Organizational Structure

Fundamental Elements of Organizational Structure

Formalization refers to the extent to which organizational policies, practices, and ways of completing tasks are standardized. Specifically, highly formalized organizations are those in which rules for expected behavior are clearly articulated and followed. Conversely, organizations that exhibit low levels of formalization have few standardized practices or rules. Formalization is often conveyed through formal means and documents such as job descriptions, but it need not be. Informal activities, such as practices that are reinforced through group norms or informal conversations with other members of the organization, also serve to reinforce the level of formalization.

Centralization refers to the distribution of decisionmaking authority, information, and power throughout an organization. In some organizations all or most decisions are made by a small group of individuals, often the top management team. Such organizations are considered highly centralized because power is maintained by a select few individuals, for example, when decisions are made by a central group of individuals. Conversely, in highly decentralized organizations, power and decision making are spread across individuals throughout the organization. Individual employees in these organizations have the opportunities and authority to make day-to-day decisions and other important decisions that affect their work. The centralization of power in an organization may be dictated and described in formal rules, policies, and job descriptions. It is also common, however, that centralization occurs informally through the behaviors and norms introduced and reinforced by those in power, such as a leader who purposefully limits access to key information.

Complexity has represented a number of different aspects of organizational structure throughout history (additional historical background is presented in a later section). Among the structural aspects that have been labeled complexity are specialization, interdependency, span of control, and height. Although each is somewhat unique, they all share the recognition that the organization of workers and work processes can range in design from simple to complex. Specialization refers to the extent to which job tasks require highly specific (i.e., specialized) work skills or, conversely, can be successfully carried out by individuals who possess more broadly available knowledge, skills, and abilities. Research- and development-based organizations are examples of organizations that are likely to be highly specialized because such activities often require unique content knowledge and skills. Interdependency (also called integration) refers to the integration of tasks and activities across different workers. Highly integrated organizations require the cooperation and collaboration of many different employees to get work done. Nonintegrated organizations are composed of individuals who work largely on their own and do not require assistance or products from other employees. Span of control refers to the number of subordinates who report to a single manager. The size of the managerial span is often associated with the varying levels of the hierarchy within an organization (height). Large spans of control are associated with flatter organizations, such as those with fewer layers between entry-level positions and top management); small spans typically correspond with tall hierarchical organizations in which there are many levels from the bottom to the top.

...