Key Concepts in the Design of an Organization


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© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

A house should be designed to meet the needs of the people living in it. Builders of houses must consider, e.g., the number of people in the house, how much the owners can afford to pay, etc. The ultimate design of an organization should be whatever structure best helps the organization to achieve its goals. The following are the standard concepts in the design of an organization.

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Key Concepts in Design of Organization

Span of control

- the range of employees who to report to a managerial position

Authority

- the formally-granted influence of a position to make decisions, pursue goals and get resources to pursue the goals; authority in a managerial role may exist only to the extent that subordinates agree to grant this authority or follow the orders from that position

Responsibility

- the duty to carry out an assignment or conduct a certain activity

Delegation

- process of assigning a task to a subordinate along with the commensurate responsibility and authority to carry out the task

Chain of command

- the lines of authority in an organization, who reports to whom

Accountability

- responsibility for the outcome of the process

Line authority

- the type of authority where managers have formal authority over their subordinates' activities (the subordinates are depicted under the manager on a solid line in the organization chart); departments directly involved in producing services or products are sometimes called line departments

Staff departments

- the type of authority where managers influence line managers through staff's specialized advice; departments that support or advise line departments are called staff departments and include, e.g., human resources, legal, finance, etc.


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