What do you understand by organizational structure. Discuss the basics of departmentation.
Organizational structure is relatively a stable relationship and processes of the organization. Organizational structure is the anatomy of the organization that provides the foundation with in which an organization functions. The idea of structure as a framework focuses on the differentiation of formulation of rules and procedures and prescription of authority.
Purpose of organizational structure
Organizational structure reduces and regulates uncertainty in the behavior of an individual employee.
The structure of an organization is purposeful and goal oriented.
Organizational design is the process of making decisions and procedures that results in an organizational structure.
Factors of organizational design
1- Top managers decide how to divide overall tasks into smaller activities.
2- Top managers distribute authority among the job.
3- The jobs have two distinct attributes, activities and authority.
4- Top managers decide the bases by which the organizational jobs are to be grouped.
5- Top managers decide the size of group reporting to each superior. This decision involves determining whether span of control relatively few or many.
This is a process of defining the activities and authority of jobs. The total task of the organization is broken down into small activities and combining the divided task into groups and departments.
Types / bases of departmentation
• Departmentation by function;
This is the process of departmentation according to the function like HP department, marketing department, Finance department etc.
• Departmentation by terrioty;
This is the process of departmentation according to area.