An organization$$s structure refers to how tasks are assigned to individuals and departments, the organization$$s formal reporting relationships, and how the organization coordinates activities across departments. You can see the organization$$s structure in an organizational chart.

When structuring an organization, you want to think about four basic characteristics of the organization. These include:

$$ Division of labor. When creating an organization, managers have to decide how tasks will be divided into separate jobs. This is known as division of labor or work specialization. When companies divide work into many different jobs, work can be done efficiently, but it may be boring for the employee. In addition, too much specialization can make it difficult to coordinate work across the company.

$$ Chain of command. The chain of command shows who reports to whom in the organization. Unity of command means that each employee reports to only one supervisor. The scalar principle is the idea that everyone in the organization must report to someone.

$$ Span of management. The span of management, sometimes called the span of control, tells you how many employees report to a single manager. In the past, it was recommended that each manager have $7$ to $10$ direct reports. But some organizations today give managers $30,40$ or more direct reports. Managers can have larger spans of control if subordinate work is stable and routine, if subordinates perform similar work tasks, if subordinates are in a single location, if subordinates are highly trained, if there are rules and procedures for subordinate work, if support systems are available for managers, if little time is required for nonsupervisory activities, and if managers have a personal preference for large spans of control. Tall structures have narrow spans of control while flat structures have wider spans of control.

$$ Centralization and decentralization. Centralization means that decisions are made near the top of an organization, while decentralization means that decisions are made at lower levels in the organization. Many organizations today are becoming more decentralized, which in turn eases the burden on their top managers, makes greater use of employee skills and abilities, ensures that the employees closest to the customer make decisions, and permits a more rapid response to environmental changes. The more uncertainty there is an organization$$s environment, the more likely the organization will be decentralized. Organizations have to choose the amount of decentralization that fits their strategy. A company in crisis is more likely to have centralized decision making.

Complete the following sentences with the correct term.

If you are looking at the organization chart of a $,$ you see more hierarchical levels and managers with relatively narrow spans of control.

You would study a business$$s to see a visual representation of its vertical structure, including the chain of command.

During a time of crisis, an organization may become $,$ placing more decision$-$making authority near the top of the organization.