Components of an Organization

Schein’s Common Elements of an Organization

The four common elements of an organization include common purpose, coordinated effort, division of labor, and hierarchy of authority.

Learning Objectives

Describe the common elements that define an organizational structure, according to Edgar Schein

Key Takeaways

Key Points

  • Organizational psychologist Edgar Schein proposed four common elements of an organization ‘s structure: common purpose, coordinated effort, division of labor, and hierarchy of authority.
  • Common purpose unifies employees or members by giving everyone an understanding of the organization’s mission, strategy, and values.
  • Coordinated effort is the organization of individual efforts into a group or collective effort.
  • Division of labor is an arrangement in which different people perform discrete parts of a task for greater efficiency.
  • Hierarchy of authority is the control mechanism for making sure the right people do the right things at the right time. This control enables organization members to make decisions quickly when necessary.

Key Terms

  • organizational psychologist: A person who conducts scientific study of employees and workplaces.

Common Elements of Organizations

Organizational psychologist Edgar Schein proposes four common elements of an organization’s structure:

  1. Common purpose
  2. Coordinated effort
  3. Division of labor
  4. Hierarchy of authority

From a manager’s point of view, operations are made successful by instilling a common purpose to create a coordinated effort across the organization and organizing resources based on tasks and decision making. Each of the four elements is relatively straightforward in theory but represents a critical component of an effective structure.

Video of Edgar Schein speaking about corporate culture

Common Purpose

An organization without a clear purpose or mission soon begins to drift and become disorganized. A common purpose unifies employees or members and gives everyone an understanding of the organization’s direction. Ensuring that the common purpose is effectively communicated across organizations (particularly large organizations with many moving parts) is a central task for managers. Managers communicate this purpose by educating all employees on the general strategy, mission statement, values, and short- and long-term objectives of the organization.

Coordinated Effort

Coordinating effort involves working together in a way that maximizes resources. The common purpose is achieved through the coordinated effort of all individuals and groups within an organization. The broader group’s diverse skill sets and personalities must be leveraged in a way that adds value. The act of coordinating organizational effort is perhaps the most important responsibility of managers because it motivates and distributes human resources to capture value.

Division of Labor

Division of labor is also known as work specification for greater efficiency. It involves delegating specific parts of a broader task to different people within the organization based upon their particular abilities and skills. Using division of labor, an organization can parcel out a complex work effort for specialists to perform. By systematically dividing complex tasks into specialized jobs, an organization uses its human resources more efficiently.

Hierarchy of Authority

Hierarchy of authority is essentially the chain of command—a control mechanism for making sure the right people do the right things at the right time. While there are a wide variety of organizational structures—some with more centralization of authority than others—hierarchy in decision making is a critical factor for success. Knowing who will make decisions under what circumstances enables organizations to be agile, while ambiguity of authority can often slow the decision-making process. Authority enables organizations to set directions and select strategies, which can in turn enable a common purpose.