What is organizational structure ? Full Meaning and Explanation of Organizational Structure

What is organizational structure ? Organizational structure defines how job tasks are formally divided, grouped, and coordinated. There are six elements that, managers need to know when they design their organization’s structure.

  • Work Specialization
  • Departmentalization
  • Chain of Command
  • Span of Control
  • Centralization and Decentralization
  • Formalization

Work Specialization:

The term work specialization or division of labor to describe the degree to which activities in the organization are subdivided into separate jobs. The essence of work specialization is that rather than an entire job being done by one individual, it is broken down into a number of steps, with each step being completed by a separate individual. In essence, individuals specialize in doing part of an activity rather than the entire activity.


You have divided jobs up through work specialization; you need to group these jobs together so that common tasks can be coordinated. The basis by which jobs are grouped together is called departmentalization.

One of the most popular ways to group activities is by functions performed. A manufacturing manager might organize a plant by separating engineering, manufacturing, accounting, personnel, and supply specialists into common departments.  

Chain of Command:

The chain of command concept was a basic cornerstone in the design of organizations. The Chain of command is an unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

Span of Control:

Span of control is important, to a large degree; it determines the number of levels and managers an organization has.

Centralization and Decentralization:

Many organizations, top managers make all the decisions. Lower level managers merely carry out top management’s directives. The term centralization refers to the degree to which decision making is concentrated at a single point in the organization. Typically, it’s said that if top management makes the organization’s key decisions with little or no input from lower level personnel, then the organization is centralized.

In contrast, the more that lower level personnel provide input or are actually given the discretion to make decisions, the more decentralization there is.


Formalization refers to which jobs within the organization are standardized. If a job is highly formalized, then the job incumbent has a minimum amount of discretion over what is to be done, when it is to be done, and how it is to be done? The degree of formalization can vary widely between organizations and within organizations.

Common Organizational Designs:

There are three common organizational designs. Such as –

  • The Simple Structure
  • The Bureaucracy
  • The Matrix Structure

The simple organizational Structure:

Simple structure is said to be characterized most by what it is not rather than by what it is. The simple structure is not elaborate. It has a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization. The simple structure is a ‘flat’ organization; it usually has only two or three vertical levels, a loose body of employees, and one individual in whom the decision making authority is centralized.

The Bureaucracy Organizational Structure:

The bureaucracy is characterized by highly routine operating tasks achieved through specialization, much formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command. Take a look at the bank where you keep your checking account, the department store where you buy your clothes, or government office, they all rely on standardized work processes for coordination and control.

The Matrix Organizational Structure:

The matrix structure is a popular organizational design. Such as advertising agencies, aerospace firms, research and development laboratories, construction companies, hospital, universities. Essentially, the matrix structure combines two forms of departmentalization: functional and product departmentalization.