2.2. Organizational structure

Organizational structure

The framework that outlines how tasks are divided, coordinated, and supervised within an organization.

Levels of hierarchy

The number of levels of responsibility in a business, indicating seniority from the chief executive officer (CEO) to junior employees.

Line managers

Employees who have authority to make decisions and are responsible for the outcomes of those decisions.

Chain of command

The formal route by which a decision must travel through the organization.

Span of control

The number of subordinates directly under the authority of a manager.

Delegation

The process where a manager gives authority for a decision but retains responsibility for the outcome.

Centralization

A high degree of centralization means that major decision-making is concentrated among a small group of top managers.

Decentralization

A system where decision-making authority is distributed to lower levels of management.

Bureaucracy

An administrative system characterized by standardized procedures and rules.

De-layering

The process of reducing levels of hierarchy in an organization to increase efficiency and reduce costs.

Matrix structure

An organizational structure that groups employees into teams based on projects, drawing from various departments.

Flat organizational structure

An organizational model with few levels of hierarchy, wide spans of control, and decentralized decision-making.

Tall organizational structure

An organizational model with many levels of hierarchy, narrow spans of control, and centralized decision-making.

Delegation advantages

Improves motivation of junior employees, enhances decision-making quality, and reduces workload of senior managers.

Delegation disadvantages

Can incur training costs, may not fit authoritarian leadership styles, and is unsuitable during crises.

Functional structure

An organizational structure that divides the organization based on specialized functional areas such as marketing, finance, and production.

Divisional structure

An organizational model that groups departments based on products, projects, or geographical locations.

Team-based structure

A flexible organizational structure that encourages collaboration among employees from different functions working in teams.

Network structure

An organizational model that relies on a central organization coordinating a network of independent companies.

Virtual organization

A temporary network of independent entities that come together to work on a specific project.

Team leader

An individual responsible for guiding a team towards achieving its goals while managing the day-to-day operations.

Autocratic leadership

A leadership style where decision-making is centralized, and leaders make decisions unilaterally.

Participative leadership

A leadership style where leaders involve team members in the decision-making process.

Transformational leadership

A leadership approach that inspires and motivates followers to exceed expectations and embrace change.

Situational leadership

A leadership style that adapts to the needs of the team or individual based on the specific circumstances.

What is a matrix structure?

An organizational structure that groups employees into teams based on projects, drawing from various departments.

Define centralization in an organization.

A high degree of centralization means that major decision-making is concentrated among a small group of top managers.

What is decentralization?

A system where decision-making authority is distributed to lower levels of management.

What does span of control refer to?

The number of subordinates directly under the authority of a manager.

Explain delegation.

The process where a manager gives authority for a decision but retains responsibility for the outcome.

What is bureaucracy?

An administrative system characterized by standardized procedures and rules.

What does de-layering mean?

The process of reducing levels of hierarchy in an organization to increase efficiency and reduce costs.

What are the advantages of delegation?

Improves motivation of junior employees, enhances decision-making quality, and reduces workload of senior managers.

Identify disadvantages of delegation.

Can incur training costs, may not fit authoritarian leadership styles, and is unsuitable during crises.

What is a tall organizational structure?

An organizational model with many levels of hierarchy, narrow spans of control, and centralized decision-making.