The first element, work specialization, refers to dividing work activities into separate job tasks. The second, departmentalization, is how jobs are grouped together, which can be one of five types: functional, product, customer, geographic, or process. The third—authority, responsibility, and power—has to do with getting work done in an organization. Authority refers to the rights inherent in a managerial position to give orders and expect those orders to be obeyed. Responsibility refers to the obligation to perform when authority has been delegated. Power is the capacity of an individual to influence decisions and is not the same as authority. The fourth, span of control, refers to the number of employees a manager can efficiently and effectively manage. The fifth, centralization and decentralization, deals with where the majority of decisions are made—at upper organizational levels or pushed down to lower-level managers. The sixth, formalization, describes how standardized an organization’s jobs are and the extent to which employees’ behavior is guided by rules and procedures.

A mechanistic organization design is quite bureaucratic whereas an organic organization design is more fluid and flexible. The strategy-determines-structure factor says that as organizational strategies move from single product to product diversification, the structure will move from organic to mechanistic. As an organization’s size increases, so does the need for a more mechanistic structure. The more nonroutine the technology, the more organic a structure should be. Finally, stable environments are better matched with mechanistic structures, but dynamic ones fit better with organic structures.

Traditional structural designs include simple, functional, and divisional. A simple structure is one with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization. A functional structure is one that groups similar or related occupational specialties together. A divisional structure is one made up of separate business units or divisions. Contemporary structural designs include team-based structures (the entire organization is made up of work teams), matrix and project structures (where employees work on projects for short periods of time or continuously), and boundaryless organizations (where the structural design is free of imposed boundaries). A boundaryless organization can either be a virtual or a network organization.

One design challenge lies in keeping employees connected, which can be accomplished through using information technology. Another challenge is understanding the global differences that affect organizational structure. Although structures and strategies of organizations worldwide are similar, the behavior within them differs, which can influence certain design elements. Another challenge is designing a structure around the mind-set of being a learning organization. Finally, managers are looking for organizational designs with efficient and effective flexible work arrangements. They’re using options such as remote work, telecommuting, compressed workweeks, flextime, job sharing, and contingent workers.