Organization Structure & IT-Harnoor Singh

The organizational structure of an organization tells you the character of an organization and the values it believes in.

Organizational structure is a pattern or arrangement of jobs and groups of jobs

within an organization.

A social unit of people, systematically structured and managed to meet a need

or to pursue collective goals on a continuing basis.

Definition

Six key elements

•Work specialization•Departmentalization•Chain of command•Span of control•Centralization and decentralization•Formalization

Types of Organizational Structure•Functional•Divisional•Matrix•Network•Team

Functional• The organization is divided

into segments based on the functions when managing.

• Advantage: Successful in large organization that produces high volumes of products at low costs.

• Disadvantage: Communication between the functional groups is not effective then, organization may find it difficult to achieve some organizational objectives at the end.

Divisional• Organizations divide the

functional areas of the organization to divisions. Each division is equipped with its own resources in order to function independently.

• Divisions can be defined based on the geographical basis, products/services basis, or any other measurement.

• Example: General Electrics. It can have microwave division, turbine division, etc., and these divisions have their own marketing teams, finance teams, etc.

Matrix• When it comes to matrix

structure, the organization places the employees based on the function and the product.

• The matrix structure gives the best of the both worlds of functional and divisional structures.

• The company uses teams to complete tasks

• The teams are formed based on the functions they belong to and product they are involved in

Network• The network structure is a newer

type of organizational structure viewed as less hierarchical (i.e., more "flat"), more decentralized, and more flexible than other structures.

• In a network structure, managers coordinate and control relationships that are both internal and external to the firm.

• The concept underlying the network structure is the social network—a social structure of interactions. Open communication and reliable partners (both internally and externally) are key components of social networks.

• Disadvantage: More fluid structure can lead to more complex relations in the organization.

Team• Newest organizational structures

developed in the 20th century is team and the related concept of team development or team building.

• 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

• Used by:- Xerox, Motorola, and DaimlerChrysler

Other Structures• Virtual organization is defined as being closely coupled

upstream with its suppliers and downstream with its customers such that where one begins and the other ends means little to those who manage the business processes within the entire organization.

•  The virtual organization exists within a network of alliances, using the Internet. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche.

• According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative Amazon.com so successful

Bureaucratic Structures• Bureaucratic structures maintain strict hierarchies when it comes to

people management. There are three types of bureaucratic structures:• 1 - Pre-bureaucratic structures This type of organizations lacks the

standards. Usually this type of structure can be observed in small scale, start-up companies. Usually the structure is centralized and there is only one key decision maker.

• The communication is done in one-on-one conversations. This type of structures is quite helpful for small organizations due to the fact that the founder has the full control over all the decisions and operations.

• 2 - Bureaucratic structures These structures have a certain degree of standardization. When the organizations grow complex and large, bureaucratic structures are required for management. These structures are quite suitable for tall organizations.

• 3 - Post-bureaucratic Structures The organizations that follow post-bureaucratic structures still inherit the strict hierarchies, but open to more modern ideas and methodologies. They follow techniques such as total quality management (TQM), culture management, etc.