An organizational structure determines how the roles, power and responsibilities are assigned, controlled and coordinated in different levels of management.
Organizations have structures which represent the lines of authority, communications, rights and duties of an organization. An organizational structure determines how the roles, power and responsibilities are assigned, controlled and coordinated and how the information flows in different levels of management. Any structure would actually depend on the organization’s objectives and strategy. In a centralized structure, the top layer of management has most of the decision making power and has tight control over departments and divisions. And since that every business vary in all these, it is also to important to take note that in a decentralized structure, the decision making power is distributed and the departments and divisions may have different degrees of independence.
It defines how activities flow in an organization such as: task allocation, coordination and supervision which are then directed toward the achievement of organizational aims. It also allows proper allocation of responsibilities to different branches, departments, workgroups and individuals. It affects the whole process by providing a solid foundation on standard operating procedures and routines; and it determines the individuals who would get to participate in the entire decision makings and processes.
There are also different types of organizational structures :
- Pre- bureaucratic:
This kind of structure lacks standardization of tasks. This structure is most common in smaller organizations and is best used to solve simple tasks. So to say, this type of structure is centralized. The strategic leader creates all key decisions and most communication is done by one on one conversations. The founder has the control on its growth and development.
It connotes precision, speed, clarity, strict subordination, reduction of friction, material and personal costs. It has a certain degree of standardization which enables optimization on all the components of the project. The following are also observed in this type of structure:
- Clear defined roles and responsibilities
- A hierarchical structure
- Respect for merit
This kind of structure could have different or many levels of management ranging from the executives to regional managers, all the way to department managers. The decisions being made are passed through over layers before it reaches the bottom line of the organizational structure. It is also known for rigid and tight procedures and constraints and is reluctant to changes to adapt or change the routines. There are people in charge of different responsibilities depending on the situation.
This type of organizational structure results to more rules and standards for the company where operational success is closely monitored. The top level managers have the tremendous control on decision making. The managers needed in this type of structure are the managers who have the command and style of management. It creates faster strategic decision making because of fewer people who need to approve. However, this type of management discourages creativity and innovation.
- Post- bureaucratic:
This organizational structure includes top quality management, culture management and matrix management. Decisions being made are based on consensus and dialogues rather than authorities. This is used to encourage participation and to empower people.
- Functional Structure:
It consists of activities such as coordination, supervision and task allocation. This also determines how the whole organization performs or operates and how the people in the organization are grouped and to whom they will report. This is done by identifying their function in the organization. Some common functions within an organization include production, marketing, human resources, and accounting.
People are organized according to their specialization and making them experts in that field. However, the communication in this type of structure could be rigid which makes the organization slow and inflexible because of standardized ways of operation and high degree of formalization. This is best suited for a producer who has standardized goods and services at large volume and low cost. All the coordination and specialization are centralized which makes the production of products or services limited but efficient and predictable. In functional organizations, the activities are integrated vertically so that the products are sold and distributed quickly at a low cost. Despite its efficiency, the level of cooperation among people is compromised.
- Divisional structure:
Divisional Organizational Structure consists of self- contained divisions. Each division is a collection of functions which produce product. Employees who are assigned for certain market services or types of products are placed in divisional structure for them to increase their flexibility.
It could have different departments like marketing, sales and engineering. It delegates authority so the performance can be directly measured with each group. This makes the managers to perform better and boosts the employees’ morale. More so, the coordination is more efficient and more flexible in responding to changes. However, it may lead to unhealthy rivalries among divisions.
The Matrix Organizational Structure uses teams of employees to accomplish work. It has decentralized form which can combine or separate structures. This takes advantage of both the strengths and weaknesses. It may include the following:
- Weak Matrix: the project manager has limited autho:rity and oversees all the cross-functional aspects of the project. The functional manager has the control for everything.
- Balanced Matrix: the project manager is assigned to oversee the project. The power is shared equally between the project manager and the functional managers. But, it is the most difficult system to maintain due to delicate sharing of power.
- Strong Matrix: the project manager is primarily responsible for the entire project.
Matrix structure is more dynamic than any functional management and it makes the combination of all structures which allows the team members to share information it also increases the depth of knowledge in a specific sector or segment. The complexity of chain of command brings ambiguity on who is next in the chain. Another disadvantage is the conflicting loyalties of employees.
Moreover, matrix structure allows for specialization that can increase depth of knowledge and allows individuals to be chosen according to project needs. This correlation between individuals and project needs is what produces the concept of maximizing strengths and minimizing weaknesses.