Organizational Structure Fundamentals

Study Notes

An organization is a goal-directed social entity with deliberate processes and systems.
Organizational structure refers to the formal pattern of how people and jobs are grouped in an organization, outlining how certain activities are directed to achieve the organization's goals.

Work specialization: the degree to which tasks in the organization are subdivided into separate jobs, creating productivity and efficiency, but potentially leading to boredom, fatigue, stress, and poor quality.
Departmentalization: the grouping of jobs under the authority of a single manager according to a rational basis for planning, coordination, and control.

Centralized authority: decision-making is concentrated on high-level managers.
Decentralized authority: decision-making authority is granted to middle and lower management.

Refers to the number of subordinates reporting to a single supervisor.
Narrow spans of control allow for close control, while wider spans of control reduce costs, speed decision-making, increase flexibility, and empower employees.

Simple structure: characterized by low departmentalization, wide spans of control, centralized authority, and little formalization, typically used in small businesses.
Bureaucracy structure: highly routine operating tasks, formalized rules, centralized authority, and narrow spans of control, with the primary advantage of performing standardized activities efficiently.
Matrix structure: combines functional and product departmentalization, facilitating communication and flexibility, but with potential drawbacks of confusion, power struggles, and stress.

Organizational structures help businesses implement efficient decision-making processes.
They provide a clear organizational chart, helping businesses keep track of their human resources.

No single pattern of authority is appropriate for all organizations because environments differ.
Work specialization is not applicable to all jobs and requires caution in adaptation.
Decentralized authority allows for flexibility and coping with situations as they arise.
Span of control affects the relationship between managers and subordinates.
Departmentalization refers to the grouping of jobs under the authority of a single manager.