Question

List and explain the six key elements in designing an organization's structure.

Answer 1

Organizational design refers to the formal process of creating a hierarchical level within the organization and also helps to integrate various activities, people, information, etc. It helps to assign proper roles and responsibilities to the employees of the organization. The six key elements in designing an organization's structure are as follows:
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization

They are described as follows:
1. Work specialization:
It is one of the elements to be considered while designing the organizational structure. In every organization, there is a division of work among different employees up to certain levels. This will leads to work specialization and they become experts in those areas. The management should be careful to not become overspecialize. It will make them bored and unsatisfied. So, the roles should be assigned very carefully and according to their positions

2. Departmentalization:
This element refers to the process of classifying the various activities into different departments. It includes a group of employees in which they are involved in the same functions. There are 5 major types of departmentalization: functional, product, process, geographical, and customer.

3. Chain of command:
This shows a line of authority that is who should report to whom. This flows from the upper level of an organization to a lower level. It is based on the concepts of authority, responsibility, and unity of command. Unity of command is that management principle where one subordinate should report only to one manager.

4. The span of control:
This is a very important element it determines the number of levels and managers an organization should have. It decides how many subordinates a manager can handle efficiently and effectively. This decides the amount of control within an organization.

4) Centralization and decentralization:
Centralization and decentralization are two forms of organization structure.
Centralization refers to the hierarchical level in which an organization has the authority to make decisions. It means that the decision-making process is kept at the top level of management.
Decentralization is a process of delegating the decision-making responsibility by the top management to the middle level and lower-level management. It helps the top management to focus on major decisions.

6) Formalization:
Formalization refers to which the employees' behavior is guided by certain rules and procedures and the jobs of the employees in the organization are standardized. It is mainly initiated for rational decision making.