The document discusses the six key elements of organizational design: work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization. It explains each element and provides examples to illustrate how they help structure companies and define roles and responsibilities. A well-designed organizational structure is important for effective communication, clear reporting relationships, efficient task completion, and accommodating a company's growth needs.

1. ELEMENTS
IMPORTANCE
By-Jyoti Rastogi
Assist. Professor

3. Organization is the process of creating the hierarchy
within a company. The six elements of organizational
design help business leaders establish the company
departments, chain of command and overall structure.
 Work Specialization
 Departmentalization and Compartments
 Chain of Command
 Span of Control
 Centralization and Decentralization
 Formalization of Elements
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4.  Business leaders must consider the job tasks and
specific duties associated with given positions. Dividing
work tasks among different jobs and assigning them to
definite levels, is the role of work specialization
elements.
 An example would be giving the first person in the
assembly line the job of putting the first three
components together. The second person in the
assembly line might then put the decals on the product,
and the third would put the item in the box.
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5.  Departments are often a group of workers with the
same overall functions. They are often broken down by
broad categories such as functional, product,
geographical, process and customer. Common
departments include accounting, manufacturing,
customer service and sales.
 Compartments might have teams with different
department members that are put together for
efficiency.
 For example, a company delivering IT services to other
businesses might have teams assigned to each company.
Each team might have a project manager, a graphic
designer, a coding specialist, a security specialist, a
client rep and service provider.
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6.  The chain of command is what the organizational chart
typically illustrates.
 It shows who reports to who in the company's human
resources structure.
 Some companies have a more traditional hierarchy with
very clear department leaders and executives in charge.
Other companies use a more fluid chain of command and
structure where more people are considered part of the
same level of command on a cross-functional team.
 There are pros and cons to any model. What is important is
that employees know what is expected of them and how
they get information to flow to the proper channels. If an
employee isn't sure who his direct supervisor is due to an
unclear chain of command, he might not properly relay the
right information to the right party.
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7.  The span of control is the organizational design element
that considers the capacity of any manager. There are
limits to the number of people one person can oversee
and supervise. The span of control addresses this design
element. If a manager has too many people to oversee,
he might lose his effectiveness and not recognize
problems or successes.
 A span of four means that for every four managers,
sixteen employees can be effectively managed.
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8.  Centralization and decentralization are organizational
design elements deciding the degree which decision-
making is made at one central level or at various levels
by employees.
 For example, all major budget decisions would filter to
the chief executive officer and chief financial officer in
a centralized fashion. Customer service decisions might
be decentralized giving those interacting with customer
directions on how to handle issues but the authority to
make certain decisions.
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9.  Smaller organizations tend to have informal elements
where large organizations formalize roles more
specifically. The reason smaller organizations use less
formal standards is that employees may serve multiple
roles as necessary.
 Bigger organizations need to formalize elements to
ensure the right stuff gets done on time and correctly.
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11. Businesses require structure to grow and be profitable,
otherwise you'd have people pulling in all sorts of
different directions. Planning the structure ensures
there are enough human resources with the right skills
to accomplish the company's goals, and ensures that
responsibilities are clearly defined.
 Structure Allows For Better Communication
 Clear Reporting Relationships
 Growth And Expansion
 Efficient Task Completion
 Fits Company’s Needs
 What Can Go Wrong?
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12.  Since the flow of information is essential to an
organization’s success, the organizational structure
should be designed to with clear lines of communication
in mind.
 For example, the financial planning and analysis
department might report to the Chief Financial Officer
and the Senior Vice President of Marketing, because
both of these members of the top management team
depend on information and reports provided by
financial planning.
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13.  Reporting relationships must be clear so all members of
the organization understand what their responsibilities
are and know to whom they are accountable;
otherwise, responsibility for a task may fall through the
cracks. These clear relationships make it easier for
managers to supervise those in lower organization
levels. Each employee benefits by knowing whom they
can turn to for direction or help. In addition, managers
are aware of who is outside the scope of their authority,
so they do not overstep their bounds and interfere with
another manager’s responsibilities.
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14.  Companies that grow rapidly are those that make the
best use of their resources, including management
talent. A sound organization structure ensures that the
company has the right people in the right positions. The
structure may suggest weak spots or deficiencies in the
company’s current management team.
 As the company grows, the organization structure must
evolve with it. Many times more layers of management
are created, when one department head has too many
individuals reporting to him at one time to give each
employee the attention and direction needed for the
employee to succeed.
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15.  A well-designed organization structure facilitates the
completion of projects. Project managers can better
identify the human resources available to them if the
scope of each department’s responsibility – and each
team member’s capabilities – are clear. A project to
develop a new product would require market research,
for instance. The project manager needs to know who
in the organization can provide this research, and
whose permission must be obtained for the research to
be done.
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16.  Companies in different industries require different
mixes of talent and a relatively greater emphasis on
certain management functions. A software company
often has a large development staff, for example.
Structuring the reporting relationships within the
development team so creativity and productivity are
maximized, and deadlines are met, is vital to that type
of company’s success.
 Companies often have to go through a reorganization
phase in which individual positions or even whole
departments are repositioned on the organization chart
in an effort to better utilize the company’s human
resources and make the operation run more smoothly.
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17.  Poorly structured organizations find that critical
deadlines are not met because there were not
sufficient human resources in each department to
accomplish all parts of a given task, or because it was
not clear whose ultimate responsibility the project was.
If individuals are not sure whom they report to, they
may find they are given conflicting assignments by two
or more managers above them.
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