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About Us (",)
Learning Objectives
What is Organizational Structure?
Key Elements of Organizational Structure
Work Specialization
Chain Of Command
Span Of Control
Centralization and Decentralization
Forms of Organizational Structure
Matrix Organization
Virtual Organization
Organizing Process


The Chain of Command



Chain of command is the unbroken line of authority that connects each level of management with the next level.  The chain of command helps organizations function smoothly by making two things clear:  who is responsible for each task, and who has the authority to make official decisions.


In organizations, employees are assigned:


1. Responsibility for their jobs; they are obligated to perform those duties and to achieve goals and objectives associated with their positions.


2. Accountability for reporting their results to supervisors or team members and justifying outcomes that fall below expectations.


Managers ensure tasks are accomplished by exercising authority.  Authority is the power to make decisions, issue orders, carry out actions, and allocate resources.


Delegation is the assignment of work and the transfer of authority and responsibility to do that work.


Possible chain-of-command systems:


1. Line organization – The simplest and most common chain-of-command system.  Everyone knows who is accountable to whom. Know which tasks and decisions each person is responsible for.  It does have a disadvantage – the technical complexity of a firm’s activities may require specialized knowledge that individual managers don’t have and can’t easily acquire.


2. Line and staff organization combines specialization with management control.  Managers are supplemented by functional groupings of people known as staff.  These staff employees provide advice and specialized services but they are not in the line organization’s chain of command.


Power and Authority

Organizational structure is a means of facilitating the achievement of organizational objectives. Such structures are not static, but dynamic. They reorganize in response to changing conditions that occur in the environment, new technology, or organizational growth. Organization structures are dependent upon the employees whose activities they guide. Supervisors rely upon power and authority to ensure that employees get things done.


The organizational structure provides the framework for the formal distribution of authority. Formalization is the degree to which tasks are standardized and rules and regulations govern employee behavior. It influences the amount of discretion an employee has over his or her job. In an organization with high degrees of formalization, job descriptions and policies provide clear direction. Where formalization is low, employees have a great deal of freedom in deciding how thy conduct their work. Within the same organization, different departments may have different degrees of formalization. For example, in a hospital, doctors have freedom in selecting treatments, drugs, and methods for treating patients. However, the hospital physical plant staff has a strict schedule for cleaning buildings, mowing lawns, and maintaining the facilities.

Authority is the legitimate power of a supervisor to direct subordinates to take action within the scope of the supervisor's position. Formal authority in the organization can be traced all the way back to the U.S. constitutional right to own property. The owner of the organization has the authority to make decisions. For example, entrepreneurial firms have an informal arrangement of employees and centralization of decision-making authority, the owner.

Forms of Authority

Three forms of authority are line authority, staff authority, and team authority.

Line authority is direct supervisory authority from superior to subordinate. Authority flows in a direct chain of command from the top of the company to the bottom. Chain of command is an unbroken line of reporting relationships that extends through the entire organization that defines the formal decision-making structure. It helps employees know to whom they are accountable, and whom to go to with a problem. Line departments are directly linked to the production and sales of specific products. Supervisors -- in line departments, such as marketing and production -- give direct orders, evaluate performance, and reward or punish those employees who work for them. Unity of command within the chain states that each person in an organization should take orders from and reports to only one person. This helps prevent conflicting demands being placed on employees by more than one boss. However, the trend toward employee empowerment, fueled by advances in technology and changes in design from downsizing and reengineering have tempered the importance of being accountable to only one superior. Span of control refers to the number of employees that should be placed under the direction of one manager. Spans within effective organizations vary greatly. The actual number depends on the amount of complexity and the level of specialization. In general, a wide span of control is possible with better-trained, more experienced, and committed employees.