An organizational structure defines how job task are formally divided, grouped and co-ordinated. There are six key elements that managers need to address when they design their organization structure. They are-
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of command
5. Centralization and decentralization
6. Formalization
1. Work specialization: Work specialization is the degree to which tasks in an organization are subdivided into separate jobs. The essence of work specialization is that rather than an entire job being done by one individual, it is broken down into a numbers of steps, with each step being completed by a separate individual.
2. Departmentalization: The basis by which jobs are grouped together is called departmentalization. On the basis of product, geography, functions, process, organization may departmentalize.
3. Chain of command: The chain of command is an unbroken line of authority that extends from the organization to the lowest echelon and clarifies who reports to whom. It answers questions for employees such as “To whom do I go if I have a problem?” and “To whom am I responsible?”
4. Span of control: How many employees can a manager efficiently and effectively direct? The answer of this questions is related with span of control. Span of control is the number of subordinates a manager an efficiently and effectively direct.
5. Centralization and decentralization: Centralization is the degree to which decision making is concentrated at a single point in the organization. The concept includes only formal authority. On the other hand, Decentralization is the degree to which decision making is scatter over the organization, more people provide input into decisions.
6. Formalization: Formalization refers to the degree to which jobs within the organization are standardized. The degree of formalization can vary widely between organization and within organizations.
Finally, above are the six key elements of organizational structure that managers need to address when they design their organization’s structure.
