Concept of Organizational Structure

Organizational Structure defines how job tasks are formally divided,  grouped and coordinated. An organizational design is the overall set of structural elements and the relationship among those elements used to manage the total organization. It is a means to implement strategies and plans to achieve organizational goals. Managers need to address six key elements when they design their organization’s structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.

Six key questions that managers need to answer in designing the proper organizational structure

Work specialization  To what degree are tasks subdivided into separate jobs? 
Departmentalization  On what basis will jobs be grouped together? 
Chain of command  To whom do individuals and groups report? 
Span of control  How many individuals can a manager efficiently and effectively direct? 
Centralization and decentralization  Where does decision making authority lie? 
Formalization  To what degree will there be rules and regulations to direct employees and managers? 

Common organizational Designs

The simple organizational Structure 

The simple organizational structure is not elaborated. It has a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization,. The simple structure is ‘flat’ organization; it usually  has only two or three vertical levels, a loose body of employees, and one individual in whom the decision- making authority is centralized. The strength of the simple structure lies in its simplicity. It’s fast, flexible, inexpensive to maintain, and accountability is clear.  One major weakness is that it’s suitable for only small organizations. But it does not mean that it is strictly limited to small organizations, it’s just harder to make it work effectively in larger firms. It becomes increasingly inadequate as an organization grows because it has low formalization and  high centralization tend to create information overload at the top. As size increases, decision making typically becomes slower and can eventually come to a stand still as the single executive tries to continue making all the decisions. The simple structure’s other weakness is that it is risky: Everything depends on one person. Death, bankruptcy, madness, destroy the organization’s information and decision making center.

Also Read: Organizational Behaviour

Simple organizational Structure Model

Bureaucracy

Max Weber  developed this design of the organization. The Webbrian  perspective suggests that a bureaucracy is a model of organization structure and  design based on a legitimate and formal system of authority. This model is  also regarded as ‘red tape’/ rigidity. Weber viewed the bureaucratic form of organization as logical, rational and efficient. According Weber, the ideal bureaucracy exhibits five basic characteristics:

  • The organization should adopt a distinct division of labor, and each position should be filled by an expert.
  • The organization should develop a consistent set of rules to ensure that task performance is uniform. 
  • The organization should establish a hierarchy of positions or offices that creates a chain of command from the top of the organization to the bottom.
  • Managers should conduct business in an impersonal way and maintain an appropriate  social distance between themselves and their subordinates.
  •  Employment and advancement should be based on technical expertise and employees should be protected from arbitrary dismissal.

The bureaucracy is characterized by highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional department, centralized authority, narrow spans of control, and decision making that follows the chain of command.

The best examples of bureaucracies today are government agencies and colleges. As these organizations have to deal with  a large number people in equal and fair manner rules, regulations, and standard operating procedures are needed.

A primary strength of bureaucracy model is that  several of its elements improve efficiency because of being performed standardized activities depending upon the fixed rules and regulation, it results in economies of scale, minimum duplication of personnel and equipment Bereaucracy also help prevent favouratism because every one must follow the rules.  But  it also has several disadvantages like- Bureaucratic model is inflexible and rigid, it is too hard to change the rules once  it is determined. It also neglects the humanity and social part of the human life. The bureaucracy is efficient only as long as employees confront problems they have previously encountered and for which programmed decision rules have already been established.

Also Read: Enterprise Systems: Digital Firm, Information Systems, organizational hierarchy, Business Processes

Matrix Modelx in organizational structure

It is  the model which is based on two overlapping bases of departmentalization. The foundation of a matrix is a set of functional departments. A set of product groups as  temporary departments are then superimposed across the functional departments. So, the matrix combines two forms of departmentalization: Functional and product. Employees in a matrix are simultaneously members of a functional department and  of a project/ product team. So matrix model represents of multiple command structure . A member reports to a both functional as well as a project manager or product managers. It breaks the concept of unity of command. Employees in the matrix has two bosses- Functional Manager sand Product Manager.

  The  functional departments have   specialists with it, which minimizes the number necessary and shares  specialized resources across products. Its major disadvantage is the difficulty of coordinating the tasks of diverse functional specialists so their activities are completed on time and within budget. Product departmentalization, on the contrary, has exactly the opposite benefits and disadvantages. It facilitates coordination among specialties to achieve on time completion and meet budget targets. The matrix attempts to gain the strengths of each while avoiding their weaknesses.

An example of matrix model in organizational structure 

Acdamic Level→

Subjects   ↓

Class 11

Co-ordinator

Class12

Co-ordinator

BBS   1st

Co-ordinator

BBS  2nd

Co-ordinator

BBS 3rd

Co-ordinator

Account

Dept. head

Members Members Members Members Members
Finance

Dept. head

Members Members Members Members Members
Marketing

Dept. head

Members Members Members Members Members
Maths

Dept. head

Members Members Members Members Members
English

Dept. head

Members Members Members Members Members

 

In the above model the academic departments  like Account, Finance, Marketing, Math are the functional units. Specific programs in form of academic levels have been overlaid on the functions. So, members in the matrix structure have a dual assignment—to report to departmental head as well as program coordinator.

Researchers have observed six primary advantages of matrix designs. 

It enhances flexibility because teams can be created, redefined, and dissolved as needed. 

Team members assume a major role in decision making, they likely to be highly motivated and committed to the organization. 

Employees in a matrix organization have considerable opportunity to learn new skills. 

 It provides an efficient way for the organization to take full advantages of its human resources.

Team members retain membership in their functional unit so that they can serve as a bridge between the functional unit and the team, enhancing cooperation. 

The matrix design gives top management a useful vehicle for decentralization. Once the day to day operations have been delegated, top management can devote more attention to areas such as long range planning.

Some of the disadvantages of this modal are-

Employees may be confused about reporting relationships if they are simultaneously assigned to a functional manager and to several product managers. It creates power struggle in between functional and product managers

In a matrix more time may also be required for coordinating task related activities.

As the program is to be conducted by the combined effort of group members.  Group may be  dominated by one individual, and may compromise too much.

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