The primary objective of an organization is to set up relationships and procedures in such a way that
employees can obtain the best results from their efforts. In an organization, jobs are generally organized into teams,
units, departments, divisions, and so forth thereby combining individual efforts and producing more than individuals
could produce separately. The more appropriate the structure supporting relationships and procedures governing
employee actions, the smoother and more efficiently the organization will operate. The framework of an
organizations structure is created through a process called organizational design that defines the four key design
decisions, which include division of labor, departmentalization, span of control, and delegation of authority.
Division of labor determines the extent to which jobs are specialized, either by personal specialities,
horizontal specialization, or across a vertical plane. Division of labor through specialization increases control by
reducing the need for autonomy in decision-making, but also reduces responsiveness of the firm to changes in the
environment. Departmentailzation refers to the rationale used to group jobs together and includes functional,
territorial, product, and customer-based departmentalization. It is also possible to combine the better of two
departmental based groups into a matrix in order to develop a type of synergy between functional specialties.
The span of control in an organization refers to the establishment of the number of jobs to be included in
any specific group. Span of control is often determined by looking at the required contact, degree of specialization,
and ability to communicate needed across actual relationships of a manager’s interaction with subordinates,
permutations of subordinates, and the subordinate interactions between each other. Delegation of authority refers to
the amount of decision-making authority that is delegated to each job or each jobholder. Authority normally is
either centralized or decentralized depending on the straightforwardness of the job, competency and motivation of
the individual, and the costs and benefits derived from the delegation of authority.
In my firm, the four design decisions can be seen in a discussion of groups included the organizational
chart of the department of which I am a part of, and which is included as an appendix to this paper. In the example I
have named the two groups as CA and RA and only use this organizational chart as an example of the differences in
organizational structure and not as an attempt to differentiate individuals of either group. The two groups have very
different duties. CA handles day to day customer services issues. RA reports revenue and related financial
information to upper management and has a study component that handles researching cost saving initiatives for
various departments as well as for upper management.
The most obvious difference on the organizational chart is the relative size of the groups. Because CA is so
much larger there is a wider span of control, which means interpersonal relations between managers and team
members tends to be low. Reasons for the wide span of control include previous down sizing efforts, the high
degree of specialization, and the low need for continuous contact between managers and subordinates. The high
degree of specialization in the CA group is conducive to a high division of labor because the group performs welldefined duties that are repetitive in nature, which reduces their need for autonomy. The broad nature of the work in
the RA group tends to be more analytical and requires a high degree of flexibility so the employees are better able to
respond to changing environment factors.
The organizational chart reflects homogeneous departmentalization in the CA group, which helps to ensure
that the large amount of work in that department is completed in a manner prescribed by management. The RA
department is more heterogeneous because of the research related work being done and because cross-functional or
matrix teams are often created to address specific problems. Finally, delegation of authority is centralized in the CA
group meaning individual decision-making is restricted, which reduces training costs, and improves coordination
between the various departments in the group. The RA group tends to be decentralized and there is a great deal of
autonomy and decision-making. This allows the mangers to develop their skills, obtain needed information in a
timely manner, and gives them the professional influence needed to make recommendations.