ORGANIZATIONAL STRUCTURES Flashcards
What is an Organizational Structure?
It formally represents the roles and respnsibilities of a business, as well as the reporting lines between individuals in the business. Most common way to represent an organizational structure is through an organizational chart.
Levels of Hierarchy
How many levels of responsibility there are in a business. Each level indicates a level of seniority.
Each level also indicates line managers which are individuals who have the authority to make decisions and whom are responsible for the outcome of those.
Chain of Command
The formal route that a decision travels through in a business. Usually from top to bottom.
Span of control
The number of suboridnates directly under the auhority of a manager and whom managers are responsible for.
Delegation
When a manager gives the authority to a subordinate to make a particular decision, but not for the responsibility of the outcome.
Delegation is common when the span of control is very wide.
Centralization
Inidcates that all major decisions are made by a small group of managers that work closely with the head of the business.
Decentralization
Opposite of centralization. It is when managers make core decisions but middle managers have also other decision making responsibility.
Bureaucracy
The relative importance of rules and procedures. If a business is relatively bureaucratic, there are many rules, regulations and set ways of doing things. Personal initiative or delegation isn’t expected.
Delayering
Removing levels of hierarchy in an organization. The aim of it is to improve an organization’s efficiency by making it less bureaucratic. It increases the decision making capability of middle managers.
Features
No one “correct” form of organization exists.
Executives structure their organizations the way they think will maximize the objectives of the business.
As objectives and external conditions change, executives rethink their business´ structure.
Many high-tech start-ups often have flat structures. As they grow they add more levels of hierarchy.
The question is not “What is the best structure” but “What are the positive and negative aspects of the structure selected.”
