Organizational Structure

An organizational structure defines how tasks are delegated to achieve an

organization’s goals. It helps clarify employees’ roles and responsibilities
within the company. Generally, employees with greater authority are
positioned higher in the organizational hierarchy. A well-organized structure
enables a company to operate more efficiently, facilitating effective
communication and collaboration among team members. Employees want to
understand their job responsibilities, whom they report to, what decisions
they can and should make and how they interact with other people and
teams within the company. An organizational structure creates this
framework. Organizational structures can be centralized or decentralized,
hierarchical or circular, flat or vertical.

Centralized vs. Decentralized

Many companies use the traditional model of a centralized organizational

structure. With centralized leadership, there is a transparent chain of
command and each role has well-defined responsibilities.

Conversely, with a decentralized organizational structure, teams have more

autonomy to make decisions and there may be cross-collaboration between
groups. Decentralized leadership can help companies remain agile and adapt
to changing needs.

Hierarchical vs. Circular

A hierarchical organization structure is the pyramid-shaped organization

chart many people are used to seeing. There is one role at the top of the
pyramid and the chain of command moves down, with each level decreasing
in responsibilities and authority.

On the other hand, a circular organization chart looks like concentric circles
with company leadership in the center circle. Instead of information flowing
down to the next “level,” information flows out to the next ring of
management.

Vertical vs. Flat

A vertical organizational chart has a clear chain of command with a small

group of leaders at the top—or in the center, in the case of a circular
structure—and each subsequent tier has less authority and responsibility. As
discussed below, functional, product-based, market-based and geographical
organizational structures are vertical structures.
With a flat organization structure, a person may report to more than one
person and there may be cross-department responsibilities and decision-
making authority. The matrix organizational structure described below is an
example of a flat structure.

Benefits of Creating an Organizational Structure

Faster decision-making

The type of organizational structure a company employs can significantly

enhance decision-making. Improved communication among teams can lead
to better overall communication within the organization, facilitating quicker
decision-making. As such, an effective organizational structure can promote
a efficient flow of information, which can drive faster and more informed
decisions.

Multiple business locations

For business owners, implementing an organizational structure can be critical

for maintaining consistency across multiple locations and ensuring
adherence to the same procedures. Since owners typically cannot oversee
every location personally, an effective organizational structure can help offer
peace of mind, especially as the company expands. This framework helps to
standardize operations and supports smooth growth.

Improved operating efficiency

Organizational structures typically categorize companies into specific teams

or divisions, facilitating the effective management of tasks and
responsibilities. When employees have a clear understanding of their roles,
they can work more swiftly and efficiently. Consequently, a well-defined
organizational structure fosters an efficient and streamlined system that
enhances overall company operations.

Greater employee performance

When employees are assigned specific tasks and responsibilities, they tend
to be better equipped to excel in their roles. An organized structure offers
the necessary guidance for employees to perform at optimal levels
consistently. This improvement in performance can also boost employee
morale and enhance their confidence in their work.

Eliminates duplication of work

Dividing employees into teams based on their skills and expertise can help
reduce the risk of overlapping job duties. For example, when a project is
assigned to one team, other teams may clearly understand that it is not their
responsibility, allowing them to focus on their own outlined tasks.

Reduced employee conflict

Organizational structures can help reduce conflict among employees. When

team members clearly understand their roles and responsibilities, they can
concentrate on their tasks, minimizing distractions and misunderstandings.
This clarity helps promote a more harmonious work environment and helps
prevent potential conflicts between coworkers.

Better communication

Organizational structures can enhance communication between different

divisions and teams within a company. When responsibilities are clearly
assigned, employees may better understand who to approach for specific
issues.

For example, if you are part of a team with a designated manager, you will
have a clear point of contact for any concerns. Likewise, if a marketing team
member has a question about a project’s design, they will know to reach out
to the art department. This clarity fosters efficient communication and
collaboration across the organization.

Essential Elements of Clear Organizational Structure

Regardless of the special type of organizational structure you choose, it

should have the following components:

Chain of command

Roles and responsibilities

Scope of control

Decision-making authority

Departments or teams within the organization

Types of organizational structures

There are many types of organizational structures, each with its own benefits
and drawbacks. Understanding how organizational structures operate can
help you make informed decisions about which model to implement in your
workplace. Types of organizational structures include:

1. Functional structure

In a functional organizational structure, companies are divided into

specialized groups, each with distinct roles and responsibilities. This type of
organizational structure, often referred to as a bureaucratic organizational
structure, is commonly seen in small to medium-sized businesses. This
model typically involves dividing the organization into departments such as
finance, marketing, and human resources. Each department has a manager
responsible for overseeing operations, and these managers report to a
higher-level administrator or executive who supervises multiple departments.

Advantages of a functional organizational structure may include:

 Skill-based grouping fosters expertise within departments.

 Enhanced accountability within departments.
 A well-established reporting hierarchy facilitates efficient decision-
making processes.
 Departments can be easily scaled up or down based on organizational
needs.

Disadvantages of a functional organizational structure may include:

 Lack of communication with other departments.

 Employees may find their knowledge and skills confined to their
specific functions and teams.
 Organizations may struggle to adapt quickly to changes.

2. Divisional structure

In a divisional organizational structure, teams collaborate towards a common

goal while operating within distinct divisions. Each division is managed by an
executive responsible for overseeing operations, managing budgets, and
allocating resources. This structure is commonly found in large
companies.For example, an automotive manufacturer might separate its
operations into divisions for SUVs, electric vehicles, and sedans. Although
each division has its specific focus, all work collectively to achieve the
overarching objective of increasing sales. This model is also referred to as
the multi-divisional structure.

Advantages of a divisional organizational structure:

  Each division can concentrate on a specific product or service, allowing
for specialized strategies.
 Divisions benefit from strong leadership that provides clear direction
and accountability.

Disadvantages of a divisional organizational structure:

 Poor integration can occur between divisions, leading to inefficiencies.

 Competition for resources and recognition may arise between
divisions.
 A lack of communication can hinder collaboration and information
sharing.
 There may be potential tax consequences related to the structure of
divisions.

3. Flat (flatarchy) structure

In a flatarchy, organizations maintain few to no levels of management,

typically featuring only one manager between executives and other
employees. This hybrid structure combines elements of both hierarchy and
flat organizations.

While flatarchies are more common in smaller companies with fewer

employees, they can also be found in organizations of all sizes. Some
companies may outgrow this structure, while others may successfully
continue to operate within it.

Advantages of a flatarchy:

 With fewer management layers, organizations can reduce operational

costs.
 The structure promotes open lines of communication among team
members.
 Employees often feel more empowered and engaged in their roles.
 A streamlined hierarchy enables quicker decisions.

Disadvantages of a flatarchy:

 The lack of defined roles may lead to misunderstandings and disputes

among employees.
 Ambiguity in leadership roles can create uncertainty about decision-
making authority.

4. Matrix structure
In a matrix organizational structure, employees are grouped into teams that
report to two managers, a project or product manager and a functional
manager. This approach combines elements of different organizational
structures, allowing for dual reporting and resource sharing.Working within a
matrix structure enables employees to expand their skill sets as they may be
assigned to various projects that require different levels of expertise.

Advantages of a matrix organizational structure:

 Improved communication and collaboration among team members.

 Employees can adapt to different roles and projects, enhancing
versatility.

Disadvantages of a matrix organizational structure:

 Dual reporting can create ambiguity regarding authority and decision-

making.
 Employees may face divided loyalties between their two managers.
 The complexity of managing dual reporting relationships can lead to
higher operational costs.
 Job responsibilities may not be clearly defined, leading to potential
misunderstandings.
 Employees may experience increased workloads due to participation in
multiple projects simultaneously.

5. Team-based structure

Team-based structures involve small, close-knit teams of employees who

work together to achieve specific goals and functions. Each team acts as
a unit, comprising both leaders and team members, and often includes
individuals from various departments.

This structure emphasizes collaboration, flexibility, and shared leadership,

breaking down departmental silos and encouraging cross-functional
teamwork. Teams are typically granted the autonomy to manage their
own processes, promoting a cooperative environment.

Advantages of a team-based organizational structure:

 Team-based structures foster an environment where different

perspectives can lead to creative solutions.
 Team members feel a greater sense of ownership and accountability
for their work.
  Decentralized decision-making enables teams to act swiftly in
response to challenges or opportunities.
 A focus on teamwork often leads to higher efficiency and clearer
communication among members.
 Encouraging a culture of continuous learning and improvement
helps employees develop their skills.
 Teams are typically more self-sufficient, requiring less direct
supervision from management.

Disadvantages of a team-based organizational structure:

 There may be confusion regarding individual roles, responsibilities,

and decision-making authority within teams.
 Holding teams and individuals accountable for performance can be
difficult in a collaborative setting.
 Career advancement opportunities may not be clearly defined.

6. Network structure

As a decentralized structure, a network structure emphasizes collaboration

between internal teams and external partners. The core company retains
control over critical functions such as strategy and management, while
outsourcing areas like production, IT, and marketing. This approach enables
the organization to remain agile while tapping into specialized expertise.

Advantages of a network organizational structure:

 Reduces expenses as companies do not need to maintain large in-

house teams.
 Facilitates easy expansion and contraction based on business needs.
 Enables companies to leverage specialized skills and resources from
external partners.
 Allows for quicker responses to market changes and evolving industry
demands.

Disadvantages of a network organizational structure:

 Outsourcing can lead to reduced oversight over critical business

operations.
 Ensuring all partners work towards a common goal can be challenging
and may require additional effort to maintain cohesion.

7. Circular structure
Circular structures feature a hierarchical model where higher-level
employees and managers occupy the center, with concentric rings of lower-
level employees and staff radiating outward. This design promotes open
communication and collaboration across levels, breaking down barriers
between management and employees.

By emphasizing that every employee is part of a larger organizational

framework, this structure helps facilitate the flow of information and ideas,
making it suitable for organizations that prioritize collaboration. However, it
may lack the clarity needed for larger, more complex organizations.

Advantages of a circular organizational structure:

 Fosters transparent dialogue between all levels of the organization.

 Encourages the open exchange of ideas, leading to increased
creativity.
 Helps employees feel more engaged and connected to management.
 Ensures that employees understand and align with the organization’s
objectives and processes.

Disadvantages of a circular organizational structure:

 The absence of a traditional hierarchy can complicate individual

accountability for performance.
 Decision-making processes may be prolonged due to the structure’s
collaborative nature.
 Can lead to uncertainty regarding decision-making responsibilities
across the organization.

8. Process-based structure

A process-based structure is organized around a company’s workflow rather

than traditional departments or functions. The primary focus is on how tasks
and activities interact and flow through the organization to create value for
customers. Employees are grouped according to specific processes, such as
product development, customer service, or order fulfillment.

This structure is commonly adopted by organizations aiming for operational

efficiency, particularly in manufacturing. For example, a process-based
structure may consist of teams focused on R&D, product creation, order
fulfillment, billing, and customer service.

Advantages of a process-based organizational structure:

  The focus on continuous improvement and optimization of workflows
can enhance efficiency.
 Encourages cooperation among employees.
 Increases the speed and efficiency of business operations.
 Facilitates better coordination across different functions.

Disadvantages of a process-based organizational structure:

 May lead to misunderstandings between departments.

 Can hinder the organization’s ability to respond quickly to changes,
reducing agility.
 Continuous improvement initiatives can require significant resources.

Benefits of organizational structures

While not all businesses adopt organizational structures, those that do can
experience significant advantages. Here are some key benefits of
implementing an organizational structure in your company:

Faster decision-making

The type of organizational structure a company employs can significantly

enhance decision-making. Improved communication among teams can lead
to better overall communication within the organization, facilitating quicker
decision-making. As such, an effective organizational structure can promote
a efficient flow of information, which can drive faster and more informed
decisions.

Multiple business locations

For business owners, implementing an organizational structure can be critical

for maintaining consistency across multiple locations and ensuring
adherence to the same procedures. Since owners typically cannot oversee
every location personally, an effective organizational structure can help offer
peace of mind, especially as the company expands. This framework helps to
standardize operations and supports smooth growth.

Improved operating efficiency

Organizational structures typically categorize companies into specific teams

or divisions, facilitating the effective management of tasks and
responsibilities. When employees have a clear understanding of their roles,
they can work more swiftly and efficiently. Consequently, a well-defined
organizational structure fosters an efficient and streamlined system that
enhances overall company operations.
Greater employee performance

When employees are assigned specific tasks and responsibilities, they tend
to be better equipped to excel in their roles. An organized structure offers
the necessary guidance for employees to perform at optimal levels
consistently. This improvement in performance can also boost employee
morale and enhance their confidence in their work.

Eliminates duplication of work

Dividing employees into teams based on their skills and expertise can help
reduce the risk of overlapping job duties. For example, when a project is
assigned to one team, other teams may clearly understand that it is not their
responsibility, allowing them to focus on their own outlined tasks.

Reduced employee conflict

Organizational structures can help reduce conflict among employees. When

team members clearly understand their roles and responsibilities, they can
concentrate on their tasks, minimizing distractions and misunderstandings.
This clarity helps promote a more harmonious work environment and helps
prevent potential conflicts between coworkers.

Better communication

Organizational structures can enhance communication between different

divisions and teams within a company. When responsibilities are clearly
assigned, employees may better understand who to approach for specific
issues.

For example, if you are part of a team with a designated manager, you will
have a clear point of contact for any concerns. Likewise, if a marketing team
member has a question about a project’s design, they will know to reach out
to the art department. This clarity fosters efficient communication and
collaboration across the organization.

Departmentalization

Departmentalization is an organizational structure that separates people into

groups, or departments, based on a particular set of criteria. These
departments have their own leadership and work together to complete tasks.
With large or complicated projects, multiple departments may work
together.Here are the primary objectives of businesses that choose to
implement departmentalization:
Maintaining control

Simplifying operational processes

Grouping specialized activities together

Increasing overall efficiency

Ensuring responsibility and accountability

Departmentation is a valuable tool in organizational management that

involves dividing an organization’s workload into smaller, more manageable
units known as departments. This approach provides a range of benefits,
including increased specialization and efficiency in the organization’s
operations, as employees can focus on their areas of expertise. Additionally,
departmentation helps the organization allocate resources more effectively
by identifying the resources needed for each task and allocating them
accordingly. Clear communication and coordination between employees are
also facilitated by grouping similar tasks. Departmentation further provides a
transparent hierarchy of authority and responsibility, which enhances
decision-making and goal achievement. In conclusion, departmentation is a
vital strategy that supports the smooth running of an organization and its
successful attainment of objectives.

Types of Departmentation

Under bases and types of departmentation, there could be the following

categories:

1. Functional Departmentation

Functional departmentation is a widely used organizational structure that

groups employees based on their specialized knowledge and skills. Each
major or basic function, such as production, sales, finance, and personnel, is
organized as a separate department, which allows for efficient and effective
collaboration among employees with similar expertise. This approach
promotes specialization, simplifies decision-making, and provides employees
with clear career paths and development opportunities. However, it may also
create silos, where departments focus solely on their function, leading to
slower decision-making when addressing complex issues spanning multiple
functional areas. Despite these potential drawbacks, functional
departmentation remains a popular organizational approach, allowing
organizations to capitalize on economies of scale and promoting efficiency,
coordination, and specialization within each department.
Advantages:
 Grouping employees with similar skills and expertise together
allows for increased efficiency and effectiveness, as they can
share knowledge and experience to complete their tasks.
 Functional departmentation allows for better communication
and a more streamlined workflow within each department.
 Functional departmentation promotes specialization, leading
to increased productivity and better quality output.
 Managers can consult with functional experts when needed,
simplifying the decision-making process.
 Functional departmentation provides clear career paths and
development opportunities for employees within each
department.
Disadvantages:
 Departments may become silos, focusing solely on their
functions, leading to a lack of collaboration and coordination
between departments.
 Functional departmentation can lead to slower decision-
making as decisions often require input from multiple
functional areas.
 It can be challenging to address complex issues that span
multiple functional areas using a functional departmentation
structure.
 Functional departmentation can create inter-departmental
conflict as departments may prioritize their interests over the
organization’s goals.
 There may be duplication of effort, as each department may
have its own resources, leading to a waste of resources and
inefficiency.
2. Product Departmentation
Product departmentation is an effective organizational structure that
groups employees based on the specific products or product lines
they work on. Under this approach, each product or product line is
treated as a separate department, allowing organizations to focus on
specific products and tailor their activities and resources accordingly.
This can lead to increased efficiency and effectiveness as employees
specialize in their specific product area, enabling them to respond
quickly to changes in customer demand and market trends. It is
essential to be aware of the potential drawbacks of product
departmentation. It can create duplication of effort and resources, as
each department may have its own marketing, design, and production
resources, which can lead to inefficiency. Additionally, coordinating
activities and decision-making between product departments may be
challenging, leading to potential conflicts and slower decision-making
Advantages:
 Product departmentation allows for a high degree of
specialization, with each department focusing on a specific
product or product line, leading to increased efficiency and
effectiveness.
 Since each department is focused on a specific product or
product line, decision-making is faster and more efficient,
leading to quicker response times to changes in customer
demand or market trends.
 Each product department has clear accountability for the
performance of its specific product or product line, leading to
a higher level of responsibility among employees.
 Since each department is focused on a specific product or
product line, they can be more innovative and creative in
developing new products and solutions.
 By having departments focus on specific products or product
lines, organizations can improve their customer focus and
provide better customer service.
Disadvantages:
 Product departmentation can lead to duplication of effort and
resources as each department may have its own marketing,
design, and production resources.
 Coordinating activities and decision-making between product
departments can be challenging, leading to potential conflicts
and slower decision-making.
 Each department may become siloed and not communicate or
collaborate effectively with other departments, leading to a
lack of coordination and slower decision-making.
 Product departmentation can create competition and conflicts
between departments, leading to a lack of cooperation and
teamwork.
 It can be challenging to find managers with the necessary
expertise to lead each product department effectively,
leading to potential leadership and management issues.
3. Territorial (Geographical) Departmentation
Territorial departmentation is an organizational structure where
employees are grouped based on their geographical location or
territory. For example, a company may divide its operations into
different regions, such as North America, Europe, and Asia, with each
region being a separate department. This approach allows companies
to tailor their operations and strategies according to the needs of
each specific location. For instance, different regions may have
different customer needs, preferences, or regulations, and by
grouping employees based on their geographical location, companies
can better address these differences. Territorial departmentation
enables better coordination and communication between employees
in the same geographic location leading to improved teamwork and
collaboration. It also allows for better control and monitoring of
operations, as managers can closely oversee and manage employees
in each location.
Advantages:
 Territorial departmentation enables organizations to
customize their operations and strategies according to local
needs and preferences leading to improved customer
satisfaction and organizational performance.
 By grouping employees based on their geographic location,
territorial departmentation can enhance communication and
coordination between employees in the same region, resulting
in better teamwork and collaboration.
 Territorial departmentation allows managers to closely
supervise and manage employees in each location, leading to
better control and monitoring of operations.
 By having employees located in different regions, territorial
departmentation can respond faster to changes in customer
demand or market trends.
 Each territorial department has clear accountability for the
performance of its geographic area, leading to higher levels of
responsibility among employees.

Disadvantages:
 Territorial departmentation can lead to duplication of effort
and resources as each department may have its own
marketing, design, and production resources.
 Territorial departmentation can create competition and
conflicts between departments, resulting in a lack of
cooperation and teamwork.
 Coordinating activities and decision-making between
territorial departments may be difficult, leading to potential
conflicts and slower decision-making.
 Territorial departmentation can result in higher costs as each
department may require its resources and infrastructure.
  Territorial departmentation may not be suitable for
organizations that need to quickly adapt to changes in market
conditions or customer needs, as changes may be slower to
implement across different geographic locations.
4. Customer Departmentation
Customer departmentation is an organizational structure that groups
employees based on specific customer groups or segments. This
approach enables organizations to focus on the unique needs and
preferences of each customer group, which can enhance customer
satisfaction and improve performance. By grouping employees based
on customer segments, companies can better understand the needs
of each customer group and tailor their products, services, and
marketing efforts accordingly. It can also foster increased customer
loyalty, as customers may feel that their needs are being addressed
in a personalized manner. Moreover, it can facilitate better
communication and coordination among employees in the same
customer segment leading to improved teamwork and collaboration.
Advantages:
 Customer departmentation enables organizations to focus on
specific customer segments, leading to a better
understanding of customer needs and preferences, and
enabling companies to tailor their products, services, and
marketing efforts to meet those needs.
 By focusing on specific customer groups, companies can
provide more personalized and tailored services leading to
increased customer satisfaction and loyalty.
 By grouping employees based on customer segments,
customer departmentation can lead to better communication
and coordination among employees in the same customer
segment, resulting in improved teamwork and collaboration.
 Customer departmentation can lead to faster and more
effective decision-making, as employees are better equipped
to make decisions based on the specific needs and
preferences of each customer segment.
 Customer departmentation provides clear accountability for
each department’s performance in serving its specific
customer group, leading to a higher level of responsibility and
motivation among employees.
Disadvantages:
 Customer departmentation can lead to duplication of effort
and resources as each department may have its own
marketing, design, and production resources.
  Customer departmentation can create competition and
conflicts between departments, leading to a lack of
cooperation and teamwork.
 It may be challenging to coordinate activities and decision-
making between customer departments, leading to potential
conflicts and slower decision-making.
 Customer departmentation may not be suitable for
organizations that need to quickly adapt to changes in market
conditions or customer needs, as changes may be slower to
implement across different customer segments.
 Customer departmentation can result in higher costs as each
department may require its own resources and infrastructure
5. Process or Equipment Departmentation
Process or equipment departmentation is a type of organizational
structure that groups employees based on the equipment or
technology they use or the specific processes they perform. For
example, a manufacturing company may organize its operations into
departments based on the types of equipment, such as milling
machines, lathes, or welding machines. This structure allows
organizations to capitalize on specialized equipment and technology
and group employees with the expertise and skills required to operate
and maintain specific equipment or perform particular processes. The
approach promotes efficiency and effectiveness since employees with
similar skills and knowledge work together to complete specific tasks.
Process or equipment departmentation can streamline decision-
making, improve coordination, and enhance communication among
employees in the same department, resulting in better teamwork and
collaboration. This structure can also facilitate better monitoring and
control of processes and equipment, leading to higher-quality output
and more efficient use of resources.
Advantages:
 Process or equipment departmentation allows for a high level
of specialization, resulting in better quality output and more
efficient use of resources.
 Bygroupingemployees with similar skills and expertise,
process or equipment departmentation can streamline
decision-making and reduce the time and effort needed for
communication and coordination.
 Process or equipment departmentation can facilitate better
monitoring and control of processes and equipment, leading
to higher-quality output and more efficient resource
utilization.
 Each department is accountable for its specific equipment or
process, leading to a higher level of responsibility and
motivation among employees.
 Process or equipment departmentation provides clear career
paths and development opportunities for employees within
each department.
Disadvantages:
 Process or equipment departmentation can result in silos,
with employees focusing solely on their specific equipment or
processes, leading to a lack of collaboration and
communication across departments.
 Process or equipment departmentation may limit cross-
functional knowledge and skills among employees, reducing
flexibility and adaptability.
 Process or equipment departmentation can lead to duplication
of effort and resources as each department may have its own
marketing, design, and production resources.
 It may be challenging to coordinate activities and decision-
making between departments, leading to potential conflicts
and slower decision-making.
 Process or equipment departmentation can result in higher
costs as each department may require its own resources and
infrastructure.
6. Time Departmentation
Time departmentation is an organizational structure in which
employees are grouped based on the time of day or week that they
work. This approach enables companies to manage their workforce
more efficiently and ensure that operations run smoothly without
interruptions. For example, a manufacturing company may organize
its operations into departments based on different shifts, such as day
shift, night shift or weekend shift. Grouping employees based on their
availability and work schedules can ensure that the organization has
the necessary resources available at the right time to meet business
demands. This approach can also increase productivity, as employees
may be more focused and efficient during specific hours of the day or
week. Additionally, time departmentation can promote a better work-
life balance for employees, as they have more flexibility in choosing
their work schedules. This can lead to higher job satisfaction and
employee retention.
Advantages:
  Time departmentation enables organizations to manage their
workforce more efficiently and ensure that operations are
continuously running without interruptions.
 Grouping employees based on their availability and work
schedules can increase productivity as employees may be
more focused and efficient during specific hours of the day or
week.
 Time departmentation can promote a better work-life balance
for employees, allowing them more flexibility in choosing their
work schedules and leading to higher job satisfaction and
employee retention.
 Time departmentation can ensure that the organization has
the necessary resources available at the right time to meet
business demands, leading to better resource allocation and
improved operational efficiency.
 Time departmentation can enable the organization to provide
better customer service by ensuring that there are employees
available to meet customer needs during specific hours of the
day or week.
Disadvantages:

 Time departmentation may lead to limited communication

and collaboration between employees in different shifts,
leading to silos and reduced cooperation.
 It may be challenging to coordinate activities and decision-
making across different shifts, leading to potential conflicts
and slower decision-making.
 Time departmentation may reduce flexibility in terms of
employee work schedules, which may be challenging for
employees with personal or family commitments.
 Time departmentation may require the organization to pay
employees a premium for working during non-standard
hours, leading to higher labor costs.
 Time departmentation may result in limited knowledge and
skill sharing across different shifts, leading to reduced
cross-functional knowledge and skills among employees.

7. Combined Departmentation

Combined departmentation is an organizational structure that incorporates

two or more types of departmentation. It allows companies to leverage the
benefits of different departmentation methods to improve their operational
efficiency and effectiveness. For instance, a company can use a combination
of functional and product departmentation by organizing its operations into
departments based on both functions and products. This approach groups
employees with similar skills and expertise in each department while also
grouping employees based on the specific products they produce or manage.
Combined departmentation can promote better communication and
coordination across different departments, leading to enhanced teamwork
and collaboration. Furthermore, it allows companies to specialize in different
areas and meet the needs of different customer segments effectively.

Advantages:

 Combined departmentation can promote better coordination and

communication across different departments, leading to enhanced
teamwork and collaboration.
 By leveraging multiple departmentation methods, companies can
enhance their operational
 Efficiency and effectiveness.
 Combined departmentation allows companies to specialize in different
areas and meet the needs of different customer segments more
effectively.
 Each department is accountable for its specific function or product,
leading to a higher level of responsibility and motivation among
employees.
 Combined departmentation allows companies to be more strategically
flexible by adjusting their departmentation methods to meet changing
business needs.

Disadvantages:

 Combined departmentation can result in a more complex

organizational structure, making it more challenging to coordinate
activities and decision-making.
 Implementing multiple departmentation methods may require more
resources and infrastructure, resulting in higher costs.
 Multiple departmentation methods may result in a greater potential for
conflict and competition between departments.
 There may be limited communication and collaboration between
employees in different departments leading to silos and reduced
cooperation.
 Combined departmentation may reduce flexibility in terms of employee
work schedules and the ability to adapt to changing business needs.
 Span of Control and span of management

The span of management refers to the ideal number of subordinates who

report to and are supervised by one manager.

Also known as the span of control (SOC), it determines how many

subordinates are able to provide maximum output without costing too
much under one manager/supervisor.

It also relates to the Unity of Command principle under Fayolism, which

discusses that there should be one manager who should be providing
guidance to subordinates.

Without determining an optimal number, a manager may be unable to

perform the controlling function. Likewise, coordinating, directing, etc.,
will also suffer. With that, the long-term plans suffer.

Types of Span of Management

There are two basic types when it comes to discussing the span of
management.

Wider Span of Management

It refers to situations when the organisational hierarchy consists of one

manager and many subordinates. For this span of management type, the
manager supervises many subordinates who are themselves skilled to
conduct duties without much directing and controlling.

Narrow Span of Management

This is the opposite situation, when there is more than one manager in an
organisation to handle a few subordinates. One of the best advantages
here is that the subordinates get thoroughly supervised and the manager
can exercise their duties more efficiently.

Number of Subordinates in Organisational Structures

Tall Structure

In a tall structure, there are less number of subordinates under managers.

There are different levels of management that deal with a specific number of
subordinates under each level. Here, a narrower span of management works.
Tall structures have more managers and the scope of managerial work is
more complex, and hence, the fragmentation.

Flat Structure
There is not much hierarchy in a flat organisational structure. Here, a
manager has to supervise subordinates who are more or less at the same
hierarchical level. That also means the roles of subordinates are neither too
varied nor complex.

Authority, Responsibility and Delegation

Authority
Authority is the right or power assigned to an individual/s in an organization
to achieve certain objectives. Henri Fayol says, “Authority is the right to give
orders and the power to demand obedience.”

A manager will not be able to function effectively without proper

authorization. Authority is the genesis of the organizational framework. It is
an essential accompaniment of the management task.

An organization cannot survive without authority. Without authority, an

administrator cannot function as a manager. It indicates the right and power
to make decisions and give orders and instructions to subordinates. In other
words, authority flows downward.

Types of Authority

Authority can be classified into three types –

 Line authority: Line authority trickles from top to bottom in the

organizational hierarchy. It establishes the chain of command. Each
level has the authority to manage the activities of the level below it to
ensure clear communication and accountability.
 Staff authority: Staff authority provides managers with support, advice,
and specialized knowledge. Staff positions have authority in specific
areas and serve as consultants to assist line managers in making
decisions.
 Functional authority: Functional authority typically exists in a matrix
organizational structure. It is delegated to people or departments with
expertise in particular functions. These individuals can give orders,
make decisions, and enforce policies within their designated domain.

Pros of Authority Principle of Management

 Clear decision-making: The authority principle provides a clear chain of

command, enabling efficient decision-making. Each level of authority
can make decisions within their scope of responsibility. This clarity
avoids confusion and delays in decision-making processes.
  Accountability and responsibility: The authority principle establishes a
clear link between authority and responsibility. Individuals with
authority are accountable for the outcomes of their decisions and
actions. This accountability promotes a sense of ownership and
ensures that individuals take responsibility for their assigned tasks.
 Efficient resource allocation: With authority comes the power to
allocate resources. Managers with authority can make decisions
regarding allocating financial, human, and material resources and
ensure better productivity.
 Effective coordination: The authority principle facilitates coordination
within an organization. This coordination ensures that teams work
together towards common goals, avoiding duplication of efforts and
enhancing overall efficiency.
 Simplified communication: The authority principle simplifies
organizational communication. Communication flows vertically through
the chain of command, ensuring the accurate flow of information.
 Quick response to challenges: Authorized individuals have the power to
make decisions. They can also take action promptly without being
hindered by excessive bureaucracy.
 Specialized expertise utilization: Different individuals or departments
with functional authority can provide specialized knowledge and
support to line managers. This expertise enhances decision-making
and problem-solving capabilities within the organization.

Cons of Authority Principle of Management

 In this principle, there is always a chance of misuse of given

authorities.
 It needs the supervisor’s skills to delegate required authorities and
responsibilities properly.
 Largely depends upon the interest and abilities of employees.
 Improper delegation sometimes leads to conflict between management
(manager) and employees.

Cons of Authority Principle of Management

• Overwhelming workloads, particularly for proactive team

members.
• The responsibility principle can sometimes limit experimentation
and creativity.
• Individuals can become too focused on their tasks, neglecting
collaboration and cooperation.
 • Lack of flexibility and adaptability.

Responsibility

Responsibility is the quality of an individual to fulfil his obligations or

promises and assume the consequences of his actions.

“Responsibility” is also used when one or several individuals must respond or

take charge of a situation to fulfil business goals. For example – Anita from
the Administration team is responsible for vendor management.

Responsibility is closely related to authority since being an authority is

assuming a great responsibility.

Importance of Responsibility Principle of Management

 Accountability: The responsibility principle establishes a clear link

between assigned tasks and those responsible for completing the
assigned tasks.
 Task execution: When the team members understand their
responsibilities, they can prioritize their work. They can allocate
resources appropriately if required and take necessary actions to
accomplish their assigned tasks.
 Decision-making and problem-solving: The responsibility principle
empowers individuals to make decisions and act responsibly. This
creates a decentralized work environment. Here the team members
can find solutions to the challenges without constantly seeking
approvals from upper management.
 Employee engagement and motivation: Engaging and involving the
team in meaningful work fosters a sense of satisfaction, motivation,
and commitment.
 Collaboration and teamwork: When individuals know their
responsibilities, they can coordinate and align their activities with
others and collaborate to achieve common goals.
 Organizational effectiveness: Responsibility ensures that tasks are
assigned to individuals or teams with the necessary skills and
expertise. It helps maximize resource utilization and enhance the
organization’s ability to achieve its strategic goals.

Delegation

Delegation at the workplace is when managers assign tasks to their team

members, which helps them to focus on higher-level goals and also makes
the members feel empowered and accountable. The objective of
delegation of authority is to decrease direct supervision and make the
team members more responsible for their work and learning. Knowing
about the principles of delegation of authority can help you better
understand the delegation process at work. Delegation may be full or
partial, depending on how much power a supervisor grants to their team
members for making independent decisions and taking action. Below are
some principles of delegation of authority that a manager may use during
the process of delegation:

Principle of functional definition: The objective of this principle is to define

the task clearly that an individual is required to accomplish. It also focuses
on the clarity of methods, expectations, goals and targets.

Principle of unity of command: This principle focuses on an individual

getting directions from only one supervisor, as receiving instructions from
several supervisors may make the process of delegation perplexing. With
this, the individual also remains answerable to their leader.

Principle of parity of authority and responsibility: This principle involves

authority corresponding to responsibility, as the former without the latter
may result in an individual’s inefficiency. By implementing this principle, a
manager may ensure a proper balance between both components.

Principle of absoluteness of responsibility: A supervisor can only grant

authority to their team members but not responsibility. The latter is the
commitment of an individual for which both managers and team members
are accountable.

Principle of delegation by results: This principle focuses on supervisors

determining the final result of a process and, based on that, assigning
tasks and delegating authority. Managers may achieve this by coherently
defining organisational goals and ensuring that team members align their
efforts with these goals.

Principle of limitations of authority: To prevent misuse of authority,

supervisors may limit the powers of an individual so that they do not
misemploy their authority. An efficient way for managers is to develop a
written set of guidelines to provide their team members with clear
directions.

Principle of proper motivation: Even with authority, an individual may not

perform tasks that a supervisor delegates to them. With the help of this
 principle, managers may introduce incentives, helping team members to
feel motivated and fulfil their responsibilities with accountability.

Principle of effective control: When supervisors establish a system for

control, they may be better able to measure the performance of their
team members. This allows them to evaluate how an individual
implements their authority.

Importance Of Delegation

Delegation is important for managers and their team members because it

can:

 Allows employees to gain new skills: When a manager delegates

tasks that are outside an individual’s usual duties, this allows the
individual to gain new skills. This skill development enables the
employees to find growth in their position and their career.
 Fosters trust: An employee may feel empowered when their
manager shows faith in them to complete a particular task. Trust
facilitates strong relationships between leaders and their team
members and also improves morale at work.
 Increases accountability: An employee feels more accountable when
managers show confidence in their abilities. To maintain this trust,
employees show their diligence and ensure that their actions result
in beneficial outcomes.
 Reduces stress: Managers may often have several high-level goals
they are required to accomplish to help organisations achieve their
business objectives. When they delegate tasks that are incidental,
they allow themselves to manage their schedules better, which can
reduce stress.

How To Delegate Effectively?

Below are some steps in the delegation process that a manager may follow
for effective delegation:

1. Assess before the delegation

When managers conduct assessments of tasks they intend to delegate, it

helps them to define the objectives and expectations clearly. It allows them
to determine what to accomplish or which team member may be suitable for
a specific task. Below is a list of questions to help supervisors efficiently
conduct the assessment of delegation:
What strengths and abilities do my team members require for accomplishing
the task well?

What are the resources that I may offer my team members to help them
efficiently complete their work?

What technical tools the organisation can offer them to help them maximise
their productivity?

What results do I expect from my team members?

Do I have examples that may enable me to define a successful project to

help me conduct a performance comparison?

Do I really require delegating a larger responsibility to my team members, or

can it be beneficial dividing it into smaller goals?

2. Assign tasks

By utilising the assessment of delegation and goals, a manager may

prudently identify the right team members for specific jobs. After this
analysis, they may assign different tasks to members. To recognise what
tasks they may assign to different team members, a manager may take the
help of the following metrics:

Skills: Managers can ensure better results when they assign team members
tasks that match their skill set. This enables the team members to work
independently and deliver their best work, whichh further enhances their
morale and also saves time.

Interest: Managers often receive the best results when they assign work to
those members who possess the eagerness to apply their skills and
experience to tasks they are most interested in accomplishing. Individuals
may perform more efficiently when they work on projects that interest them.

Time: If an individual already has several tasks to accomplish, assigning

more duties to them may not always produce favourable results. A manager
who ensures delegation based on availability is better able to accomplish
team goals within deadlines.

3. Establish comprehension

Before delegating duties, a manager who conveys the task’s objectives and
expectations to their team members can better ensure that everybody
understands their responsibilities clearly. A manager may also reiterate the
requirements before the team members start working on their tasks. To help
their team members recognise their responsibilities, the manager may
develop a written document that has actionable instructions.

4. Implement SMART goals to support the success

When managers establish specific and actionable goals for their team
members, they monitor their performance and progress better. These goals
also ensure success for both managers and their teams. Below are the
SMART goals for the process of delegation:

Specific: Clearly specify the expectations for success. For example, asking
team members to upload 15 regional news stories every day that reporters
submit.

Measurable: Quantify the employee’s progress. For example, specify the

number of regional stories that a team member may upload to increase the
traffic on the website.

Attainable: Ensure that the team members have the resources that they may
require for completing their tasks within deadlines. For example, high-speed
internet connectivity and a robust backend system that allows the team
members to quickly and accurately upload the news stories.

Relevant: Identify and eliminate unrelated processes to maximise efficiency.

For example, asking team members to write stories that match the current
news trends.

Time-based: Set clear deadlines for team members. For example, giving
team members an hour to edit a 500-word news story.

5. Establish commitment

Managers may organise follow-up meetings to confirm the commitment of

team members to their respective tasks. This also gives the managers an
opportunity to discuss the importance of projects with their team members.
During these discussions, managers may also talk about the skills that the
team members may gain by completing the upcoming work. Below are some
questions a manager may ask to confirm the commitment of their team
members:

What interests you the most about working on this project?

Do you think it can be possible for you to accomplish the tasks within
deadlines?

What are some benefits of this project for you?

 6. Ensure accountability

A manager’s support to their team members results in greater trust and

team efficiency. Good managers offer resources to their team members,
helping them succeed in their roles. Here are some ways a manager may
follow to increase accountability of their delegation:

Agree on clear and unanimously accepted deadlines.

Encourage open communication, allowing team members to ask questions

comfortably.

Establish benchmarks to enhance time management, along with monitoring

work progress.

Share the consequences of delivering incomplete work.

7. Recognise accomplishments and provide incentives

Managers who recognise the accomplishments of their team members allow

their team to possess higher motivation. To further enhance their motivation,
managers may also introduce performance-based incentives. Rewarding
those who do well may make them feel valued at an organisation. Here are
some tips to help managers encourage their team members to complete
their work productively:

Share feedback with team members routinely and give specific details about
what they do best and what their areas of weakness are.

Compare the results with their previous performance to highlight their

growth.

Celebrate their accomplishments and support their career goals.