A consciously coordinated social unit, composed of two or more people that functions on a relatively continuous basis to achieve a common goal or set of goals. Groups of people who work interdependently toward some purpose. A managed system designed and operated to achieve a specific set of objectives.
Defines how job tasks are formally divided, grouped and coordinated. The division of labour as well as the patterns of coordination, communication, work flow, and formal power that direct organisational activities. Reflects its culture and power relationships (McShane & Glinow, 2000).
Fundamental requirements of organizational structures
The division of labour into distinct tasks. The coordination of that labour so employees are able to accomplish common goals.
Internal environment created by job specialisation and the division of labour. The work of the organisation is subdivided into smaller tasks. Different people or groups often perform specific parts of the entire task.
Differentiated units are put back together so that work is coordinated into an overall product. Coordination would link the various parts of the organization to achieve the organization’s overall mission.
Elements of Organizational Structure
Authority in organizations
The legitimate right to make decisions and to tell other people what to do.
Authority resides in positions rather than in people
Top to bottom
Span of control
Number of people reporting directly to the next level in the hierarchy
Narrow spans build a tall organization
Wide spans create a flat organization
Assignment of authority and responsibility to a subordinate at a lower level.
Responsibility means the assignment of a task that an employee is supposed to carry out
Accountability means the expectation that employees perform a job, take corrective action when necessary, and report upward on the status and quality of their performance.
The delegation of responsibility and authority
In a centralised organisation, important decisions usually are made at the top.
In decentralised organisations, more decisions are made at lower levels.
Horizontal structure (departmentalisation)
As the tasks of organizations become increasingly complex, the organization inevitably must be subdivided or departmentalized. Departmentalization specifies how employees and their activities are grouped together, such as by function, product, geographic location, or some combination.
Jobs and departments are specialized and grouped according to business functions and the skills they require: production, marketing, human resources, research and development, finance, accounting and so forth. Organizations with functional structures are typically centralized to coordinate their activities effectively.
Type of departmentalization that groups employees around outputs, clients or geographic areas. Divisional structures are sometimes called strategic business units because they are normally more autonomous than functional structures and may operate as subsidiaries rather than as departments of the enterprise.
Matrix structures usually optimize the use of resources and expertise, making them ideal for project-based organizations with fluctuating workloads. Matrix structures focus technical specialists on the goals of serving clients and creating marketable products.