The concepts of organizational structure and performance include departmentalization, delegation, the scalar principle or chain-of-command (authority is defined in the organization), centralization, decentralization, and the contingency approach.
Departmentalization is the grouping of related functions into a departmental unit to achieve efficiency of operations. Departmentalization can include line structure, line and staff structure, and a matrix structure. The matrix structure can include an employee working on projects managed by people not from his or her own department.
Departmentalization as part of organizational structure and performance can be according to product or service category. Therefore, all employees who work on a particular product, for example, leather coats for a clothing manufacturer would be grouped under this department. All employees who are part of taking care of the needs of customers who've purchased products would be in the Customer Service department.
Performance, in fact enhanced performance, in a company is achieved when those best suited to a job are slotted into the appropriate department that can take advantage of the employee's skills and talents. Therefore, company management must analyze their organizational structure and make decisions on who best fits within the departments they've put in place. The end result is properly organized, efficient, productive departments, with employees in each department achieving their career goals, while helping the business enterprise achieve their goals.
Decentralization is something that can promote creativity and new ways of doing things in a business organization. Within a decentralized organization authority and responsibilities are assigned to lower levels of the organization, who are overseen by senior management. Those in these lower levels have more decision-making capabilities than those in lower levels in a centralized organization.
Organizational structure consists of activities that determine how the roles, power and tasks are given, controlled, and synchronized and how information flows between the different levels of management.
Organizational performance can be measured by analyzing the goals and objectives of a company. Generally three types of performances are analyzed in the organization. They are financial performance, market performance and shareholder value performance.