2.2 Organizational Structure

 Organizational charts (page 117) 

Organizational chart is a diagram that outlines the formal roles, responsibilities, and reporting lines. Using an organizational chart you will be able to clear see and distinguish each manager’s responsibility in a given business

Terminology
 * Levels of hierarchy refers to the amount of levels that there are in the organizational chart of a business. Each level indicates a level of seniority in the business. In this case, there are four levels in this organizational chart that range from the CEO being at the top, and the Junior being at the bottom. (Most important to least important)


 * Chain of command is the formal rout that a decision must travel through an organization. For example: if the CEO makes a decision, the managers will have to be aware in order for them to keep the employees up to date with the decision of the CEO.
 * Span of control refers to how many subordinates are directly under the authority of manager and whom managers are responsible for.


 * Delegation is when a manager gives authority for a particular decision, but not full responsibility of the outcome of that decision.
 * Centralization all major decision making is maintained within a small group of managers operating close to the head of the business.
 * Decentralization is the opposite of centralization. In a decentralized organization, senior managers may maintain core strategic decisions, but other decision-making authority is delegated to middle managers
 * Bureaucracy is a term referring to non-elected officials serving in government, today this term means any administrative system. In business the term indicates the relative importance of rules and procedures.
 * De-layering this occurs when a business reduces levels of hierarchy by removing layers of management.

 Types of organization chart 

Tall organizational structure  A tall organizational structure is the traditional organizational form of a business.

It has the following features:
 * Many levels of hierarchy
 * Narrow spans of control
 * Centralized decision making
 * Long chains of command
 * Autocratic leadership
 * Limited delegation

Flat organizational structure A flat organizational structure is a modification of the more traditional structure due to de-layering.

A flat organizational structure includes the following features:
 * Few levels of hierarchy
 * Wider spans of control
 * Decentralized decision making
 * Shorter chains of command
 * Democratic leadership
 * Increased delegation

Organizational structure by hierarchy 

In an hierarchal organizational structure, individuals that are at the top have more authority than those below them.

Organizational structure by function

An organizational structure by function, represents what employees do. Employees are grouped by department.

Organizational structure by product

An organizational structure by product shows what the business produces.

Organizational structure by region

A further typical way of presenting an organizational structure is according to where the business operations are.