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CHAPTER 6 • Organizational Structure and Design 185
What Are the Six Key Elements in Organizational Design?

A short distance south of McAlester, Oklahoma,
6-1 Describe six employees in a vast factory complex make products
key elements in that must be perfect. These people “are so good at what
organizational they do and have been doing it for so long that they
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have a 100 percent market share.” They make bombs
design. for the U.S. military, and doing so requires a work
environment that’s an interesting mix of the mundane,
structured, and disciplined, coupled with high levels of
risk and emotion. The work gets done efficiently and effectively here. Work also gets done
efficiently and effectively at Cisco Systems, although not in such a structured and formal
way. At Cisco, some 70 percent of the employees work from home at least 20 percent of
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the time. Both of these organizations get needed work done, although each does so using
a different structure.

Getting work done efficiently & effectively.

Organizing is all about that! Recall from Chapter 1 that we defined organizing as the
function of management that determines what needs to be done, how it will be done, and
who is to do it; in other words, the function that creates the organization’s structure. When
managers develop or change the organization’s structure, they’re engaging in organization
design. This process involves making decisions about how specialized jobs should be, the
rules to guide employees’ behaviors, and at what level decisions are to be made. Although
organization design decisions are typically made by top-level managers, it’s important for
everyone involved to understand the process. Why? Because each of us works in some type
of organization structure, and we need to know how and why things get done. In addition,
given the changing environment and the need for organizations to adapt, you should begin
understanding what tomorrow’s structures may look like—those will be the settings you’ll
be working in.
Few topics in management have undergone as much change in the past few years
as that of organizing and organizational structure. Managers are reevaluating tradi-
tional approaches and exploring new structural designs that best support and facilitate
employees doing the organization’s work—designs that can achieve efficiency but are also
flexible.
The basic concepts of organization design formulated by management writers such as
Henri Fayol and Max Weber offered structural principles for managers to follow. (Rewind
to History Module, p. 49.) Over 90 years have passed since many of those principles were
originally proposed. Given that length of time and all the changes that have taken place,
you’d think that those principles would be mostly worthless today. Surprisingly, they’re not.
They still provide valuable insights into designing effective and efficient organizations. Of
course, we’ve also gained a great deal of knowledge over the years as to their limitations. In
the following sections, we discuss the six basic elements of organizational structure: work
specialization, departmentalization, authority and responsibility, span of control, centraliza-
tion versus decentralization, and formalization.

(1) What Is Work Specialization? organizing
The function of management that creates
TradiTional View. At the Wilson Sporting Goods factory in Ada, Ohio, workers make the organization’s structure
every football used in the National Football League and most of those used in college and organization design
high school football games. To meet daily output goals, the workers specialize in job tasks When managers develop or change
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such as molding, stitching and sewing, lacing, and so forth. This is an example of work the organization’s structure
specialization, which is dividing work activities into separate job tasks. (That’s why it’s work specialization
also known as division of labor.) Individual employees “specialize” in doing part of an Dividing work activities into separate job tasks;
activity rather than the entire activity in order to increase work output. also called division of labor