Organization Structure

                                                    Organization Structure

What is organization Structure ? What does it consists of ?

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.

What are the 4 basic elements of Organization Structure ?

a) Span of Control: Number of people directly reporting to the next level in the hierarchy.

b) Centralization: Degree to which formal decision authority is held be a small group of people, typically those at the top of the organizational hierarchy.

c) Formalization: Degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms.

d) Departmentalization: Organizational charts that specifies how employees and their activities are grouped together.

How does the Organizational Structure affect the organization ?

Organizational structure affects organizational action in two big ways. 

a) Provides 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.

TYPES OF ORGANIZATIONAL STRUCTURES

a) Functional Organization

This type of organizational structure:

•  - Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS. 
•   - 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.
•  - Mainly used by the 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.
•  Disadvantages :
•    i) As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions.
•    ii) Harder to judge performance because which department to blame when a new product fails.
•    iii) 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.

b) Product/Market/Divisional 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.

  - Can follow three patterns as described above:

    i) DIVISION BY PRODUCT

ii) DIVISION BY GEOGRAPHY

iii) DIVISION BY CUSTOMER 

c ) Matrix Organization/ Multiple Command System

•  - Employees have in effect 2 bosses ie. 2 chains of command. One chain of command is functional or divisional and the second is a horizontal overlay that combines people from various divisions or functional departments into a project or business team led by a project or group manager who is an expert in the team's assigned area of specialization. For example, many large companies have a corporate human resources division, with individual HR representatives stationed at local facilities. At the local level, the HR representative may report to the operations manager charged with responsibility for that facility. 
•  - Bring together the diverse specialized skills required to solve a complex problem.
•  - Problems of coordination are minimized here because the most important personnel for a project work together as a group. They come to understand the demands faced by those who have different areas of responsibility.
•  - Gives the organization a great deal of cost-saving flexibility because each project is assigned only to the required people and unnecessary duplication is avoided.
•  - To be effective, team members must have good interpersonal skills and flexibility and cooperation.
• Disadvantages :
• Everyone fails to adapt
• Without proper outlining of hierarchy it will not function