ORGANIZATION STRUCTURE
An organization structure is a framework that allots a particular space
for a particular department or an individual and shows its relationship to the
other. An organization structure shows the authority and responsibility
relationships between the various positions in the organization by showing who
reports to whom. It is an established pattern of relationship among the
components of the organization.
March and
Simon have stated that-"Organization structure consists simply of those
aspects of pattern of behavior in the organization that are relatively stable
and change only slowly." The structure of an organization is generally
shown on an organization chart. It shows the authority and responsibility
relationships between various positions in the organization while designing the
organization structure, due attention should be given to the principles of
sound organization.
Significance of Organization Structure
Properly
designed organization can help improve teamwork and productivity by providing a
framework within which the people can work together most effectively.
Organization
structure determines the location of decision-making in the organization.
Sound
organization structure stimulates creative thinking and initiative among
organizational members by providing well defined patterns of authority.
A sound
organization structure facilitates growth of enterprise by increasing its
capacity to handle increased level of authority.
Organization
structure provides the pattern of communication and coordination.
The
organization structure helps a member to know what his role is and how it
relates to other roles.
PRINCIPLES OF ORGANIZATION STRUCTURE
Modern organizational structures have evolved from several
organizational theories, which have identified certain principles as basic to
any organization structure.
a) Line and Staff Relationships:
Line
authority refers to the scalar chain, or to the superior-subordinate linkages,
that extend throughout the hierarchy (Koontz, O'Donnell and Weihrich). Line
employees are responsible for achieving the basic or strategic objectives of
the organization, while staff plays a supporting role to line employees and
provides services. The relationship between line and staff is crucial in
organizational structure, design and efficiency. It is also an important aid to
information processing and coordination.
b) Departmentalization:
Departmentalization is a process of horizontal clustering of different
types of functions and activities on any one level of the hierarchy.
Departmentalization is conventionally based on purpose, product, process,
function, personal things and place.
c) Span of Control:
This refers to the number of specialized activities or individuals
supervised by one person. Deciding the span of control is important for
coordinating different types of activities effectively.
d) De-centralization and Centralization:
De-centralization refers to decision making at lower levels in the
hierarchy of authority. In contrast, decision making in a centralized type of
organizational structure is at higher levels. The degree of centralization and
de-centralization depends on the number of levels of hierarchy, degree of
coordination, specialization and span of control.
Every
organizational structure contains both centralization and de-centralization,
but to varying degrees. The extent of this can be determined by identifying how
much of the decision making is concentrated at the top and how much is
delegated to lower levels. Modern organizational structures show a strong
tendency towards de-centralization.
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