Organizational Structure

Organizational Theory, Design and Change

Organizational Theory, Design and Change

Introduction

The structure of an organization has a lot of impact on the organization's culture. Hierarchy of the organization refers to the level of reporting relationship that is there in the company. The organizational structure is an amalgamation of the organization's purpose and goals, its people and tasks, the technology used by the organization, the organizational culture and the external environment.

Discussion

Centralization is the process by which authority is distributed, and decisions are made within the organization. Organizations with a tall hierarchy and numerous layers of management have a centralized structure, also called the top down approach. As the organizational hierarchy becomes more tall and centralized, the number of managers increases, thereby, decreasing the level of communication and coordination among the employees. Under this system, authority is designated to a few top managers.

Standardization is also a component of such organizations. They have defined code of conducts, standards and processes that are to be followed by all the organizational members. On the other hand, a decentralized structure refers to a flat hierarchy with a lesser number of supervisors and accountability. Such an organization follows a bottom up approach with employees having authority and freedom and communication. In today's scenario, organizations are mostly flat and decentralized. This process increases the level of communication and participation among the employees and thereby increases the organization's effectiveness and performance. It creates a feeling of ownership among the employees as authority is not confiscated in few hands, rather than distributed throughout the organization (Driskell 2003).

Horizontal differentiation is the way an organization groups tasks into jobs/roles and jobs/roles into sub-units. This structure results in the emergence of specialized sub units, functions and divisions; thereby, establishing the division of labor and level of specialization. Organizations following this ...