The board of directors sits at the top of the pyramid, making decisions that are then passed down through the CEO and executive team, to department managers, line managers and finally, to the workforce at the bottom of the pyramid. Recently, there has been a shift toward decentralized structures, especially among new media businesses and technology startups. Decentralized structures give high levels of autonomy, accountability and decision-making to every employee and team.
The idea is to eliminate decision-making bottlenecks further up the corporate chain, allowing the business to remain fast, flexible and adaptable to fast-moving conditions. Within these two categories, there are four basic types of organizational structure — functional , divisional , flatarchy and matrix — although many businesses develop variations on a theme. Each structure has pros and cons. Also known as the bureaucratic structure , the functional structure breaks up the company based on the specialization of its workforce.
For example, you may have departments or teams dedicated to manufacturing, sales, marketing, human resources and finance. This is the most common type of organizational structure in the United States. With a divisional structure , the company breaks into distinct business sectors based around a product, project or subsidiary it operates, or around a geographic location. A car manufacturer, for example, might have one division dedicated to the production of luxury sedans and another dedicated to the production of SUVs.
Each division has its own manufacturing, IT, finance and marketing department to support the needs of that division. The flatarchy or team structure is a modern invention that aims to address the failings of the functional model. As the name suggests, it flattens the hierarchy and puts individuals with complementary skills into smaller working teams. Those teams are given a lot of autonomy and can choose how they work toward the company goals.
Companies that adopt a matrix structure group employees by both product and function, or by region and product, or by region and function and product. The matrix can be as big and as complicated as the company wishes. This means that each employee would have a number of different departments, divisions and managers. For example, an employee may have duties in both customer service and sales. Organizational design is a diagnostic process or methodology.
Its purpose is to identify the dysfunctional elements of a company's procedures, systems, workflow — even its organizational structure — and then make positive changes to help the company meet its current business goals. Organizational design takes a holistic look at the company with a view to identifying inefficient workflows, such as communication breakdowns and steps that don't add value.
These might include:. Organizational structure is the static representation of organization. Whatever type of structure a business is using, you should be able to draw it out in the form of a diagram. The organogram structure — that's the posh word for a corporate structure chart — provides an easy way to visualize the relationship between one job function and another, the ranks of team members, managers and leaders, and the various chains of command.
Organizational design, on the other hand, is a dynamic representation of organization. The term refers to the procedures for structuring and restructuring an organization, its processes and workflows to make sure the business is continually operating at its best.
The main point about organizational design is that it's an ongoing process. The economy, market forces, the regulatory framework, customer tastes, the rest of the external business environment — these things all have power to impact a business, and they are constantly changing. So, the business may need to change, too. Organizational design provides a structured way for tweaking the systems that are no longer working with a view to reducing costs and strengthening performance in the light of new external conditions.
Evan 25 November at Unknown 6 October at Shadhin Kangal 5 November at Unknown 22 June at Unknown 23 February at Kathleen Brain 12 September at Newer Post Older Post Home. Subscribe to: Post Comments Atom. Some think they have the same meanin When marking test papers, I have often noticed that students tend to confuse the terms managerial roles and managerial skills.
In this tutor Having decided on a functional structure, a company might create the organization chart shown in Figure 1. Using the figure above for reference you can complete a hypothetical organization chart.
Then fill in the level directly below your name with the names and positions of the people who work directly for you —your accounting, marketing, operations, and human resources managers. The next level identifies the people who work for these managers. Your marketing manager, however, oversees one person in advertising and a sales supervisor who, in turn, oversees the sales staff.
Your operations manager oversees two individuals—one to supervise notetakers and one to supervise people responsible for making copies.
With these relationships in mind, you can now draw lines to denote reporting relationships , or patterns of formal communication. The organization chart shows that if a member of the sales staff has a problem, he or she will report it to the sales supervisor. If the sales supervisor believes that the problem should be addressed at a higher level, then he or she will report it to the marketing manager. Behind every formal communication network there lies a network of informal communications—unofficial relationships among members of an organization.
You might find that over time, you receive communications directly from members of the sales staff; in fact, you might encourage this line of communication. We see that the president has two direct reports—a vice president in charge of rides and a vice president in charge of concessions. Over time, companies revise their organizational structures to accommodate growth and changes in the external environment.
Then, as it becomes bigger and more complex, it might move to a divisional structure—perhaps to accommodate new products or to become more responsive to certain customers or geographical areas. Some companies might ultimately rely on a combination of functional and divisional structures.
This could be a good approach for a credit card company that issues cards in both the United States and Europe. Figure 3. To whom does a particular person report? Does each person report to one or more supervisors? How many people does a manager supervise? How many layers are there, for example, between the top managerial position and the lowest managerial level?
That is to say, they show who reports to whom. To understand why unity of command is an important organizational feature, think about it from a personal standpoint. Would you want to report to more than one boss? What happens if you get conflicting directions?
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