Designing the right organizational structure and presenting it in a clear organization chart isn’t that easy. The biggest challenge is trying to get a solid and reliable structure despite complex and dynamic environments. In order to carry out this task, it is first of all necessary to know what an organization chart of this type consists of. The elements that compose it are:
- Structural components: all action units to which the various tasks of the company are distributed, including the position as the smallest unit, the instance (a position with authority), the department (a grouping of several positions under the management of an instance), support services, as well as committees and teams, which are usually set up on a temporary basis to manage complex projects.
- Structural relationships: the network of relationships between all the structural elements mentioned above.
- Systems of lines: Graphic elements such as boxes, lines and arrows that visually illustrate the order and paths of education. You can also check organization chart and management details which can help you in your business.
How are the different types of corporate organizational structure distinguished?
The common types of corporate organizational structure are distinguished primarily on the basis of six components. These six components are stated below:
- Chain of command (long or short): the basic component of the organizational structure; a chain of command means an unbroken line of authority between top management and employees at the lowest level. It determines who should report to whom.
- Control margin (wide or narrow): The more subordinates a superior can or must manage effectively, the greater the control margin of an organizational structure.
- Centralization (centralized or decentralized): this component describes whether the decision-making process in the company takes place in a central point (in management) or decentralized (in consultation with employees). The latter variant is considered more democratic, but there is also the risk that it could slow down the decision-making process.
- Specialization (specialized or differentiated): Also referred to as “division of labor”, describes the degree to which tasks in a company are divided into sub-tasks and individual jobs. With a high degree of specialization, employees have the opportunity to become experts in their field and thus work more productively. A low level of specialization in turn promotes the formation of flexible all-round talent.
- Formalization (formal or informal): in formal organizational structures, works and processes are highly regulated and standardized regardless of the person who carries them out. An informal organizational structure, on the other hand, gives the individual more freedom to organize their work based on preferences, skills and results. This allows employees to look beyond their own horizons and to orient themselves and train in other departments.
- Departmentalization (rigid or loose): The term departmentalization refers to the process of grouping jobs in order to carry out joint projects. A rigid departmental formation is therefore present when all departments are autonomous and hardly interact with each other, while a concept of free collaboration promotes collaboration more strongly.