Introduction 1

An effective organizational structure clarifies roles and responsibilities, levels of
authority, and supervisory or reporting lines in an organization. Moreover, it
enables managers to determine which resources are available and in what
quantities and how they should be employed in order to produce the desired
output. There are many interrelated components that decide the effectiveness of
the organization structure. These components are:

·      Clear vision and prioritization of organizational activities

·      Effective leadership and high performance values

·      Clear roles and responsibilities for decision making

·      Strengths of the organization and employee skills necessary for success

·      Performances measures against organizational objectives

·      Effectiveness
execution of work processes

·      Fast response to changes in the dynamic business environment.

An Organizational structure can be defined as the logical arrangement of tasks, duties, and roles
and responsibilities with the aim to achieve the predetermined objectives of
the organization.

Kast and Rosenzweig: Structure is the established pattern of relationships
among the component parts of the organization.

An Organizational
structure is broadly categorized into centralized structure and decentralized
structure.

·      In centralized
structure, decisions are taken at the top level management ad passed to the
lower level management.

·      In decentralized
structure, departments are given autonomy to make their own decisions depending
on their requirements.

Characteristics of an effective organizational
structure:

1.     Simple and unambiguous:The structure of an
organization should have a minimum chain of command so that unnecessary
confusions and chaos can be avoided.

2.     Flexible and adaptable: As the business
environment is dynamic, the organizational structure should be created in a
manner that it can readily be altered as per the changing needs and demands.

3.     Clarity of roles: Every employee should know the
authority responsibility relation whether from top to bottom or horizontal.

4.     Involvement of top management: The participation
of top management is crucial to the development of an organizational structure
due to objectives, functions, and policies.