Organization structure and effectiveness

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Organisation Structure and Effectiveness


Organizational functions and activities need to be organized and coordinated. They should be designed properly to manage the effective division of work, grouping of activities, coordinating and controlling the work of the organization. Organizational structure determines the work allocation and grouping of activities according to the need and goals. All the activities need to be delegated by the managers to achieve efficiency and professionalism in the task. It needs departmentation which leads to efficient functioning of managers and the organization. It also gives specialized output, administrative control and fixation of responsibilities, freedom and development of managers. There are three types of structures of organization they are functional, divisional and adaptive according to which an organization can be created. Besides this, organization structure has three dimensions they are formalization, centralization and complexity to attain organizational effectiveness. Other factors which influence effectiveness are managerial policies and practices, environmental characterization, employee characteristics and organizational characteristics.


The designing is done for division of tasks, grouping of activities and coordinating and controlling the tasks of organisation. Organisation structure is established pattern of relationships among components of the organisation. It refers to the network of relationships among individuals and positions in an organisation.
The structure of organisation takes the shape of pyramid and implies some important facts. It contributes to the smooth functioning of organisation in many ways. The significance of organisation structure is attributed to factors like clear-cut authority, relationships, pattern of communication, location of decision centers, proper balancing, stimulating creativity, encouraging growth and making use of technological improvements.

Organisation structure determines the allocation of tasks, influences division of tasks and helps in grouping of activities. It also influences coordinating the activities and the overall task accomplishments in an organisation. Managers are required to take four important decisions for designing organisational structure. The first step involves division of overall task into smaller jobs. The second step involves distribution of authority among the jobs. The third step stresses as bases by which individual jobs are to be grouped together. The fourth step refers to the appropriate size of group reporting to each superior.
Division of labor results in work specialization and delivers benefit to the organisation. It enhances work efficiency and so employee's skills can be used in best possible ways. It helps in attaining perfection on job. It enhances productivity and lowers training costs. Its demerits are that it cannot be used for all types of jobs, leads to monotony and boredom, and underestimates behavioral aspects of workers.

Delegation is a process followed by manager in which he divides the work assigned to him. It is done so that he can perform his part efficiently in the interest of the organisation. It is legitimate authorization to a manager or employee to act in a specified ways.
Delegation has its benefits as it leads to professionalism, enhances creativeness and innovativeness through managerial decisions, creates competitive environment, and encourages quick witted decisions.

It has its limitations as managers may resist delegating authority and may require training for taking decisions. It may also result in increasing of administrative cost.
Departmentation is the process done for efficient functioning. It includes forming departments or grouping activities of an organization into number of separate units. Its major benefits include specialization, administrative control, and fixation of responsibility, freedom or autonomy, development of managers.

Span of Control means the number of individuals that can be efficient supervised by the manager. It has some important factors like nature of the work, ability of the managers, efficiency of the cognition, self assistants, time available for supervision, ability of the subordinates and degree of decentralization.

There are different types of organization structure that can be created. They are done on the basis of arrangement of activities. There are three types of structural forms and they are:
  1. Functional structure
  2. Divisional structure
  3. Adaptive structure

In function structure there is functional specialization in each unit that leads to operational efficiency of persons engaged with it. It is created by having units and sub units biased on the functions in the organization.

Divisional structure works well with large enterprise that deals in multiple products and has multiple markets to sell their products. Organization gets divided into smaller business units that are exhausted with business related to different products or different market territories. This type of structure is characterized by decentralization of authority and provides opportunities to divisional managers. It has its limitations as it requires adequate number of capable managers to take charge of respective divisions and their functional units.

Adaptive structures are the one that are designed to cope with the unique nature of undertaking and the situation. They are of two types they are project organization and matrix organization.
There are three dimensions of organization structure and they are formalization, centralization and complexity.

Formalization is the extent to which the activities, rules, procedures instructions etc. are specified and written and refers to the degree to which the activities of the organization are standardized. It promotes coordination, reduces operating cost, standard activities reduce conflict and ambiguity, scope of personal discretion is less.

Centralization is the extent to which decision making is centralized in the organization. It is useful in small organizations. On the contrary, decentralization is just the opposite as it means transference of authority from higher levels to lower levels.
Complexity relates to the difference among jobs and units. It reflects the extent of differentiation that exists within the organization. In organizations, there can be horizontal, vertical and spatial differentiation that is based on the complexity of activities.

Organizational design is the process of coordinating, structural elements of organizations in appropriate manner.
Organizational effectiveness is the measure of effectiveness by which any organization function are also dependant on the structure of the organization. There are many factors that influence organization effectiveness and they are managerial policies and practices, environmental characteristics, employee characteristics and organizational characteristics.