Organizational Structure: Definition, Components and Principles

Organizational structure refers to the groupings of an organizations functions, positions and operations. Typically, organizations express their structures visually on an organizational chart. Chart shows the positions within an organization, the roles they play and the relationship between them-including supervisory relationships.

Focusing on organizational structure and its design helps organizations to gain clarity on what they are doing currently, their ideal functioning and how they can achieve it. Again structure allows for the division of work among members of the organization and the co-ordination of their activities to ensure that they are directed towards achieving the goal and objectives of the organization.

The structure also shows the tasks and responsibilities, work roles and relationship and channel of communication. Basically, organizational structure creates the framework of order and command, through which the activities of the organization can be planned, organized, directed and controlled.

An organization must have its own structure in order to operate systematically and efficiently. There is no one best way for organization to be structured and so organizations vary considerably on structural attributes.

Components of Organizational Structure

  • Horizontal Differentiation: this refers to the degree of differentiation between units based on the orientation of members, the nature of tasks they perform and their education and training.
  • Vertical Differentiation: this is characterized by the number of hierarchical levels in the organization.
  • Spatial Differentiation: this refers to the degree to which the location of the organization’s office, facilitate and personnel are geographical distributed.

Principles of Organizational Structure

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

Specialization: specialization facilitates division of work into units for efficient performance. According to the classical approach, work can be performed much better if it is divided into components and people are encouraged to specialize by components.

Work can be specialized both horizontally and vertically. Vertical specialization in an organization refers to different kinds of work at different levels, such as project leader, scientist, researcher and field staff. Horizontally, work is divided into departments like genetics, plant pathology, administration and accounts. Specialization enables application of specialized knowledge which betters the quality of work and improves organizational efficiency.

Coordination: coordination refers to integrating the objectives and activities of specialized departments to realize broad strategic objectives of the organization. It includes two basic decisions pertaining to: (i) which units or groups should be placed together and, (ii) the pattern of relationships, information networks and communication.

Coordination of different activities is important to achieve strategic objectives. Efficient coordination can also help in resolving conflicts and disputes in organization.

Hierarchy: basically, hierarchy also facilitates vertical coordination of various departments and their activities. Organizational theorists have over the years developed several principles relating to the hierarchy of authority for coordinating various activities.  

Unity of Command: every person in an organization should be responsible to one superior and receive orders from that person only. This is considered to be the most important principle for efficient working and increased productivity in an organization.

The Scalar Principle: decision making, authority and the chain of command in an organization should flow in a straight line from the highest level to the lowest. The principle evolves from the principle of unity of command. However, this may not always be possible, particularly in large organizations.

The Responsibility and Authority Principle: to successfully perform certain tasks, responsibility must be accompanied by proper authority. Those responsible for performance of tasks should also have the appropriate level of influence on decision making.

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.

Levels of Organizational Structure

Organizations are structured in layers. This implies that the determination of policy and decision making, the execution work and the exercise of authority and responsibility are carried out by different people at varying levels of seniority throughout the organizational structure.

It is therefore possible to structure an organization in terms of interrelated levels in the hierarchical structure such as the technical level, the managerial level and community level.

Technical Level: this is concerned with the specific or actual job or tasks to be done like administrative process, giving direct service to the public in governmental departments and the actual process of teaching in education establishment etc.

The Managerial Level: this level is concerned with the coordination and integration of work at the technical level. Decisions at this level may relate to the resources necessary for performance of the technical function and the beneficiaries of the product or service provided.

The Community Level: this is the level above the managerial level that is concerned with the broad objectives and the work of the organization as a whole. Examples of the community level within organizations are the boards of directors, governing boards or trustees of nonprofit organizations.

Designing Organizational Structure

Some important considerations usually made in designing an effective organizational structure are:

  • Clarity: the structure of the organization should be such that there is no confusion about people’s goals, tasks, style of functioning, reporting relationship and sources of information.
  • Understanding: the structure of an organization should provide people with a clear picture of how their work fits into the organization.
  • Decentralization: the design of an organization should compel discussion and decisions at the lowest possible level.
  • Stability and adaptability: while the organization structure should be adaptable to environmental changes, it should be such that it remains steady during unfavourable conditions.

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