Organizational Structure Types

10 Key excerpts on "Organizational Structure Types"

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  eBook - ePub

  Strategic Thinking

  • Irene M. Duhaime, Larry Stimpert, Julie Chesley(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  And as we will emphasize, this means much more than a re-organization or restructuring of lines and boxes on a chart. It needs to address critical issues such as the impact on information flow and business processes, effects on customers, and interrelationships among employees, to name a few. 5 In other words, these mechanisms need to fit together. When a change is made in one area, such as reporting relationships on the organization chart, managers need to consider the implications in the other areas. Policies may need to change, information systems may need to be adjusted, or even new norms created. As suggested by our model of strategic management, illustrated in Exhibit 11.1,these decisions about organizational structure will be influenced by managers’ beliefs about how to organize and implement strategy. Finally, as suggested in Chapter 3, managers’ beliefs and understandings are likely to be developed by their own trial-and-error learning, imitation of other firms’ effective structures, and their own creativity and ingenuity. Exhibit 11.1 Managers' Beliefs, the Strategic Decisions Studied in This Book, and Their Influence on Performance and Competitive Advantage The Components of Organizational Structure Hierarchy Hierarchy is both the most visible and the most widely studied aspect of structure. This section focuses on three types of hierarchical structures—functional, multidivisional, and matrix— and examines the strengths and limitations of each type of structure. Later in the chapter, we examine some new types of hierarchical structures. Functional Structures Functional structures organize activities around functional activities or departments, such as manufacturing, marketing, research and development, and sales, as illustrated in Exhibit 11.2.The principal advantage of the functional structure is that its division of the organization into departments allows employees to specialize and become increasingly skilled at what they do

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  Designing Exceptional Organizational Cultures

  How to Develop Companies where Employees Thrive

  • Jamie Jacobs, Hema Crockett(Authors)
  • 2021(Publication Date)
  • Kogan Page

    (Publisher)

  If organizations want to succeed and create exceptional cultures, they need to stack the deck (aka build their team) in a new way. To do this, organizations have to start thinking about talent differently.

  Types of organizational structures

  There are many organizational structures, but knowing all of them is not important, unless you are in HR (in which case you should have a good understanding of most structures). Figure 3.1 outlines a short list of some of the most commonly used structures. Consider where your own organization sits from a structural perspective.

  Figure 3.1 Most commonly used structures

  Figure 3.1 details The details of the illustration are as follows:

  • Functional: units are formed according to major technical or professional function performed
  • Product-based and lines of business: units are formed around each of the major products (or services)
  • Customer or geographical area-based: units are formed around the characteristics or location of customers or markets
  • Business process teams or agile: cross-functional teams structured around the major work processes
  • Matrix: units are formed where individuals have accountability to two managers: one functional and one project or product or geo
  • Hybrid: units are formed which mix and match the above structures to create the best fit to their environment.

  • Functional. This structure is one of the most common structures we see. Employees are segregated into their functional departments, each with a leader, eventually reporting up to the CEO. This type of structure builds functional excellence and a depth of experience. There is consistency in processes and clear career paths.
  • Product-based/lines of business. This type of structure emphasizes the product and, due to this focus, creates more innovation. For organizations with multiple products, this type of structure is scalable.
  • Customer or geographical area-based.

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  Human Resource Management

  People and Organisations

  • Stephen Taylor, Carol Woodhams(Authors)
  • 2016(Publication Date)
  • CIPD - Kogan Page

    (Publisher)

  Most organisations have documents showing their structure in varying degrees of detail, for example, divisions, function names, job titles, name of position holder, even photographs. These are used as OD tools, but are often widely available within the business, on an intranet for example. We’ll examine the factors that influence the choice of structure in the next section on OD process, but first we’ll take a look at the principal types of organisational structure

  8.2.6  HIERARCHICAL STRUCTURES

  Campbell and Craig (2005) refer to these as ‘M form’ structures, due to the shape made by the various divisions reporting into the CEO. The different types of hierarchical structure are distinguished by how the parts of the organisation are divided up, for example by function, geography, customer base.

  Functional structure: Most readers will have experienced working life in a functional structure at some point (Figure 8.3 ). Connor et al (2012) refer to this as the most logical and common option, and Wagner and Hollenbeck (2014) describe it as the most basic kind of bureaucratic structure. It can create the risk of functional silos, but allows a clear chain of command and relatively smooth communication. Other factors, such as spans of control, and how many layers of management exist, will determine how reactive and dynamic it is.

  Figure 8.3 Functional structure

  Geographical structure: This can be a regional structure within one country or market, with several regional offices (each potentially with its own regional manager or director) supported by a head office with support functions. Alternatively, it could be an international structure with various national markets or areas of the world reporting to a Global CEO. These structures have the advantage of being close to the regional or national customer base, but require high levels of control, and can potentially create duplication of costs where each geographical branch has its own support functions.

  Organisation by product:

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  Construction Management and Organisational Behaviour

  • Maureen Rhoden, Brian Cato(Authors)
  • 2017(Publication Date)
  • Wiley-Blackwell

    (Publisher)

  12 Organisations and Structures

  Introduction

  Organisational structures allow us to organise and deploy resources; define job activities, responsibilities and accountabilities. They help with decision making processes and communication flows in order to achieve the goals of the organisation. They help to create the power structure for the organisation and influence the identity and corporate image of the company. Organisational structures can also help with the attitudes of staff members. In essence, the structures of organisations can be influential as to whether an organisation is effective or not (Fryer, 2004; Carnall and Todnem, 2014).

  Pugh et al. (1963) proposed that the structure of an organisation can be defined by its level of complexity, formalisation and centralisation:

  • Complexity – is the extent to which the organisation is differentiated along three dimensions:
    • Horizontal differentiation – the number of different types of jobs that exist within the company.
    • Vertical differentiation – the number of levels that exist within the hierarchy of the organisation.
    • Spatial differentiation – the extent of the geographical dispersion of staff and physical facilities.

  These differentiations introduce complexities into the organisation which increase the challenges that management have when leading companies.

  • Formalisation – the extent to which rules and procedures guide the activities of the personnel employed within the organisation which often allow little freedom of choice in how jobs are completed.
  • Centralisation – the degree to which the decision making is concentrated.

  Case study A

  An example is a small architectural firm where the main Partner of the firm makes the main decisions and therefore determines the direction of the company. In construction there are many SMEs (small to medium enterprises) consisting of under 10 workers and generally with a single head director or partner.

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  The Psychology of Behaviour at Work

  The Individual in the Organization

  • Adrian Furnham(Author)
  • 2012(Publication Date)
  • Psychology Press

    (Publisher)

  Devising, and where appropriate changing, the formal and explicit structure of an organization is clearly of crucial importance. For some, the very idea of structure implies bureaucratic restrictions, but structure is clearly necessary. Furthermore, just as in the case of leadership there may well be formal and informal structures. Informal structures often arise when the formal structures fail. Structure can be flexible and must change to meet the requirements of the organization.

  What is the optimal organizational structure? The answer to the question is inevitably contingent on such things as the size, goals and technology of the organization. Once the environmental factors have been closely considered, the organization may be designed and specific decisions made about the span of control, the bias of differentiation and integration. The design may be functional, divisional or matrix, and inevitably it will have particular characteristics that may be described in terms of complexity, formality and centralization (Randolph & Blackburn, 1989). Each structure will inevitably have particular outcomes that are a happy fit or misfit between internal and external requirements.

  Senior (2000) has argued that organizational structure and culture are closely interwoven. Furthermore, that these lead to very different attitudes to, and capacity for, change.

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  Strategy and Structure of Japanese Enterprises

  • Toyohiro Kono(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  10 Organizational Structure and Resource Structure

  10.1 Concept

  The organizational structure of a company is the way that company groups its jobs and defines the line of authority to integrate the jobs. Organizational structure has three dimensions, as illustrated in Figure 10.1 . From the similarity of goals, the sub-units are grouped under products. The diversified company takes this grouping as the first stage; it uses the product division structure. From the similarity of required knowledge, the jobs are grouped under strategic planning, development, production and marketing. This is a functional grouping. The specialized company uses functional organization as its first stage of grouping.

  The company's capability has three resource elements: the system, the human resources (and atmosphere) and the facilities. These elements specify the contents and quality of the capability. If there is a balance between each element, and if the level of key capabilities is high, then the strategy will be well generated and well implemented and the company's performance will be high.

  10.2 Balanced Change of Strategy and Structure

  The structure needs to fit the strategy. As the strategy changes, the structure has to be changed, and there should be a dynamic matching between the two. There is a good deal of support for this view (Chandler, 1962; Scott, 1971; Channon, 1973; Galbraith and Nathanson, 1978). The author finds that it is true for successful Japanese enterprises, but with some modification. We should differentiate the strategy-generating department from the strategy-implementing department; the former is more important than the latter. The process of balanced change is then as follows.

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  Organizations

  Structures, Processes and Outcomes

  • Pamela S. Tolbert, Richard H. Hall(Authors)
  • 2015(Publication Date)
  • Routledge

    (Publisher)

  Structure is a defining and crucial aspect of any organization. One way to think about structure is as the arrangement of organizational parts, similar in some ways to parts of a building. Buildings have doors through which we enter. Organizations, too, have “ports of entry,” such as the admissions office for undergraduates at a university or the hiring department in a business firm. Hallways govern our movements and the forms of activity in a building. Organizations have rules and procedures about how things are to be done, which direct the behavior of their members. Some buildings are small and simple, such as a garage; others are complex and multilayered, with intricate linkages and passageways to other buildings. Similarly, some organizations operate in a single location and have only a few different types of jobs; other organizations operate in many sites, nationally and internationally, and have a wide array of divisions and jobs. In some buildings, the heating and air-conditioning are centrally controlled; in others, each room is essentially autonomous and its temperature is determined by occupants. Likewise, organizations vary in the degree to which people and units are given autonomy in decision-making.

  The building analogy isn’t perfect. For example, the structure of most buildings rarely changes significantly over time. Although organizational structure has a strong tendency toward inertia, most structures do change (sometimes slowly, sometimes very swiftly) as they are influenced by successive waves of members, interactions among the members, and changes in environmental conditions. However, the analogy provides you with a general sense of how structure affects an organization.

  Defining Organizational Structure

  But how do we define structure exactly? There is no single, agreed-upon definition, and indeed, there is wide variation in the ways people have defined this concept. Chester Barnard, in a famous early analysis of organizations, offered the following characterization of structure: “all complex organizations are built up from units of organization, and consist of many units of ‘working’ or ‘basic’ organizations, overlaid with units of executive organizations …” (1968:113). Robert Merton, whose students helped define organizational sociology as a distinctive subfield, suggested that structure “involves clearly defined patterns of activity in which, ideally, every series of actions is functionally related to the purposes of the organization” (1957:195). Peter Blau, a well-known organizational researcher, defined structure simply as “the distributions, along various lines, of people among social positions that influence the role relations among these people” (1974 :12).

  One reason that there may be little agreement on a definition of structure is that many scholars have tried to define it broadly enough to encompass both informal and formal aspects of organizations. Informal structure involves norms and social expectations that are not officially prescribed by an organization, but that can be a very powerful force in channeling people’s behavior. Formal structure, on the other hand, refers to explicit organizational specifications, such as who is to do what kinds of tasks or jobs, and how these are to be done (including when and where). In offering our own definition of structure, we distinguish between these two aspects. Thus, formal structure refers to the official, explicit division of responsibilities, definitions of how work is to be done, and specifications of relationships involving the members of an organization. Informal structure refers to the unofficial divisions, definitions, and relations that emerge over time in an organization. As we suggested above, structure (both formal and informal) is important because it shapes people’s behavior. Under most circumstances, people enact behaviors that are consistent with structural prescriptions. But you should also recognize that people’s behaviors are the source of changes in structure over time. This relationship is sometimes referred to as structural duality: “structures shape people’s practices, but it is also people’s practices that constitute (and reproduce) structure” (Sewell, 1992 :4; see also Giddens, 1987 ). Under what conditions individuals are most apt to deviate from structural prescriptions and when such deviations will result in changes in existing structure (i.e., general acceptance of new ways of doing things) are questions with which contemporary organizational theorists are still wrestling (Barley and Tolbert, 1997 ; Scott, 2007

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  Business Networks

  • Emanuela Todeva(Author)
  • 2006(Publication Date)
  • Routledge

    (Publisher)

  Organisations in general are defined as groups of people working together under a division of labour in order to achieve some common aims or instrumental goals (Brass, 1992). An organisation is both a collectivity of people and an aggregation of interlinked organisational sub-units, coordinated towards the achievement of the instrumental goals. There is a division of labour inside organisations which is a result of the specialisation of actors and sub-units for the efficient implementation of organisational goals. The division of labour is also an antecedent of the structural relationships that emerge between individuals and sub-units.

  These principles from organisation theory can apply to individual organisations, organisational sub-units, or mega-sets of interlinked organisations and business networks where coordinated activities prevail over spontaneous actions. Networks, in the same way as organisations, comprise interlinked elements/actors that specialise in their contribution to the network output and coordinate activities for the implementation of some aims.

  The main structural and functional characteristics of such networks and organisational formations described in the literature are: pre-specified and stable relationships, instrumentality of goals, additivity of parts, uni-directionality of command, universality of communication flow and synergy in activities. With these fundamental characteristics organisations and networks have become the dominant form of social coordination along with markets, administrative hierarchies, political intervention and normative control. Intra- and inter-organisational networks have evolved as complex organisational systems of structured relationships that facilitate coordinated economic activity. This is why the analysis of the main archetypes of network structures starts with the analysis of organisational structures as building blocks of complex organisational agglomerations.

  Figure 5.1 Mutual determination of action, structure and relationship.

  Types of structural configurations

  There are many descriptions of complex inter- and intra-organisational agglomerations and many classifications of organisational structures that attempt to synthesise this knowledge. Monge and Contractor (2003) refer to five epistemic perspectives on the emergence of structure from chaos, that capture almost all structural possibilities. This classification is used here as the main framework within which I incorporate all other structural configurations. The generic classification of epistemic structural possibilities starts with the so-called nested type of structure which is accompanied by fully hierarchical control. Nested structures are composed of nests or sub-units, which are interconnected and subjected to maximum control by a centre and minimum flexibility in their choices. This form is known also as the classical hierarchy

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  Project Management Leadership

  Building Creative Teams

  • Rory Burke, Steve Barron(Authors)
  • 2014(Publication Date)
  • Wiley

    (Publisher)

  Functional Organization Structure The most pervasive organization structure is the basic hierarchical structure which has been handed down from the medieval kingdoms, the military and the church. The functional organization structure groups people by specialization (production, marketing, accounts, engineering, etc.). The principle behind the functional structure is that it is easier to manage specialists if they are grouped together and supervised by an individual with similar skills and experiences. This centralizes similar resources, gives an economy of scale, provides mutual support by physical proximity and clearly defines line and staff divisions of responsibility and authority. Figure 4.2 outlines a typical functional structure with a number of functional departments reporting to the general manager

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  Project Management

  A Systems Approach to Planning, Scheduling, and Controlling

  • Harold Kerzner(Author)
  • 2009(Publication Date)
  • Wiley

    (Publisher)

  If we assume that an organizational system is composed of both human and nonhuman resources, then we must analyze the sociotechnical subsystem whenever organizational changes are being considered. The social system is represented by the organization’s personnel and their group behavior. The technical system includes the technology, materials, and machines necessary to perform the required tasks.

  Behavioralists contend that there is no one best structure to meet the challenges of tomorrow’s organizations. The structure used, however, must be one that optimizes company performance by achieving a balance between the social and the technical requirements. According to Sadler18 :

  Since the relative influence of these (sociotechnical) factors change from situation to situation, there can be no such thing as an ideal structure making for effectiveness in organizations of all kinds, or even appropriate to a single type of organization at different stages in its development.

  There are often real and important conflicts between the type of organizational structure called for if the tasks are to be achieved with minimum cost, and the structure that will be required if human beings are to have their needs satisfied. Considerable management judgment is called for when decisions are made as to the allocation of work activities to individuals and groups. High standardization of performance, high manpower utilization and other economic advantages associated with a high level of specialization and routinization of work have to be balanced against the possible effects of extreme specialization in lowering employee attitudes and motivation.

  Organizations can be defined as groups of people who must coordinate their activities in order to meet organizational objectives. The coordination function requires strong communications and a clear understanding of the relationships and interdependencies among people. Organizational structures are dictated by such factors as technology and its rate of change, complexity, resource availability, products and/or services, competition, and decision-making requirements. The reader must keep in mind that there is no such thing as a good or bad organizational structure; there are only appropriate or inappropriate ones

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