Principles of Organization Structure

Principles of Organization Structure

Modern organizational structures have evolved from several organizational theories, which have identified certain principles as basic to any organization structure.

1 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.

2 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.

3 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.

4 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. 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.