Chapter 10, Problem 1RDQ

Summary Introduction

To determine:

The traditional and contemporary views of the six key element of organizational design.

Introduction:

Organizational design is the process of establishing a structure in which the jobs are assigned in the organization. The reason to design an organizational structure is to help the employees or working to perform their job efficiently and effectively. The six key elements of organizational design are chain of command, span of control, departmentalization, work specialization, centralization or decentralization, and the degree of formalization.

Explanation of Solution

The traditional and contemporary views of the six key elements of organizational designs are as follows:

1. Chain of Command: Chain of command is the order of the command or line of authority from top to the bottom. It outlines to whom an employee has to report. In traditional view, the chain of command was considered essential for easy management of the employees. It provides a regular direction in which the command has to flow. Whereas in contemporary view a fixed structure in today’s business is not essential.
2. Span of control: It is the ability to supervise number of employees in the organization efficiently and effectively. It defines the number of employees a manager is supervising. In traditional view, number of employees a manager supervises must be fixed so that the efficiency and the productivity can be maintained. Whereas contemporary view state that employee can work better without supervision.
3. Departmentalization: It classifies the job into various categories such as function, geographical, process, product, marketing and customer relation. Traditional view state that any organization can be classified according to the above-mentioned departments. Contemporary views, on the other hand, state that only marketing and sales units can use geographical and functional forms of departmentalization but retail stores or super markets may use product, functional, process and customer departmentalization.
4. Work Specialization: Dividing the work into separate tasks that can be done by separate individuals. It helps to differentiate each and every job according to its function and required skill level. Contemporary view state that work specialization should be enforced up to a point only. Every employee should be given tasks according to both specialization and general duties so that employees can progress in all duties.
5. Centralization/decentralization: Centralization is when decision making authority is only one person such as the owner of the company or CEO. While in decentralization the authority of making decision is decentralized. Traditional views are that decision should be made by the top most authority. Contemporary views are that organizations required flexibility and that each department has authority of making decisions for themselves.
6. Degree of formalization: Degree of formalization is the standard for each job in the organization. In traditional view the Company designs all their jobs in a standardized form. As per contemporary view, subjective changes in jobs are permitted to an extent.