Organizational structure
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. 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, workgroup and individual.
Operational organizations and informal organizations
The set organizational structure may not coincide with facts, evolving in operational action. Such 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. Organizational structures shall be adaptive to process requirements, 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. Organization shall retain a set order and control to enable monitoring the processes. Organization shall support command for coping with a mix of orders and a change of conditions while performing work. Organization shall allow for application of individual skills to enable high flexibility and apply creativity. When a business expands, the chain of command will lengthen and the spans of control will widen. When an organization comes to age, the flexibility will decrease and the creativity will fatigue. Therefore organizational structures shall be altered from time to time to enable recovery.
Success factors
Common success criteria for organizational structures are;
Ø Decentralized reporting
Ø Flat hierarchy
Ø High transient speed
Ø High transparency
Ø Low residual mass
Ø Permanent monitoring
Ø Rapid response
Ø Shared reliability
Ø Matrix hierarchy
Organizational structure
Pre-bureaucratic structures
Pre-bureaucratic (entrepreneurial) 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.
Bureaucratic structures
Bureaucratic structures have a certain degree of standardization. They are better suited for more complex or larger scale organizations.
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. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.
Divisional structure
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. Divisions can be categorized from different points of view. There can be made a distinction on geographical basis or on product/service basis. Each division would have its own sales, engineering and marketing departments.
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. Matrix structure is amongst the purest of organizational structures.
Ø 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.
Ø 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 power is delicate proposition.
Ø Strong/Project Matrix:
A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed.
Team
One of the newest organizational structures developed in the 20th century is team. In small businesses, the team structure can define the entire organization. Teams can be both horizontal and vertical. While an organization is constituted as a set of people who synergize individual competencies to achieve newer dimensions, the quality of organizational structure revolves around the competencies of teams in totality.