Organizational Structure

Each organization has a defined structure that defines the division and coordination of labor. The complexity of that structure varies according to the complexity of the organizational levels and its scope of business. This structure also reflects a number of facts about a given organizations. These facts are:

1. Specialization; it refers to the division of labor and the tendency of grouping related skilled people under one specialized department. In many organizations, specialization is VALID and the founders believe that it's the right choice for the bet of the employee performance. However; many new organization believe that specialization get the employee bored of repetitive tasks and thus affect its performance negatively. Some related skilled people may be also divided according to some business needs. For example; a newspaper organization may divide its reporters according to their topic domain such as politics reporters, sports reporters and economic reporters.
   
2. Centralization; it refers to the decision-making power of some individuals. Centralized organizations hold the decision-making capabilities in one or more of the executive managers. Decentralized organization tends to spread the decision-making capabilities across the organization to the executives, line managers and supervisors.
   
3. Standardization; it refers to the similarity of the rules, procedures and regulations across the organization. There are some organizations that give a high degree of job autonomy and personality expression to employees, while others don't allow this level of autonomy because of the strict rules and procedures spread around.
   
4. Chain of command; it refers to the formal hierarchy between employees and who reports to whom. A group of employees might be reporting to section head for example. This head is the ultimate reference of those employees within this section.
   
5. Span of control; it refers to the authority level of an employee. The wider the level of control, the lesser the levels of the organization. This fact is used by some organization to decrease employment costs!!
   

Types of organization structure

There are four main types of organizational structure summarized in the following table that lists the main differences between them.

Type	Simple	Matrix	Team	Virtual
Level of labor division	Low	High	High	Low
Chain of authority	Centralized	Dual	Decentralized	Centralized
Extent of control	Wide	Wide	Narrow	Narrow
Standardization	Low	Low	Low	High

P.S. There are other nomenclatures of these types in other business literature, so don't get confused. There are almost the same.

Virtual Structure

Matrix Structure

Simple Structure

Team Structure

The selection of an organizational structure depends on many factors such as:

• Organizational Size
  
• Organizational Strategy (business scope, departments, activities, etc.)
  
• Organizational adopted technology
  

Moreover; an organizational structure can impose serious effects on employee performance, employee behavior and level of production. Going towards centralization environments for example can have the disadvantages of decreased employee involvements, lesser employee belonging, loss of innovation, decreased development of skills and much more. On the other hand, going towards decentralized environments can also have the disadvantages of losing ability to address wide-spread problems, difficulty of monitoring employee compliance with policies. This means the founders of the organization has to carefully consider the organizational structures selected.

It's also worth saying that an organizational structure is evolved over time as the organization grows, not just invented from scratch. This means that organizational structure is a flexible topic to be continuously adapted and adjusted over time. Every manager should make this issue CLEAR!!