What you’ll learn to do: Describe the miscellaneous business structures and their history

When the US economic climate went from the basic store on the edge to the boom of manufacturing and also the industrial revolution, tright here was a should look at businesses in different ways. Suddenly, tright here were not 2 or 3 employees in a company, tright here were hundreds. Tright here was not just one team of work to finish, tbelow were dozens.

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Just as we looked to our team members to decide exactly how to motivate them and also make them even more productive, we began to study business structure to identify exactly how that had an affect. Organizational structure brings together Taylor’s concepts of job-related field of expertise, Fayol’s concepts of chain of command, and also Weber’s bureaucracy to include to the performance and also effectiveness of organization.

Learning Outcomes

Discuss the elements of business structureDiscuss widespread business structures and their historic originsIdentify modern business architecture options

What is Organizational Structure?

A worker reports to a manager. A manager reports to a director, a director reports to a vice president, and a vice president reports to a C-level senior leader, favor a chief executive officer or a chief administrative officer. If you’ve ever before operated in a corpoprice setting, you’re likely to acknowledge this as the fundamental collection of layers of an organization’s framework.

Organizational framework specifies exactly how task work are formally separated, grouped, and also coordinated. The structure of an organization typically functions 6 various elements:

Work specializationDepartmentalizationChain of commandSpan of controlCentralization and decentralizationFormalization

Practice Question

Now that we understand also just what organizational framework is, let’s take a look at each among its facets, so we can much better understand also exactly how institutions select to framework themselves to maximize efficiency.

Work Specialization

Earlier, we stupassed away Frederick Winslow-moving Taylor, who researched time and also movement and also determined the the majority of effective means for employees to perform their tasks. Taylor’s “one best way” was the birth of work expertise. When Henry Ford conceived the assembly line, he tossed aside “one best way” and perceived occupational field of expertise via an eye toward continued innovation. Work specialization explains the level to which activities in the organization are separated, and then subdivided, into sepaprice tasks.

If you put one worker on the task of structure an car, he could still be structure it a month or 2 later. But if you have actually one worker that’s focused on installing appropriate front tires, and another who is concentrated on left front fenders, then those work become standardized. Employees learn to do them easily through practice.

By the 1940s, many manufacturers were practicing occupational expertise, or “division of labor” as it’s occasionally dubbed. Work expertise was appropriate from a task allude of view—easy tasks could be done by unexperienced labor, and also those tasks that required more skill could be separated out and addressed by employees that possessed those skills. Those skilled employees weren’t wasting their time on work they didn’t need to be doing.

Work specialization was also best from a performance point of view. Installation of brake pads calls for various tools than the installation of a tire, and when workers were assigned to among those jobs instead of both, devices didn’t should be taken out and also put away. Employees can cheaply be trained to perform one particular job, and also many type of employees, each trained to carry out their certain job, might assemble very complex machinery quicker and also simpler than one very trained employee that possessed all the abilities to finish the assembly.

Manufacturers ongoing to tinker with and fine-tune worker field of expertise to rise productivity till the 1960s, once it ended up being clear that a good point could be taken too far. Boredom, anxiety, low productivity, raised absenteeism and turnover offset better productivity. Manufacturers responded by enlarging worker specialization, including even more jobs within a place to rise engagement.


Once tasks are divided up via work-related specialization, those jobs need to be combined together to coordinate widespread tasks. Departmentalization is the basis whereby jobs are grouped together. Jobs can be grouped in the adhering to ways.

Function. This is among the many popular method to group tasks. Corporations could have actually a supply chain attribute, a finance feature, a huguy sources feature. All the worker specializations for those areas are grouped together, and also world through prevalent skills work in widespread units.Product. A huge manufacturing agency could team its prevalent jobs together by product. A paper commodities manufacturer might have a department for office paper, and also various other department for bathroom tworries, and also yet one more for carlots. The significant advantage of organizing common tasks this way is to increase employee accountcapability for the success of those commodities.Geography. If an organization’s customers are scattered over a geographical region, an company might choose to group widespread work geographically. A firm that has a South, Midwest, and Eastern sales function is organizing around area, or geography.Process. A manufacturing plant might select to organize prevalent work approximately procedure. A tubing plant might organize departments approximately casting, pressing, finishing, packaging, and so on Each department specializes in one particular part of the production procedure. The very same type of departmentalization is true of the Department of Motor Vehicles, wright here you continue from one area to one more to renew your license plates or your driver’s license.Customer. A organization can choose to incorporate work about the type of customer it serves. For circumstances, a business favor Dropbox.com has free file sharing and cloud storage for its individual individuals, but there is also a department of Dropbox that services service clients.

Large corporations deserve to use any type of or every one of these forms of departmentalization to organize themselves. They can have a manufacturing area that organizes itself roughly process, however then a sales department that is arranged geographically and a corporate support facility that’s arranged functionally.

Chain of Command

The chain of command also is the undamaged line of authority that exhas a tendency from the peak of the organization (e.g., the CEO or the President) to the lowest echelon and also clarifies who reports to whom. At the start we talked around supervisors reporting to directors, that reported to vice pinhabitants that reported to C-level leaders. Such is the chain of command.

Two extra concepts go together with the principle of chain of command. The initially, authority, describes the legal rights natural in a managerial position to give orders and to suppose the orders to be obeyed. The second, unity of command, explains the idea that a subordinate need to just have actually one remarkable to whom he or she is straight responsible. If unity of command also doesn’t exist, there’s a likelihood that a subordinate will be responding to regulates from various world and also enduring a dilemma of competing priorities, which isn’t productive.

We learned around Henri Fayol and his theories approximately administration, particularly chain of command also and unity of command. These values provided to be a cornerstamong business structure, but developments in technology and also the trfinish toward empowering employees makes this much less appropriate today, however the chain of command aspect is not going to disshow up any type of time quickly.

See more: Why Are Standard Units Of Measurement Necessary, Why Is A Standard System Of Measurement Important

Span of Control

Span of regulate encounters the number of subordinates a manager deserve to successfully straight. The larger an company can make its managers’ spans of regulate the even more reliable it will certainly be. Wider spans of regulate save money.