2.2 Organizational Structure

Organizational Structure

Refers to the formal interrelationships and hierarchical arrangements

of human resources within a business.

Delegation

The passing on of control and authority to others in a firm.

Span of Control

Refers to the number of people who are directly accountable to a manager.

Levels of Hierarchy

Hierarchy in a business refers to the organizational structure based on a ranking system.

Chain of Command

Refers to the formal line of authority through which orders are passed down in an organization.

Bureaucracy

The execution of tasks that are governed by official administrative and formal rules of a firm.

Centralization

Occurs when decision-making is made by a very small number of people (main or central office).

Decentralization

Occurs when decision making authority and responsibility are shared with others in the organization.

Delayering

The process of removing one or more levels in the hierarchy.

Matrix Structures

Flexible method of organizing employees from different departments to temporarily work together on a particular project.

Organizational Charts

Diagrammatic/visual representations of firms’ formal structures.

Tall Organizational Structures

Traditional organizational form of a business and it is common in well-established businesses

Flat Organizational Structure

A modification of the more traditional structure (become popular since 1960 as an attempt to reinvent themselves

Organizational Structure by Function

An organisational structure based on what employees do

Organizational Structure by Product

An organisational structure based on the business produces

Organizational Structure by Region

An organisational structure based on where the business geographically

operates.

Project-Based Organizations (HL Only)

These firms organize their human resources around particular projects or development plans.

Organization Restructuring (HL Only)

The reorganizing of human resources of a firm into a new organizational structure.