One important factor in how organizations are structured is whether they are centralized or not. Centralized organizations have a few executives at the top of the organization who have most of the decision making authority. These organizations tend to have lots of managers at different levels and very tight controls in what managers and employees can and can't do. Employees have very little freedom to make decisions. They're basically expected just to show up and do their jobs. Organizations like this were once very common, but these days are mostly seen as old-fashioned. Military organizations are an example of a centralized organization. The other side of the coin is decentralized organizations. When an organization is decentralized, decision making authority is distributed throughout the organization. Daily operations and decision making responsibilities are delegated by top management to middle and lower level managers. This frees up top managers to focus on major decisions. Managers in turn delegated authority and responsibility to supervisors and employees. Decentralized organizations have just a few levels of management. And for that reason, they're sometimes referred to as flat or flattened organizations. Employees have much greater freedom in this sort of an organization and are encouraged to contribute their knowledge and ideas. For that reason, they tend to be highly satisfied. Span of control is another important factor. Span of control is the number of functions, activities, people, or things for which an individual or organization is responsible. The more things a supervisor is responsible for, the wider their span of control becomes. A good rule of thumb is that a supervisor should be responsible for no more than five to eight people or activities. But opinions about that vary and it isn't uncommon for supervisors in some organizations to be responsible for 30 or more employees. So when should spans of control be short or long? It's not always an easy answer because a lot of factors are involved in determining a supervisor's span of control. Geographical dispersion is a big one. When employees are spread out widely, it's hard for a supervisor to supervise each of them. For that reason, a narrower span of control is ideal. A narrower span of control is also appropriate when employees are not highly capable or are new and not well trained, the organization is centralized, activities are specialized or complex. New problems are encountered frequently, or supervisors themselves are inexperienced or responsible for many other tasks. On the other hand, a wider span of control is typical in decentralized organizations, when employees are closer together, well trained and highly capable. When tasks are relatively simple and a lot of employees perform them. And when supervisors are relatively free of other tasks and readily available to respond to problems. Business process streamlining, effectiveness, and efficiency can also reduce the span of control. An organizational chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions. They help employees understand organizational relationships, like employees to supervisors, supervisors to managers, and managers to the CEO. Organizational charts are only useful if they show relationships accurately. In a growing organisation, they go out of date quickly due to changes in structure and staffing. For instance, if more managers and supervisors are hired to meet organizational goals, the chart must be updated accordingly. Keep in mind that informal relationships and communication patterns won't show up on an organizational chart. This is a simple hierarchical organizational chart. Notice how the boxes indicate levels of authority flowing downward in the organization and lines indicate reporting relationships. Managers report to CEO, supervisors report to managers, and so forth. Now, a real organizational chart would have more managers and supervisors in additional departments, but this should give you a good idea of the concept. Restructuring is the reorganization of a company to achieve greater efficiency and profit or adapt to a changing market. Unfortunately, companies attempt to achieve these goals through the mass layoffs of employees. Remaining employees may need to work harder to keep up standards, or some task may be outsourced to countries where wages are lower. Restructuring can be caused by corporate mergers that make positions redundant, budget cuts, failed or obsolete products, legal problems, changes in the market, economic downturns, and changes in strategy. Sometimes it's done to trim the workforce. When a company simply has too many employees, this is often called rightsizing. Despite the obvious negative consequences, restructuring can be an opportunity to learn from mistakes and reexamine how the organization does things. Supervisors who were faced with downsizing faced a number of ethical challenges. What do you tell employees and when? Do you confirm or deny rumors? How do you decide who to let go? These are tough decisions that have serious repercussions in employees' lives. So how do you handle things ethically? Follow a clear set of standards and be honest about your decisions. Make sure employees know you are doing the best you can in a bad situation. Communicate with them frequently and tell them everything they need to know. And last of all, put yourself in their shoes and show a little empathy. Remember, someday your job could be on the line, just like theirs.
