FOUNDATIONS OF ORGANIZATION

FOUNDATIONS OF
ORGANIZATION
Chapter 17 :
Foundations of
Organization
Structure
Definition of Structure
Key Elements in
Designing an
Organization Structure
Work
Specialization
Departmentalizatio
n
Chain of Command
Span of Control
Centralization/
Decentralization
Formalization
Types of
Organizational Designs
Simple Structure
Bureaucratic
Structure
Matrix Structure
Organizational Designs
and Employee Behavior
Chapter Summary
The framework of tasks,
reporting and authority
relationships within which
an organization functions is
referred to as the
organization structure.
There are six basic
elements which form the
basis of an organization
structure: They include
work specialization,
departmentalization, chain
of command, span of
control, centralization/
decentralization and
formalization. The degree to
which tasks are divided into
sub-tasks and each sub-
task is carried out by an
individual employee is
referred to as work
specialization. The grouping
of similar jobs to achieve
better coordination among
them is referred to as
departmentalization.
The chain of command is an
unbroken line of authority
that establishes clear
reporting relationships
among various levels in the
organization. The ratio of
managers to their immediate
subordinates in an
organization is referred to
as span of control. The
degree to which decision
making power is
concentrated at the top
most level of the
organization is referred to
as centralization. The
degree to which rules and
procedures govern the
duties and responsibilities
of employees in
organizations is referred to
as formalization.
The three most commonly
used organization
structures are simple
structure, bureaucratic
structure and matrix
structure. In simple
structures, there is a low
degree of
departmentalization and
formalization, a wide span
of control and centralized
decision making. In
bureaucratic structures,
there is a high degree of
work specialization,
formalization, centralization
and departmentalization.
Such structures have a
narrow span of control and
support the principle of
unity of command.
The matrix structure
combines two organizational
designs - functional design
and project design - to gain
the advantages of both.
The principle of unity of
command is violated in this
structure as employees are
required to report to two
heads - the functional head
and the project head.
Matrix structures offer
flexibility, facilitate better
communication and
coordination among the
different departments, and
enable the efficient
allocation of resources.