company employs a broad span of control. Wide span of control limits the levels of management necessary and increases delegation, but it can result in loss of control. Narrow span of control occurs when a small number of employees report to one manager. Narrow span of control increases the levels of management necessary, but it increases control over processes and workflow.
Formalization
Formalization determines the extent of standardization among jobs, as well as how much or how little rules or established procedures guide employee behavior. Fast food franchises tend to employ high levels of formalization, with strict guidelines for processes and behavior. Startup companies tend to employ low levels of formalization, with significant input from all team members across most areas of the business.
References
Mind Tools: Organizational Design -– Aligning Organizational Structure With Business Goals
MyManagement: Organizational Design
Reference for Business: Organizational Structure
MBA Notes World: 6 Elements of the Organisational Structure
Management Study Guide: Centralization and Decentralization
Practical Management: Organization’s Size and Span of Control
Resources
HRM Guide: Organizational Structure
MangerWise: Matrix Organizations -- What Are They?
About the Author
Eric Dontigney received a Bachelor of Arts in philosophy with a psychology minor. He has been writing for more than 10 years and presently works full time as a writer. Most of his writing work is done for private clients.
Specialization
Specialization refers to the extent that organizational design divides the work done into discrete jobs. A custom woodworker, for example, performs all of the cutting, assembly and finish work on a cabinet. In a cabinet factory, on the other hand, one person might cut the cabinets and another person glues them together, while a third person applies stain to the wood. The more an organization divides the work, the more specialized each job is.
Departmentalization
Departmentalization occurs when an organization reaches sufficient size that related jobs get grouped together into a unit that operates somewhat independently of other units. Organizations can departmentalize on the basis of product, geography or process, for example. The most common approach creates departments by function, such as sales, human resources and information technology.
Chain of Command
Chain of command defines the structure of authority within an organization. It formally or informally determines who answers to whom. In smaller businesses with a limited staff, the entire staff may answer only to a manager or the owner. In larger organizations, the chain of command may comprise numerous levels that involve supervisors, multiple managers and executives.
Centralization/Decentralization
Centralization occurs when the authority to make decisions rests with only a small group of individuals. When a business owner makes most decisions for all employees, the business employs centralized decision making. Decentralization aims to delegate decision making to the lowest practical level of the organization. If staff members receive only general goals to meet and maintain broad discretion in deciding how to achieve those goals, the business employs decentralized decision making.
Span of Control
Span of control describes how many employees report to an individual manager. When a large number of employees report to a single manager, the company employs a broad span of control. Wide span of control limits the levels of management necessary and increases delegation, but it can result in loss of control. Narrow span of control occurs when a small number of employees report to one manager. Narrow span of control increases the levels of management necessary, but it increases control over processes and workflow.
Formalization
Formalization determines the extent of standardization among jobs, as well as how much or how little rules or established procedures guide employee behavior. Fast food franchises tend to employ high levels of formalization, with strict guidelines for processes and behavior. Startup companies tend to employ low levels of formalization, with significant input from all team members across most areas of the business.
References
Mind Tools: Organizational Design -– Aligning Organizational Structure With Business Goals
MyManagement: Organizational Design
Reference for Business: Organizational Structure
MBA Notes World: 6 Elements of the Organisational Structure
Management Study Guide: Centralization and Decentralization
Practical Management: Organization’s Size and Span of Control
Resources
HRM Guide: Organizational Structure
MangerWise: Matrix Organizations -- What Are They?
About the Author
Eric Dontigney received a Bachelor of Arts in philosophy with a psychology minor. He has been writing for more than 10 years and presently works full time as a writer. Most of his writing work is done for private clients.
No comments:
Post a Comment