Organizational Structure

Organizational Structure

David Palacios, sebastián alvarez, andrés acevedo, nicolás estrada, alendro barranco and emiliano montoya

Concept

Organizational structure is the method companies choose to determine the flow of information, decisions, and work. It allows employees to collaborate productively so that their individual tasks combined achieve the company's objectives.

It's composed by

Chain of command

Levels of hierarchy

Span of control

Levels of hierarchy are a way to quantify the importance of each employee, and thus elements like their salary/commissions, weight of their decisions, power, and others.

Levels of hierarchy

Decentralized

Basic structure

(centralized)

Some companies have a different approach: they don’t have hierarchy levels and every employee has the same value. This is only possible in small firms composed by capable individuals like Renaissance Technologies.

1. CEO 2. Directors: Chiefs (area) officers 3. Managers 4. Operators

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The span of control is the number of workers assigned to a manager.

Span of control

Narrow Span

Wide Span

Each manager has a small number of employees. Creates a more intimate work setting and in many cases, each manager is more hands-on. The limited number of employees operating under each manager creates more personal interactions and often opens access to the manager.

A wide span of control means each manager is responsible for a large number of employees. This approach is effective when the daily tasks and processes are clearly defined.

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References

Kenton, W. (2022, 26 julio). Organizational Structure for Companies With Examples and Benefits. Investopedia. https://www.investopedia.com/terms/o/organizational-structure.asp

Indeed Editorial Team. (2022, 12 julio). What is a Chain of Command? (Definition and Explanation). indeed.com. https://www.indeed.com/career-advice/career-development/chain-of-command

Keys to compose the hierarchy of a company. (2021, 5 junio). AYCE LABORYTAX. https://www.aycelaborytax.com/en/blog/tips-to-compose-the-hierarchy-of-a-company-and-promote-its-growth/

Lazzari, Z. (2019, 27 marzo). Advantages of the Span of Control. Small Business - Chron.com. https://smallbusiness.chron.com/advantages-span-control-61229.html

Bragg, S. (2022b, mayo 26). Span of control definition. AccountingTools. https://www.accountingtools.com/articles/span-of-control

Hunsaker, E. (2021, 20 noviembre). Mechanistic Vs. Organic Organizational Structure. Bizfluent. https://bizfluent.com/facts-7642894-mechanistic-vs-organic-organizational-structure.html