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Organizational structure: Organizational structure refers to the way that an organization arranges people and jobs so that its

work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. In an organization of any size or complexity, employees' responsibilities typically are defined by what they do, who they report to, and for managers, who reports to them. Over time these definitions are assigned to positions in the organization rather than to specific individuals. The relationships among these positions are illustrated graphically in an organizational chart. The best organizational structure for any organization depends on many factors including the work it does; its size in terms of employees, revenue, and the geographic dispersion of its facilities; and the range of its businesses (the degree to which it is diversified across markets). Differences between traditional organization and modern organizational structure: Traditional Organization: The traditional organizational structure was established and became popular in the first part of the 20th century, a time, where multilayered bureaucracies were seen as the most effective and efficient approach to manage large, complex corporations. Constraints on transportation, modest education levels among the workforce, and the limited technical ability to collect, display, and transmit information were but some of the factors that led to the creation of a strong, centralized management system where managers did the thinking and workers were expected to do the assigned work without a question. The traditional organization was therefore causal and goal orientated. This means that the incentives and objectives could be clearly defined and the controlling was easy, since everything in the business process was predictable. The traditional model of an organization serves to establish managerial control, provide workers with job instructions and enables managers to gather information for planning. Managers run the organization by hierarchy, authority, control and rules. We could compare the traditional model to an effective, well-built machine, with clearly differentiated

functional components working reliably and timely accurate to accomplish predetermined goals, for example efficiency and productivity. • The Bureaucratic Organization A bureaucratic organization is a large organization that is designed to streamline production by having specialist employees. In these organizations, there is an emphasis on the positions, rather than the people in them, which is in direct opposition to small companies, which are based on individuals. Job Specialization Bureaucracies function according to two main principles: job specialization and management by rules. People in bureaucracies are organized according to what their jobs are--all of the accountants will be in one section, salesmen in another and so on. Rules and Regulations In order to maintain specialization and keep the organization tightly controlled, a bureaucracy will have strong rules and regulations. This means that another part of a bureaucratic organization structure is the presence of people who enforce these rules. Management Finally, bureaucracies tend to have many managers. Indeed, it has been noted that a bureaucracy's manager ranks will often grow in spite of the line ranks stagnating or even shrinking. Top-heavy structure is a key part of a bureaucracy. Divisionalized Organizational Structure A divisionalized organization is one in which leadership partitions strategic functions into departments and divisions. The company distributes all the organizational work between the divisions. These divisions accomplish their share of the work and work towards achieving organizational objectives. Features In a divisionalized organization, divided departments include production, marketing, finance, IT, accounts and sales. A manager supervises and administers

all the employees in his division. These department managers report to top management. Significance By segregating work and responsibility, the company can evaluate the role and importance of each division in the organizational schema of affairs. Leadership can clearly understand the strengths and weaknesses of each department. The company can take corrective actions and measures accordingly. Benefits Using this structure, the organization can clearly define its authority and responsibility frameworks. Employees know who reports to them and to whom they must report. This structure accentuates communication and workflows. Each division works distinctly and on its own; at the end, all the work combines for a completed initiative.

Modern Organization: The modern organization on the other hand emphasis on strategic management and takes the growth of the decentralized organization into perspective. Motivation, creativity and the influence of politics and the power force organizations to undergo a drastically structural change. The informational flow in the modern organization is not directed in just one way. This means that a communication between the management and the workforce can take place. In contrast to the traditional organization, the modern organization has variables instead of defined objectives that lead to more complex and diverse structures. The modern organization also has fewer layers than the traditional structure. This means that the hierarchy is not so complex and therefore not so specifically defined. This makes it more difficult for the management and for department managers to control and regulate their departments, since the chain of command is not as clear as in the traditional organization. In modern organization the goals are not as causal as in traditional organization. That means that they are more diverse and are influenced by a lot of factors, such as strategic planning, teamwork, creativity and individual responsibility towards the incentive of the organization itself.

Matrix Organizations Organizations have a design that combines a traditional functional structure with a product structure. Instead of completely switching from a product-based structure, a company may use a matrix structure to balance the benefits of product-based and traditional functional structures. Specifically, employees reporting to department managers are also pooled together to form project or product teams. As a result, each person reports to a department manager as well as a project or product manager. In a matrix structure, product managers have control and say over product-related matters, while department managers have authority over matters related to company policy. Matrix structures are created in response to uncertainty and dynamism of the environment and the need to give particular attention to specific products or projects. Using the matrix structure as opposed to product departments may increase communication and cooperation among departments because project managers will need to coordinate their actions with those of department managers. In fact, research shows that matrix structure increases the frequency of informal and formal communication within the organization. Matrix structures also have the benefit of providing quick responses to technical problems and customer demands. The existence of a project manager keeps the focus on the product or service provided.

An example of a matrix structure at a software development company. Business analysts, developers, and testers each report to a functional department manager and to a project manager simultaneously. Despite these potential benefits, matrix structures are not without costs. In a matrix, each employee reports to two or more managers. This situation is ripe for conflict. Because multiple managers are in charge of guiding the behaviors of each employee, there may be power struggles or turf wars among managers. As managers are more interdependent compared to a traditional or product-based structure, they will need to spend more effort coordinating their work. From the employee’s perspective, there is potential for interpersonal conflict with team members as well as with leaders. The presence of multiple leaders may create role ambiguity or, worse, role conflict—being given instructions or objectives that cannot all be met because they are mutually exclusive. The necessity to work with a team consisting of employees with different functional backgrounds increases the potential for task conflict at work. Solving these problems requires a great level of patience and proactively on the part of the employee. The matrix structure is used in many information technology companies engaged in software development. Sportswear manufacturer Nike is another company that uses the matrix organization successfully. New product introduction is a task shared by regional managers and product managers. While product managers are in charge of deciding how to launch a product, regional managers are allowed to make modifications based on the region. Boundaryless Organizations Boundaryless organization is a term coined by Jack Welch during his tenure as CEO of GE; it refers to an organization that eliminates traditional barriers between departments as well as barriers between the organization and the external environment. Many different types of boundaryless organizations exist. One form is the modular organization, in which all nonessential functions are outsourced. The idea behind this format is to retain only the value-generating and strategic functions in-house, while the rest of the operations are outsourced to many suppliers. An example of a company that does this is Toyota. By managing relationships with hundreds of suppliers, Toyota achieves efficiency and quality in its operations. Strategic alliances constitute another form of boundaryless design. In this form, similar to a joint venture, two or more companies find an area of collaboration and combine their efforts to create a partnership that is beneficial for

both parties. In the process, the traditional boundaries between two competitors may be broken. As an example, Starbucks formed a highly successful partnership with PepsiCo to market its Frappuccino cold drinks. Starbucks has immediate brand-name recognition in this cold coffee drink, but its desire to capture shelf space in supermarkets required marketing savvy and experience that Starbucks did not possess at the time. By partnering with PepsiCo, Starbucks gained an important head start in the marketing and distribution of this product. Finally, boundaryless organizations may involve eliminating the barriers separating employees; these may be intangible barriers, such as traditional management layers, or actual physical barriers, such as walls between different departments. Structures such as self-managing teams create an environment where employees coordinate their efforts and change their own roles to suit the demands of the situation, as opposed to insisting that something is “not my job.” Learning Organizations A learning organization is one whose design actively seeks to acquire knowledge and change behavior as a result of the newly acquired knowledge. In learning organizations, experimenting, learning new things, and reflecting on new knowledge are the norms. At the same time, there are many procedures and systems in place that facilitate learning at all organization levels. In learning organizations, experimentation and testing potentially better operational methods are encouraged. This is true not only in response to environmental threats but also as a way of identifying future opportunities. 3M is one company that institutionalized experimenting with new ideas in the form of allowing each engineer to spend one day a week working on a personal project. At IBM, learning is encouraged by taking highly successful business managers and putting them in charge of emerging business opportunities (EBOs). IBM is a company that has no difficulty coming up with new ideas, as evidenced by the number of patents it holds. Yet commercializing these ideas has been a problem in the past because of an emphasis on short-term results. To change this situation, the company began experimenting with the idea of EBOs. By setting up a structure where failure is tolerated and risk taking is encouraged, the company took a big step toward becoming a learning organization. Learning organizations are also good at learning from experience—their own or a competitor’s. To learn from past mistakes, companies conduct a thorough analysis

of them. Some companies choose to conduct formal retrospective meetings to analyze the challenges encountered and areas for improvement. To learn from others, these companies vigorously study competitors, market leaders in different industries, clients, and customers. By benchmarking against industry best practices, they constantly look for ways of improving their own operations. Learning organizations are also good at studying customer habits to generate ideas. For example, Xerox uses anthropologists to understand and gain insights to how customers are actually using their office products. By using these techniques, learning organizations facilitate innovation and make it easier to achieve organizational change. Advantages and disadvantages of traditional organizational structure: In this section, we will show you the advantages and disadvantages of bureaucracy organization Strengths of bureaucracy: 1. A division of labor into spheres of influence 2. A definite hierarchy of official offices 3. Clear norms and rules 4. Selection to office is by technical qualification. 5. Promotion by seniority. 6. Disciplinary control over the incumbent of each office. 7. Better than feudal/traditional forms where people got appointed by favoritism or bribes. Weaknesses of bureaucracy: 1. Becomes an Iron Cage of Control (as Weber saw it) 2. Red Tape from all the rules and sign offs 3. Hard to change this form 4. Divisions of labor compartmentalize attention and response.

5. Hierarchy can mean silos (e.g. must go up and down chains of command to get things done). 6. Certain irrationalities result