Let's begin with definition of Organization Structure:
An organizational structure comprising of activities such as:
a) Task allocation,
b) Coordination and
c) Supervision
which are directed towards the achievement of organizational aims.
OR
It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
What are the ways through which Organization action is affected by Organization Structure ?
a) Laying the foundation on which standard operating procedures and routines rest.
b) Determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.
The impact of inadequate Organizational structure is very harmful:
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.
What an Organizational structure like be ?
Organizational structures shall be adaptive to process requirements, aiming to optimize the ratio of effort and input to output.
What are the different types of Organizational structure?
Main types are listed below:
1) Functional Organization
Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS.
For example:
As shown, the organization is divided by functions into different departments like sales, finance, engineering, HR. A sales manager would be responsible for the sale of all the products which are manufactured by the firm.
Prons: Operational efficiency,
Cons: Lack of Communication due to which Organization becomes low and inflexible.
Prominent in smaller firms that offer a limited line of products.Makes supervision easier as each manager must be expert in only a narrow range of skills. It also helps to group a particular set of people with the specialized kind of skill set.
But as the organization grow and diversify, some of the problems begin to surface:
a) As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions
b) Harder to judge performance because which department to blame when a new product fails.
c) Difficult to coordinate the functions of members of the entire organization as each department may have difficulty working with other departments in a unified way to achieve organizational goals
2) Product/Market/Divisonal Organization:
Brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.
This type could follow 3 patterns mentioned below:
a) Divison By Product
As shown the categorization (division) has been done on the basis of broad category of products. And each category of related group of products has its own marketing, sales, purchasing and inventory manager.
b) Divison By Geography
Geographical organization is logical when a plant must be located as close as possible to sources of raw materials, to major markets, or to specialized personnel.
c) Divison By Customer
d) Matrix Structure
The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization frequently 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 example would be a company that produces two products:
"product a" and "product b".
Using the matrix structure, this company would organize functions within the company as follows:
Product a: Sales department, customer service department, accounting,
Product b: sales department, customer service department, accounting department.
Matrix structure is amongst the purest of organizational structures, a simple lattice emulating order and regularity demonstrated in nature.
Weak/Functional Matrix: 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.
Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional managers. It brings the best aspects of functional and projectized organizations. However, this is the most difficult system to maintain as the sharing of power is a delicate proposition.
Strong/Project Matrix: A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed
Deciding among different kinds of Organizational structure is a difficult decision. Its important to look an organizations size, no of facilities located in different geographical areas, marketing strategy, business philosophy etc. while making this decision.
Regardless of the type of structure you choose, it's important to clearly communicate expectations to employees at all levels, making sure that each member of the team is clear about his or her reporting lines
An organizational structure comprising of activities such as:
a) Task allocation,
b) Coordination and
c) Supervision
which are directed towards the achievement of organizational aims.
OR
It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
What are the ways through which Organization action is affected by Organization Structure ?
a) Laying the foundation on which standard operating procedures and routines rest.
b) Determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.
The impact of inadequate Organizational structure is very harmful:
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.
What an Organizational structure like be ?
Organizational structures shall be adaptive to process requirements, aiming to optimize the ratio of effort and input to output.
What are the different types of Organizational structure?
Main types are listed below:
1) Functional Organization
Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS.
For example:
As shown, the organization is divided by functions into different departments like sales, finance, engineering, HR. A sales manager would be responsible for the sale of all the products which are manufactured by the firm.
Prons: Operational efficiency,
Cons: Lack of Communication due to which Organization becomes low and inflexible.
Prominent in smaller firms that offer a limited line of products.Makes supervision easier as each manager must be expert in only a narrow range of skills. It also helps to group a particular set of people with the specialized kind of skill set.
But as the organization grow and diversify, some of the problems begin to surface:
a) As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions
b) Harder to judge performance because which department to blame when a new product fails.
c) Difficult to coordinate the functions of members of the entire organization as each department may have difficulty working with other departments in a unified way to achieve organizational goals
2) Product/Market/Divisonal Organization:
Brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.
This type could follow 3 patterns mentioned below:
a) Divison By Product
As shown the categorization (division) has been done on the basis of broad category of products. And each category of related group of products has its own marketing, sales, purchasing and inventory manager.
b) Divison By Geography
Geographical organization is logical when a plant must be located as close as possible to sources of raw materials, to major markets, or to specialized personnel.
c) Divison By Customer
d) Matrix Structure
The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization frequently 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 example would be a company that produces two products:
"product a" and "product b".
Using the matrix structure, this company would organize functions within the company as follows:
Product a: Sales department, customer service department, accounting,
Product b: sales department, customer service department, accounting department.
Matrix structure is amongst the purest of organizational structures, a simple lattice emulating order and regularity demonstrated in nature.
Weak/Functional Matrix: 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.
Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional managers. It brings the best aspects of functional and projectized organizations. However, this is the most difficult system to maintain as the sharing of power is a delicate proposition.
Strong/Project Matrix: A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed
Deciding among different kinds of Organizational structure is a difficult decision. Its important to look an organizations size, no of facilities located in different geographical areas, marketing strategy, business philosophy etc. while making this decision.
Regardless of the type of structure you choose, it's important to clearly communicate expectations to employees at all levels, making sure that each member of the team is clear about his or her reporting lines
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