ORGANIZATIONAL STRUCTURE

Organizational Structure

ORGANIZATIONAL STRUCTURE

Introduction

Organizational structure refers to the formal and informal manner in which people, job tasks, and other organizational resources are configured and coordinated. Although organizational structure sounds like a singular characteristic, it is composed of a number of dimensions, because there are multiple ways the employees within an organization and the job tasks that are carried out can be structured. The most commonly studied aspects of organizational structure include formalization, centralization, and complexity.

Fundamental Elements of Organizational Structure

Formalization refers to the extent to which organizational policies, practices, and ways of completing tasks are standardized. Specifically, highly formalized organizations are those in which rules for expected behavior are clearly articulated and followed. Conversely, organizations that exhibit low levels of formalization have few standardized practices or rules. Formalization is often conveyed through formal means and documents such as job descriptions, but it need not be. Informal activities, such as practices that are reinforced through group norms or informal conversations with other members of the organization, also serve to reinforce the level of formalization.

Centralization refers to the distribution of decision making authority, information, and power throughout an organization. In some organizations all or most decisions are made by a small group of individuals, often the top management team. Such organizations are considered highly centralized because power is maintained by a select few individuals, for example, when decisions are made by a central group of individuals. Conversely, in highly decentralized organizations, power and decision making are spread across individuals throughout the organization. Individual employees in these organizations have the opportunities and authority to make day-to-day decisions and other important decisions that affect their work. The centralization of power in an organization may be dictated and described in formal rules, policies, and job descriptions. It is also common, however, that centralization occurs informally through the behaviors and norms introduced and reinforced by those in power, such as a leader who purposefully limits access to key information.

Structural dimensions receiving less attention include departmentalization and physical dispersion. Departmentalization refers to the existence of formal and informal divisions within an organization. These divisions are often, but not always, created by grouping subsets of jobs, and often comprise similar (or related) jobs. Highly departmentalized organizations are those that have created many internal divisions, whereas highly non-departmentalized organizations have few. Physical dispersion refers to the extent to which organizational members are physically spread apart from one another. This may refer to the dispersion of individuals within a single building or, in highly dispersed organizations, the spread of employees across numerous locations throughout the world.

Factors Relevant to the Elements of Organizational Structure

There is convincing evidence that no one structure is best for all organizations. Because there are many factors that determine the structure most effective for any given organization, researchers have adopted an approach called contingency theory. Contingency theory in this context refers to the idea that relevant circumstances must be considered before applying a specific organizational design. A number of contingencies determine structure; environment, technology, strategy, and ...