Organizational Structure and Departmentalization Strategies

Organizational Structure and Departmentalization

An organizational chart is the graphic representation of the different positions and departments within an organization and the set of interrelationships between them. This tool helps identify faults in organizational design and clarifies connections between various roles.

Types of Organizational Charts

• General: Provides a broad view of the entire entity.
• Partial: Reflects one or more specific areas of the company.
• Functional: Details the specific functions of each position.
• Structural: Represents departments or positions and their connections without specifying the individuals occupying them.

Chart Formats

• Concentric/Radial: The position of highest status appears in the center, with others in concentric orbits that become more remote as rank decreases.
• Horizontal: The most senior position is on one side, with others extending in vertical lines, moving further away as the level decreases.
• Vertical: Positions are represented from top to bottom, with the most senior at the top, branching down through horizontal lines.

Departmentalization Criteria

Departmentalization involves dividing a company into groups of workers and activities that operate with varying degrees of autonomy.

• By Functions: The company is broken down into departments that perform specific functions; appropriate for high levels of specialization.
• Geographic: Common in organizations providing services across different regions, often used by commercial and service companies.
• By Clients: Organized to serve specific groups of customers with specialized services; frequently used by banks.

Global Economy, Business Organization, and HR

The global economy influences company structures and human resource management. Modern organizations are characterized by:

1. Predominance of skilled labor: Mechanization of simple, repetitive tasks allows personnel to focus on complex, high-value roles.
2. Training needs: Continuous development is essential for workers to maintain labor competitiveness.
3. Variable compensation: Salaries now often include a fixed base plus a variable component linked to objective achievement or professional skill assessment.
4. Workforce optimization: Companies tend to reduce their workforce to the essential core, outsourcing support services to remain competitive.
5. Flattened hierarchy: A reduction in control levels and a wider span of direction leads to organizations with fewer hierarchical steps.