Organizational structure determines work functions, control, and power. Companies can structure work activities by department, customer, product, or function. The allocation of activities determines job titles and responsibilities. Authority and responsibility are related to size, with vertical and horizontal dimensions. Tight structures have multiple levels of supervision, while large structures have fewer levels. The degree of control is related to the nature of the position and company culture. Hybrid strategies can be adopted to ensure efficient task performance.
The components of the organizational structure determine the organization of work functions, control and power. Companies may choose to divide jobs by department, customer or customer base, product or function. Some structures allow for higher levels of coordination between separate departments and give more control to lower-level employees. How a company’s hierarchy is formed is one of the most critical parts of the organizational structure.
Organizations can structure work activities according to function. For example, the Vice President of Marketing may preside over some regional sales managers managing several regional sales leaders. In this system, each position that has the primary function of selling the company’s products and services is grouped together. As one of the components of organizational structure, the allocation of activities can determine job titles and responsibilities.
Authority and responsibility are related to size, which is another part of the organizational structure. Companies can be organized according to a vertical or horizontal dimension. The vertical dimension refers to whether a company’s job positions and activities are centralized or decentralized, while the horizontal dimension describes whether the company could be considered structurally narrow or broad.
The authority and power of a centralized organization is traditionally concentrated. More decision making falls to positions further up the company’s chain of command. For example, in a centralized sales organization, a regional sales manager may establish policies that district sales managers do not have the authority to change. Decentralized organizations, on the other hand, tend to take on a flatter structure as more decision-making power is given to frontline employees.
Tight organizational structures are often seen in companies that have multiple levels of supervision. These types of companies are considered narrow as a top-line manager, executive, or supervisor typically has only a few subordinates. Conversely, a large structure contains fewer levels of management. A supervisor or manager in these companies may be responsible for several employees.
In addition to which positions are able to exercise control, the components of the organizational structure can determine the degree of control and supervision. Some companies perpetuate the traditional idea that employees must work under strict supervision, while others allow for a more creative and free environment. The degree of control is often directly related to the nature of the position, the culture of the company and how it must deliver its products and services.
Different organization types can be mixed together as components of the organizational structure. Businesses can adopt hybrid strategies to ensure that tasks are performed efficiently. For example, a group or department can be assigned to a certain stage of product development, such as planning. Another department can focus solely on running the provisioning process for all of the company’s products.
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