Six Elements of Organizational Structure
Content
Chapter # 15: Foundation of Organization Structure
1. Identify the six elements of an organization’s structure
Exam Q: List six elements of organizational structure and explain three of
them?(Two Times)
• Organizational structure is defined as how job tasks are formally divided,
grouped, and coordinated.
• The key elements of organizational structure include:
I.
II.
III.
IV.
V.
VI.
I.
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and Decentralization
Formalization
Work specialization
• Work specialization refers to Division of Work.
• Work Specialization is the degree to which organizational activities are
subdivided into separate jobs (Individual specializes in doing part of an
activity rather than the entire job).
Advantages and Disadvantages of Work Specialization
• Work Specialization makes efficient use of employee skills.
• Work Specialization increases employee skills through repetition and
specialized trainings.
• Work Specialization increases efficiency and productivity of the employee.
• Work Specialization allows use of specialized equipment.
• Overspecialization can result in boredom, fatigue, stress, poor quality,
increased absenteeism, and higher turnover.
Chapter # 1 Exam Notes
Page 1
II.
Departmentalization
• Departmentalization is defined as how the jobs are grouped together and
common tasks can be coordinated.
• When jobs are grouped, departments are formed.
• The jobs can be grouped and organized in the following categories:
i.
ii.
iii.
iv.
v.
Function
Product
Geography
Process
Customer
III.
Chain of command
• Chain of command is an unbroken line of authority that extends from Top
to Lowest level and clarifies who reports to whom.
• To understand the chain of command, it is necessary to understand three
other following important concepts:
a) Authority
b) Responsibility
c) Unity of Command
a) Authority
• Authority is the rights inherent (inbuilt) in a managerial position to tell
people what to do and to expect them to do it.
b) Responsibility
• Responsibility is the obligation or expectation to perform.
c) Unity of Command
• Unity of command is the concept that a person should have one boss and
should report only to that person.
Chapter # 1 Exam Notes
Page 2
IV.
Span of control
• Span of control is defined as the number of subordinates that a manager
can effectively and efficiently directs towards organizational goals.
• Wider spans are more efficient in terms of cost because fewer managers
needed but they can reduce the efficiency and performance of the
employee.
• Narrow spans can allow manager to maintain the control over the
employees but they are expensive, make vertical communication in the
organization and are more complex.
V.
Centralization and Decentralization
Exam Q: Contrast Centralization and decentralization of organizational
operations, which one is better in your view. Explain.
• Centralization is the degree to which decision making is concentrated at a
single point in the organization.
• Decentralization is the degree to which decision making is spread
throughout the organization.
More Centralization
More Decentralization
• The dissemination of authority,
• The retention of the powers and
responsibility and accountability
authority with respect to
to the various management
planning and decisions with the
levels.
top management.
• Communication flow is open and
• Communication flow is formal or
free.
vertical.
• Power of decision making lies
• Power of decision making lies
with multiple persons.
with the top management.
• Decision
making
is
• Decision making is slow.
comparatively faster
• Decisions are significant.
• Decisions are relatively minor.
• Sharing
of
burden
and
• Proper
coordination
and
responsibility.
leadership.
• Considerable control over the
• Inadequate control over the
organization.
organization.
• Best suited for large sized
• Best suited for small sized
organization.
organization.
Chapter # 1 Exam Notes
Page 3
• The difference between centralization and decentralization is one of the
hot topics these days.
• Some people think that centralization is better while others are in favor of
decentralization.
• In early times, people used to run their organization in a centralized
manner, but now the scenario has been changed completely due to rise in
extreme competition where quick decision making is required and
therefore many organizations opted for decentralization.
• However, centralization still exists in some of the organizations.
• Coming to the point, no organization is completely centralized or
decentralized; they are centralized or decentralized only up to the extent
of the delegation of authority.
VI.
Formalization.
• Formalization is the degree to which jobs within the organization are
standardized.
• When there is high formalization, workers have very little control over their
work and they have to follow rules and procedures.
• When there is low formalization, workers have more control over their
work.
Chapter # 1 Exam Notes
Page 4
1. Identify the six elements of an organization’s structure
Exam Q: List six elements of organizational structure and explain three of
them?(Two Times)
• Organizational structure is defined as how job tasks are formally divided,
grouped, and coordinated.
• The key elements of organizational structure include:
I.
II.
III.
IV.
V.
VI.
I.
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and Decentralization
Formalization
Work specialization
• Work specialization refers to Division of Work.
• Work Specialization is the degree to which organizational activities are
subdivided into separate jobs (Individual specializes in doing part of an
activity rather than the entire job).
Advantages and Disadvantages of Work Specialization
• Work Specialization makes efficient use of employee skills.
• Work Specialization increases employee skills through repetition and
specialized trainings.
• Work Specialization increases efficiency and productivity of the employee.
• Work Specialization allows use of specialized equipment.
• Overspecialization can result in boredom, fatigue, stress, poor quality,
increased absenteeism, and higher turnover.
Chapter # 1 Exam Notes
Page 1
II.
Departmentalization
• Departmentalization is defined as how the jobs are grouped together and
common tasks can be coordinated.
• When jobs are grouped, departments are formed.
• The jobs can be grouped and organized in the following categories:
i.
ii.
iii.
iv.
v.
Function
Product
Geography
Process
Customer
III.
Chain of command
• Chain of command is an unbroken line of authority that extends from Top
to Lowest level and clarifies who reports to whom.
• To understand the chain of command, it is necessary to understand three
other following important concepts:
a) Authority
b) Responsibility
c) Unity of Command
a) Authority
• Authority is the rights inherent (inbuilt) in a managerial position to tell
people what to do and to expect them to do it.
b) Responsibility
• Responsibility is the obligation or expectation to perform.
c) Unity of Command
• Unity of command is the concept that a person should have one boss and
should report only to that person.
Chapter # 1 Exam Notes
Page 2
IV.
Span of control
• Span of control is defined as the number of subordinates that a manager
can effectively and efficiently directs towards organizational goals.
• Wider spans are more efficient in terms of cost because fewer managers
needed but they can reduce the efficiency and performance of the
employee.
• Narrow spans can allow manager to maintain the control over the
employees but they are expensive, make vertical communication in the
organization and are more complex.
V.
Centralization and Decentralization
Exam Q: Contrast Centralization and decentralization of organizational
operations, which one is better in your view. Explain.
• Centralization is the degree to which decision making is concentrated at a
single point in the organization.
• Decentralization is the degree to which decision making is spread
throughout the organization.
More Centralization
More Decentralization
• The dissemination of authority,
• The retention of the powers and
responsibility and accountability
authority with respect to
to the various management
planning and decisions with the
levels.
top management.
• Communication flow is open and
• Communication flow is formal or
free.
vertical.
• Power of decision making lies
• Power of decision making lies
with multiple persons.
with the top management.
• Decision
making
is
• Decision making is slow.
comparatively faster
• Decisions are significant.
• Decisions are relatively minor.
• Sharing
of
burden
and
• Proper
coordination
and
responsibility.
leadership.
• Considerable control over the
• Inadequate control over the
organization.
organization.
• Best suited for large sized
• Best suited for small sized
organization.
organization.
Chapter # 1 Exam Notes
Page 3
• The difference between centralization and decentralization is one of the
hot topics these days.
• Some people think that centralization is better while others are in favor of
decentralization.
• In early times, people used to run their organization in a centralized
manner, but now the scenario has been changed completely due to rise in
extreme competition where quick decision making is required and
therefore many organizations opted for decentralization.
• However, centralization still exists in some of the organizations.
• Coming to the point, no organization is completely centralized or
decentralized; they are centralized or decentralized only up to the extent
of the delegation of authority.
VI.
Formalization.
• Formalization is the degree to which jobs within the organization are
standardized.
• When there is high formalization, workers have very little control over their
work and they have to follow rules and procedures.
• When there is low formalization, workers have more control over their
work.
Chapter # 1 Exam Notes
Page 4
