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People, information, and technology. Organizational design (also called organizational structure) is the process of structuring a business’s people, information, and technology to enable the business to achieve its goals and to be successful. A business isn’t able to structure its competitors.

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Innovation. Innovation refers to creating something new, such as a product, a process,

or a strategy. A well-planned organizational design encourages innovation within the

business. Division of labor refers to dividing a big job into smaller tasks. Competition is the “fight” among businesses to win scarce customer dollars. Authority is the formally granted influence given to a particular position within an organization.

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The business is more productive. A well-planned organizational design helps a business

to improve communication, foster innovation, and become more productive—all actions that help the business to be more competitive. A business can’t control whether or not its competitors have organizational structures in place. A well-planned organizational design improves communication; it doesn’t reduce it. How much money a business has doesn’t necessarily depend on its organizational design.

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Objectives. Organizational design must fit with organizational objectives and goals—not the other way around. The business’s purpose must be reflected within its structure to make the structure workable. A business’s organizational design does not necessarily have to fit with its image, facilities, or income.

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Line. As vice president of marketing, Mason has line authority, which is direct, formal authority that affects a business’s day-to-day operations. Staff authority refers to advisory authority, often without the ability to enforce decisions. The terms functional authority and divisional authority aren’t used in organizational design.

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Staff. As a public relations consultant, Keri has staff authority, which is advisory authority that often doesn’t carry the ability to enforce decisions or take action. Line authority is formal, direct authority that affects a business’s day-to-day operations. The terms functional authority and divisional authority aren’t used in organizational design.

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Delegation. Assigning tasks to subordinates is known as delegation. It is an important part of the responsibilities involved with having authority within an organization. Innovation

refers to creating something new, such as a new product or process. Unity of command is a principle that states that no employee should answer to more than one supervisor at a time. The scalar principle states that authority should flow in a clear, unbroken line from the top to the bottom of an organization.

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Division of labor. The hair salon example illustrates an organizational principle known as division of labor, or dividing one job into separate, smaller tasks. Span of control refers to how many employees one manager can effectively supervise at a time. Authority is the formally granted influence given to a position within an organization. Innovation refers to something new, such as a new product or process.

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• False

Unity of command. Unity of command is an organizational principle that states that no employee should answer to more than one manager at a time. Using this principle can help to avoid confusion within the business. The scalar principle states that authority should flow in a clear, unbroken line from the top of the organization to the bottom. Span of control refers to how many employees a manager can effectively supervise at one time. Line authority is direct, formal authority that affects a business’s day-to-day operations.

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• False

Scalar principle. The scalar principle is an organizational principle that states that authority should flow in a clear, unbroken line from the top of an organization to the bottom. Span of control refers to how many employees a manager can effectively supervise at one time. Staff authority is advisory authority that often does not carry the ability to enforce decisions. Responsibility is the duty to get the job done.

• True

• False