Organizational Structure

Organizational Structure: Who Reports to Whom and Who Does What

  • organizational culture: a formal system of task and reporting relationships that coordinates and motivates an organization’s member so that they can work together to achieve the organization’s set goals
    • concerned with who reports to whom and who specializes in what work
  • top management’s challenge is to align the organization’s vision and strategies with its organizational culture and structure
  • organizational design: process of designing optimal structures of accountability and responsibility that an organization uses to execute its strategies

The Organization Chart

  • tells us…

  

  1. the vertical hierarchy of authority

      1. this is the more traditional organizational structure

  1. horizontal specialization of the organization

Common Elements of Organizations

  • 4 elements proposed by Edgar Schein:

  

  1. common purpose: gives everyone an understanding of the organization’s reason for being

      1. ex: a group of people traveling together to attend a common function

  1. coordinated effort: the coordination of individual effort into a group-wide effort

      1. purchase and sales departments have to coordinate their efforts so that supply of goods takes place according to purchase orders

  1. division of labor: having discrete parts of a task done by different people

      1. ex: assembly lines present in most manufacturing businesses

  1. hierarchy of authority: making sure the right people do the right things at the right time (unity of command)

      1. ex: starts with CEO, followed by all company executives, directors, managers, supervisors, and employees

  • 3 more common elements that are present in nearly all organizations:

  

  1. span of control: the number of people reporting directly to the given manager

      1. narrow or wide 2. ex of a narrow span of control: the military or the government 3. ex of a wide span of control: a floor manager in a factory supervises all of the employees working the production floor during his shift

  1. authority: accountability, responsibility, and delegation

      1. line vs staff positions 2. what is the difference between authority and responsibility?

  1. centralized vs decentralized authority: who makes decisions

      1. upper management or middle