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ORGANIZATIONAL STRUCTURE

What Is An Organisation Structure?

Every organisation is composed of certain parts. These parts then have their various functions and are interdependent on each other for a smooth functioning of the organisation. An organisation's structure is a framework that allots a particular space for a particular department or an individual and shows its relationship to the other. An organisation's structure may be of many types, the most common of these being the hierarchical and the flat organisational structure. A horizontal organisational structure is what we call the traditional structure or at times, the bureaucratic structure where there are one or more levels between the most junior and the senior most employees. This helps in proper distribution of work but can be harmful in terms of efficiency and decision making. A flat organisation is much more rela ed and so!called modern in approach where everyone directly reports to a single boss. This could provide greater speed in the decision making process but then the boss ends up taking care of a lot of things thus making delegation difficult.

An organizational structure is a description of the types of coordination used to organize the actions of individuals and departments that contribute to achieving a common aim. Many organizations have hierarchical structures, but not all. Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs.

Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, wor group and individual. !ndividuals in an organizational structure are normally hired under time"limited wor contracts or wor orders, or under permanent employment contracts or program orders. Formal and informal framework of policies and rules, within which an organization arranges its lines of authority and communications, and allocates rights and duties. Organizational structure determines the manner and extent to which roles, power, andresponsibilities are delegated, controlled, and coordinated, and how information flows between levels of management. This structure depends entirely on the organization's ob ectives and the strategy chosen to achieve them. !n a centralized structure, the decision making power is concentrated in the top layer of the management and tight control is exercised over departments and divisions. !n a decentralized structure, the decision making power is distributed and the departments and divisions have varying degrees of autonomy. "n organization chart illustrates the organizational structure.

The set organizational structure may not coincide with facts, evolving in operational action. "uch divergence decreases performance, when growing. E.g. a wrong organizational structure may hamper cooperation and thus hinder the completion of orders in due time and within limits of resources and budgets. #rganizational structures shall be adaptive to process re$uirements, aiming to optimize the ratio of effort and input to output. An effective organizational structure shall facilitate working relationships between various entities in the organization and may improve the working efficiency within the organizational units. #rganization shall retain a set order and control to enable monitoring the processes. #rganization shall support command for coping with a mi of orders and a change of conditions while performing work. #rganization shall allow for application of individual skills to enable high fle ibility and apply creativity. %hen a business e pands, the chain of command will lengthen and the spans of control will widen. %hen an organization comes to age, the fle ibility will decrease and the creativity will fatigue. Therefore organizational structures shall be altered from time to time to

enable recovery. &f such alteration is prevented internally, the final escape is to turn down the organization to prepare for a re!launch in an entirely new set up.

Success factors
'ommon success criteria for organizational structures are(

)ecentralized reporting *lat hierarchy +igh transient speed +igh transparency ,ow residual mass -ermanent monitoring .apid response "hared reliability /atri hierarchy

History
"ee also( +ierarchical organization and *lat organization #rganizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today's post!industrial structures.

Organizational structure types


Pre-bureaucratic structures -re!bureaucratic 0entrepreneurial1 structures lack standardization of tasks. This structure is most common in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all key decisions and most communication is done by one on one conversations. &t is particularly useful for new 0entrepreneurial1 business as it enables the founder to control growth and development. They are usually based on traditional domination or charismatic domination in the sense of /a %eber's tripartite classification of authority. Bureaucratic structures 2ureaucratic structures have a certain degree of standardization. They are better suited for more comple or larger scale organizations. They usually adopt a tall structure. Then tension between bureaucratic structures and non!bureaucratic is echoed in 2urns and "talker345 distinction between mechanistic and organic structures. &t is not the entire thing about bureaucratic structure. &t is very much comple and useful for hierarchical structures organization, mostly in tall organizations. Post-bureaucratic

The term of post bureaucratic is used in two senses in the organizational literature( one generic and one much more specific 365. &n the generic sense the term post bureaucratic is often used to describe a range of ideas developed since the 4789s that specifically contrast themselves with %eber's ideal type bureaucracy. This may include total $uality management, culture management and matri management, amongst others. :one of these however has left behind the core tenets of 2ureaucracy. +ierarchies still e ist, authority is still %eber's rational, legal type, and the organization is still rule bound. +eckscher, arguing along these lines, describes them as cleaned up bureaucracies 3;5, rather than a fundamental shift away from bureaucracy. <ideon =unda, in his classic study of culture management at 'Tech' argued that 'the essence of bureaucratic control ! the formalisation, codification and enforcement of rules and regulations ! does not change in principle.....it shifts focus from organizational structure to the organization's culture'. Another smaller group of theorists have developed the theory of the -ost!2ureaucratic #rganization.3;5, provide a detailed discussion which attempts to describe an organization that is fundamentally not bureaucratic. 'harles +eckscher has developed an ideal type, the post!bureaucratic organization, in which decisions are based on dialogue and consensus rather than authority and command, the organization is a network rather than a hierarchy, open at the boundaries 0in direct contrast to culture management1> there is an emphasis on meta!decision making rules rather than decision making rules. This sort of horizontal decision making by consensus model is often used in housing cooperatives, other cooperatives and when running a non!profit or community organization. &t is used in order to encourage participation and help to empower people who normally e perience oppression in groups. "till other theorists are developing a resurgence of interest in comple ity theory and organizations, and have focused on how simple structures can be used to engender organizational adaptations. *or instance, /iner et al. 069991 studied how simple structures could be used to generate improvisational outcomes in product development. Their study makes links to simple structures and improviseal learning. #ther scholars such as ?an .ivkin and "igglekow3@5, and :elson .epenning 3A5 revive an older interest in how structure and strategy relate in dynamic environments. Functional structure Employees within the functional divisions of an organization tend to perform a specialized set of tasks, for instance the engineering department would be staffed only with software engineers. This leads to operational efficiencies within that group. +owever it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and infle ible. As a whole, a functional organization is best suited as a producer of standardized goods and services at large volume and low cost. 'oordination and specialization of tasks are centralized in a functional structure, which makes producing a limited amount of products or services efficient and predictable. /oreover, efficiencies can further be realized as functional organizations integrate their activities vertically so that products are sold and distributed $uickly and at low cost 3B5. *or instance, a small business could start making the components it re$uires for production of its products instead of procuring it from an e ternal organization.2ut not only beneficial for organization but also for employees faiths.

Di isional structure Also called a Cproduct structureC, the divisional structure groups each organizational function into a division. Each division within a divisional structure contains all the necessary resources and functions within it. )ivisions can be categorized from different points of view. There can be made a distinction on geographical basis 0a D" division and an ED division1 or on productEservice basis 0different products for different customers( households or companies1. Another e ample, an automobile company with a divisional structure might have one division for "DFs, another division for subcompact cars, and another division for sedans. Each division would have its own sales, engineering and marketing departments. !atri" structure The matri structure groups employees by both function and product. This structure can combine the best of both separate structures. A matri organization fre$uently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An e ample would be a company that produces two products, Cproduct aC and Cproduct bC. Dsing the matri structure, this company would organize functions within the company as follows( Cproduct aC sales department, Cproduct aC customer service department, Cproduct aC accounting, Cproduct bC sales department, Cproduct bC customer service department, Cproduct bC accounting department. /atri structure is amongst the purest of organizational structures, a simple lattice emulating order and regularity demonstrated in nature.

Wea#$Functional !atri"% A project manager with only limited authority is assigned to oversee the cross! functional aspects of the project. The functional managers maintain control over their resources and project areas. Balance&$Functional !atri"% A project manager is assigned to oversee the project. -ower is shared e$ually between the project manager and the functional managers. &t brings the best aspects of functional and projectized organizations. +owever, this is the most difficult system to maintain as the sharing power is delicate proposition. Strong$Pro'ect !atri"% A project manager is primarily responsible for the project. *unctional managers provide technical e pertise and assign resources as needed.

Among these matri es, there is no best format> implementation success always depends on organization's purpose and function.

Organizational circle% (o ing bac# to flat


The flat structure is common in enterprenerial start!ups, university spin offs or small companies in general. As the company grows, however, it becomes more comple and hierarchical, which leads to an e panded structure, with more levels and departments. #ften, it would result in bureaucracy, the most prevalent structure in the past. &t is still, however, relevant in former "oviet .epublics and 'hina, as well as in most governmental organizations all over the world. "hell <roup used to represent the typical bureaucracy(

top!heavy and hierarchical. &t featured multiple levels of command and duplicate service companies e isting in different regions. All this made "hell apprehensive to market changes 3G5, leading to its incapacity to grow and develop further. The failure of this structure became the main reason for the company restructuring into a matri . "tarbucks is one of the numerous large organizations that successfully developed the matri structure supporting their focused strategy. &ts design combines functional and product based divisions, with employees reporting to two heads 385. 'reating a team spirit, the company empowers employees to make their own decisions and train them to develop both hard and soft skills. That makes "tarbucks one of the best at customer service. "ome e perts also mention the multinational design 375, common in global companies, such as -rocter H <amble, Toyota and Dnilever. This structure can be seen as a comple form of the matri , as it maintains coordination among products, functions and geographic areas. &n general, over the last decade, it has become increasingly clear that through the forces of globalization, competition and more demanding customers, the structure of many companies has become flatter, less hierarchical, more fluid and even virtual.3495

)ea(
#ne of the newest organizational structures developed in the 69th century is team. &n small businesses, the team structure can define the entire organization 375. Teams can be both horizontal and vertical.3445 %hile an organization is constituted as a set of people who synergize individual competencies to achieve newer dimensions, the $uality of organizational structure revolves around the competencies of teams in totality.3465 *or e ample, every one of the %hole *oods /arket stores, the largest natural!foods grocer in the D" developing a focused strategy, is an autonomous profit centre composed of an average of 49 self!managed teams, while team leaders in each store and each region are also a team. ,arger bureaucratic organizations can benefit from the fle ibility of teams as well. Iero , /otorola, and )aimler'hrysler are all among the companies that actively use teams to perform tasks.

*e&it+ ,et-or#
Another modern structure is network. %hile business giants risk becoming too clumsy to proact (such as), act and react efficiently 34;5, the new network organizations contract out any business function, that can be done better or more cheaply. &n essence, managers in network structures spend most of their time coordinating and controlling e ternal relations, usually by electronic means. +H/ is outsourcing its clothing to a network of G99 suppliers, more than two!thirds of which are based in low!cost Asian countries. :ot owning any factories, +H/ can be more fle ible than many other retailers in lowering its costs, which aligns with its low!cost strategy34@5. The potential management opportunities offered by recent advances in comple networks theory have been demonstrated 34A5 including applications to product design and development 34B5, and innovation problem in markets and industries 34G5. .irtual

A special form of boundaryless organization is virtual. &t works in a network of e ternal alliances, using the &nternet. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche. According to Anderson, because of the unlimited shelf space of the %eb, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative.

Coordination
Coordination is the act of coordinating, ma ing different people or things wor together for a goal or effect.
#. a. b. %. '. The act of coordinating. The state of being coordinate$ harmonious ad ustment or interaction. Physiology. &armonious functioning of muscles or groups of muscles in the execution of movements. Grammar. The linking of two syntactically e(ual units, as by a coordinate con unction.

Organizational coordination and control is taking a systematic approach to figuring out if you're doing what you wanted to be doing or not. !t's the part of planning after you've decided what you wanted to be doing. )o*ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. !t is a hidden force which binds all the other functions of management. +anagement seeks to achieve co*ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why, co*ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. )o* ordination is the essence of management and is implicit and inherent in all functions of management. " manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group members. )o*ordination is an integral element or ingredient of all the managerial functions as discussed below, * #. Co-ordination through Planning - -lanning facilitates co*ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. * co*ordination between finance budget and purchases budget.

%. Co-ordination through Organizing - +ooney considers co*ordination as the very essence of organizing. !n fact when a manager groups and assigns various activities to subordinates, and when he creates department's co* ordination uppermost in his mind. '. Co-ordination through Staffing - " manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right ob. .. Co-ordination through Directing - The purpose of giving orders, instructions / guidance to the subordinates is served only when there is a harmony between superiors / subordinates. 0. Co-ordination through Controlling - +anager ensures that there should be co*ordination between actual performance / standard performance to achieve organizational goals.