An organizational chart should be structured in a way that aids the business in running effectively and efficiently. In most cases, a structure that is poorly crafted creates a series of problems, including profit losses, an increase in employee turnover, and a decline in productivity, to name a few.
Thankfully, there is a list of elements that can serve as a basis in the formulation of the chart. These elements are as follows: departmentalization, the chain of command, the span of control, centralization or decentralization, work specialization, and degree of formalization. Each element defines how workers interact with each other, with the management, and even the task given to them.
An organizational structure shall consist of groups that often come by function, offices, and teams. Companies then call these groups as their departments, which are sorted in the nature of tasks each one performs. Departmentalization can also come by dividing the business based on its product lines, locations, and customer needs.
2. Chain of Command
Chain of command is an essential element of an organizational structure as it reduces the inefficiency among employees. With the use of the said element, members of the firm can see the manager that they should report to. Managers, on the other hand, are expected to assign tasks to their members, set deadlines, monitor their performance, and above everything, provide motivation to them on a one-to-many basis.
Conversely, employees must report back to their managers whenever they encounter any problem or concern. Managers shall forward these issues and concerns to upper levels if such action is necessary. The chain of command fosters a more efficient flow of communication across all levels of the business that increases the firm’s productivity.
3. Span of Control
Every organization varies in terms of its span of control. This element defines the number of employees each manager is responsible for within the company. Factors that result in the variation of their optimal span include the size of the entire workforce, the basis of its division in departments, and the specific goals and strategy it has.
4. Centralization or Decentralization
Centralizing the structure of business would expect the management to plan all the actions to be taken by the organization. Such plans shall then be put into actions by front-line employees. This form of structure leaves little or no input for the employees to give.
Conversely, some companies may decide to decentralize their structure. Such a move will allow all levels of management to take part in the formulation of the firm’s goals and objectives. At present, larger companies still opt for centralization in their organizational structures.
5. Work Specialization
Presenting the job description of every employee is a step leaning towards job specialization. This is done by giving them a clear presentation of their duties and the firm’s expectations towards them. The approach makes sure that there is no duplication of jobs and that every employee performs in a standard that the firm expects from them.
6. Degree of Formalization
Any organizational structure must present the degree of formalization that it possesses. Such an element is essential, so employees are well aware of the culture, procedures, and rules that are functional within the workplace.