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.
Staff authority is more limited authority to advise. It is authority that is based on expertise and which usually involves advising line managers. Staff members are advisers and counselors who aid line departments in making decisions but do not have the authority to make final decisions. Staff supervisors help line departments decide what to do and how to do it. They coordinate and provide technical assistance or advice to all advisors, such as accounting, human resources, information technology, research, advertising, public relations, and legal services.
Team authority is granted to committees or work teams involved in an organization's daily operations. Work teams are groups of operating employees empowered to plan and organize their own work and to perform that work with a minimum of supervision. Team-Based structures organize separate functions into a group based on one overall objective.