Organization structure & IT

Editor's Notes

1. Summary Organizational structure defines how job tasks are formally divided, grouped, and coordinated. Work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization are components which determine organizational structure. Work specialization or division of labour is the degree to which activities in the organization are subdivided into separate jobs. Work specialization creates efficiency and productivity, but can also result in boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover. The trend towards specialization has been altered by the realization that productivity may be increased by enlarging the scope of job activities. Departmentalization is the basis by which jobs are grouped together. Organizations may be departmentalized by function, product, geography, process, or customer. Functional departmentalization groups activities by the functions performed, such as engineering, accounting, or personnel. Organizations using product departmentalization have separate departments or divisions devoted to a product or product line. Many sales and retail operations are departmentalized by geography or territory. In process departmentalization, each department specializes in a specific phase of the production process. Finally, customer departmentalization organizes along customer markets. Many large organizations use all of the forms of departmentalization. The chain of command is an unbroken line of authority that extends from the top of the organization to the lowest level and clarifies who reports to whom. The concept of chain of command is related to the concepts of authority and unity-of-command. Authority refers to the right of a manager to give orders and expect them to be obeyed. The unity-of-command principle states that a person should have only one supervisor to whom he or she is directly responsible. Span of control refers to the number of employees that can be directed by one manager. Narrow spans of control allow for close control, while wider spans of control reduce costs, speed up decision making, increase flexibility, and empower employees. The ideal span of control will depend upon the situation. Centralization is the degree to which decision making is concentrated at a single point in the organization. In a centralized organization, top management makes the key decisions with little or no input from lower-level personnel. In contrast, decentralized organizations allow lower-level personnel or provide input or actually make decisions. The recent trend has been towards decentralization. Finally, formalization refers to the degree to which jobs within the organization are standardized. If a job is highly formalized, individual employees have a minimum amount of discretion over what is to be done, when it is to be done, or how it is to be done. The degree of formalization can vary widely between organizations and within organizations.
2. Advantage: The low cost can be achieved by such companies due to the efficiencies within functional groups.
3. . In that sense, each division can be considered as a micro-company with the main organization
4. Proponents argue that the network structure is more agile than other structures. Because it is decentralized, a network organization has fewer tiers, a wider span of control, and a bottom-up flow of decision making and ideas.
5. A special form of boundary less organization is virtual. Hedberg, Dahlgren, Hansson, and Olve (1999) consider the virtual organization as not physically existing as such, but enabled by software to exist.