The components of organizational structure dictate how job functions, control and power are organized. Companies may choose to compartmentalize jobs according to department, client or customer base, product or function. Some structures allow for higher degrees of coordination between separate departments and give more control to lower-level employees. The way that a company's hierarchy is formed is one of the more critical parts of organizational structure.
Organizations can structure job tasks according to function. For example, the Vice President of Marketing may preside over a few regional sales directors who manage several zone sales leaders. In this system, each position that has the primary function of selling the company's products and services is grouped together. As one of the components of organizational structure, task allocation can determine job titles and responsibilities.
Authority and responsibility are linked to dimension, which is another of the parts of organizational structure. Companies may be organized according to a vertical or horizontal dimension. The vertical dimension refers to whether a company's positions and job tasks are centralized or decentralized, while the horizontal dimension describes whether the company could be considered structurally narrow or wide.
A centralized organization's authority and power is concentrated in a traditional fashion. More decision making ability rests with positions that are higher up in the company's command chain. For example, in a centralized sales organization, a regional sales director may set policies that district sales leaders do not have the authority to modify. Decentralized organizations, on the other hand, tend to take on a more flat structure since more decision making ability is given to front line employees.
Narrow organizational structures are often seen in companies that have more levels of supervision. These types of companies are considered to be narrow since an executive, manager or front line supervisor typically only has a few subordinates. In contrast, a wide structure contains less levels of management. A supervisor or manager in these companies may be responsible for numerous employees.
Besides what positions are able to exercise control, components of organizational structure can determine the degree of control and supervision. Some companies perpetuate the traditional idea that employees must work under strict control, while others allow a more creative and free environment. The degree of control is often directly linked to the nature of the position, the company's culture, and how it needs to deliver its products and services.
Several types of organization can be mixed together as components of organizational structure. Companies may adopt hybrid strategies to make sure that tasks are performed efficiently. For example, one group or department may be assigned to a certain stage of product development, such as planning. Another department may focus solely on executing the provisioning process for all of the company's products.