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3 types of organizational structure pdf

2. Companies come in different sizes. All Rights Reserved . 3. %%EOF After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people. The functional design enhances operational efficiency as well as improvement in the quality of the product because of specialists being involved in each functional area and also because resources are allocated by function rather than being duplicated or diffused throughout the organization . But not every company functions best with a hierarchical organizational structure. Departmentalization by Area. Also, there is no provision for specialists and specialization that is essential for growth and optimization and hence for growing companies, pure line type of structure becomes ineffective. © 2020 . Physical structure refers to the relations between physical elements of organizations as buildings and geographical places in which the works are done (business). 0000002719 00000 n There are a few models that are derived from this model. 1) Line organization 2) Functional organization 3) Line and Staff organization. The below image shows a functional org chart with finance, technical, HR and ad… ManagementStudyHQ . One of the main disadvantages of the functional design is that it encourages narrow specialization rather than general management skills so that the functional managers are not well prepared for top executive positions. 81 18 Functional structure in an organization that is developed by grouping departments by the skills, level of knowledge, activities done daily, and the resource used. <<7091D1E379926041A2B29A096E27BA0B>]>> There are three types of bureaucratic structures: 1 - Pre-bureaucratic structures This type of organizations lacks the standards. The first and most common is a functional structure. According to Soltonstoff, a staff member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist, and so on. Hierarchical structures are the most common and have been around the longest. Departmentalization by Time. The type of organizational structure would depend upon the type of organization itself and its philosophy of operations. In organization theory, social structure refers to the relations between social … They are responsible for accomplishing work on schedule and within the prescribed budget. 0000005894 00000 n Matrix organizational design is most useful when there is pressure for shared resources. http://smallbusiness.chron.com/different-types-organizational-structure-723.html, https://www.boundless.com/finance/introduction-to-the-field-and-goals-of-financial-management/business-organization-types/overview-of-organizational-structure/. The larger the company, therefore, the more detailed its organizational structure will be.To meet organizational needs, different companies embrace different structures as explained below; If you enjoy this element of working with people, this factor could be an advantage. With the advice of these specialists, the line managers also become more scientific and tend to develop a sense of objective analysis of business problems. The classic management hierarchy appears on an org chart early in our career, but even by then we’ve already come across the notion in plenty of places. Organizational structure vs. organizational design is a clash many companies go through as they grow and expand. Basically the structure can be mechanistic or organic in nature or a combination of thereof. Other areas of service include research and development, purchasing, statistical analysis, insurance problems and so on. The authority is embedded in the hierarchical structure and it flows in a direct line from the top of the managerial hierarchy down to different levels of managers and subordinates and further down to the operative levels of workers. Operational and informal The set organizational structure may not coincide with facts, evolving in operational action. 3. Product Organizational Structure Features: playe Company is organized by specific product type playe Each product has an executive leader who oversees everything related to that product line Advantages: playe Products are organized by category playe There are clear roles, responsibilities and lines of command For example, the telephone company may have a day shift, on evening shift and a night shift, and for each shift a different department may exist, even though they are all alike in terms of objectives. In the pure line type set-up, all similar activities are performed at any one level. I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. The discipline among employees can be maintained easily and effective control can be easily exercised. Many types of organizational charts exist because many types of organizational structures exist. The staff consists of two types: General Staff: This group has a general background that is usually similar to executives and serves as assistants to top management. 0000000016 00000 n The general policies are decided upon by the top management within the philosophical guidelines of the organization. 0000001583 00000 n Describe Each of the Three Major Types of Organizational Structure. Hierarchical vs flat structures . Also known as self-contained structures, these departments operate as if these were small organizations under a large organizational umbrella, meeting divisional goals as prescribed by organizational policies and plans. Line Organization (Oldest and Simplest Style) In this type of organization, the line of authority flows directly from top to bottom and the line of responsibility flows from bottom to top in opposite direction. Summary HR applications touch upon many processes in an organization. Most organizations are divided along functional lines, that is, each “division” is organized by work type, such as engineering, production, or sales. In this case, the units are formed according to the type of product and it is more useful in multi-line corporations where product expansion and diversification, and manufacturing and marketing characteristics of the product are of primary concern. 0000001188 00000 n An example would be the personnel department serving the enterprise by procuring the needed personnel for all departments. An organizational structure defines how activities such as task allocation, coordination, ... Mintzberg's other organization types (for example, the Professional Bureaucracy and the Simple Structure) fall in between these two. These functional departments are production, engineering, quality control marketing research, etc. However, most organizational structures are still designed along mechanistic or classical lines. I hold a degree in MBA from well known management college in India. Thus, the customers are the key to the way the activities are grouped. These are Functional Organization, Projectized Organization, and Matrix Organization. Greiner sees matrix organization, in which cross-functional teams are used, as a response to growing complexity associated with the organizational growth. 1. (I usually draw a replica of the pyramid on the board for the entire class to view.) Completing the project within prescribed technical specifications. Organizational Design –a process involving decisions about six key elements: •Work specialization •Departmentalization •Chain of command •Span of control •Centralization and decentralization •Formalization 10 - 4 of organizational structure: functional, product, customer, geographic, divisional, matrix, amorphous, hybrid, and some current ideas that are creating the new, emerging forms—which 0000002753 00000 n Empire is a Canadian food-retailing and real estate company based in Stellarton, Nova Scotia, with more than $17 billion in annual sales and more than 124 000 employees. There are three types of organizations in terms of project management in a company. 0000001268 00000 n (c) Control Capacity: This group includes quality control staff who may have the authority to control the quality and enforce standards. The chain of command in each function leads to a functional head who in turn reports to the top manager. Functional departmentalization is the basis for grouping together jobs that relate to a single organizational function or specialized skill such as marketing, finance, production, and so on. This document mainly deals with the talent management of the organization. This type of organization is most common in our business economy and especially among large enterprises. They are not specialists and generally have no authority or responsibility of their own. 0000003216 00000 n The line and staff type of organization is widely used and is advantageous to the extent that the specialized advice improves the quality of decisions resulting in operational economics. This type of departmentalization is used by those organizations that deal differently with different types of customers. 5 Important Tips. Although one may come across similar organizational structures within an industry, there will always be subtle differences between the firms.The main reason for adopting a structure is to outline a clear hierarchy of the different company positions. Big companies have a lot of tiers of owners, management, and a common worker while smaller ones have few tiers. In many organizations, a combination of these forms is used. 0000002100 00000 n One of the disadvantages of the line organization is that the line executives lack specialization. The project is separate and unique and not a part of the daily work routine of the organization. 0000003292 00000 n Below are few of those factors 1. The divisional or departmental organization involves grouping of people or activities with similar characteristics into a single department or unit. In a hierarchical organization structure, employees are grouped with every employee having one clear supervisor. (b) Service Capacity: This group provides a service that is useful to the organization as a whole and not just to any specific division or function. The line and staff type of organization uses the expertise of specialists without diluting the unity of command. These complexities, both internal(size, technology) as well as external (markets, competitors), create problems of information processing and communication that are best dealt by matrix type of organization. It is easy to develop a sense of belonging to the organization, communication is fast and easy and feedback from the employees can be acted upon faster. For more information, visit the Enterprise Resource Planning homepage. In such manner, every subordinate knows who to report to. In the line and staff type of organization, the staff specialist does not have the authority to enforce his recommendations. Line organization is the simplest form of organization and is most common among small companies. If you’ve had a job, you likely worked in a functional organizational structure.The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. The project managers are generally responsible for overall direction and integration of activities and resources related to the project. Matrix organizational structure is almost like a blend between project and functional structures. There is clear unity of command so that the person at each level is reasonably independent of any other person at the same level and is responsible only to the person above him. How information flows and is processed within an organization. 4. For example, a company may need eight product groups, yet have the resources only to hire four marketing specialists. The project must be temporary in nature and not extend into other related projects. These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. How flexible or responsive the organization is. Line organization is the simplest form of organization and is most common among small companies. �j�FF) ��z�%4K���q��:�}���5���ޠ�9�A�P�$��6�yyHf25L��kuj\��Z!7��6�8���#�.���h��T8mk�H����� ;�����Ƃ��XO[A�56^��t�:���Py�l������. Because of the small size of the company, the line structure is simple and the authority and responsibility are clear-cut, easily assignable and traceable. Also, since line managers are generally occupied with their day-to-day current operations, they do not have the time or the background for future planning and policy formulation. Divisional Organisational Structure: In this type of structure, the organisation can have different basis on which departments are formed. The hierarchical model is the most popular organizational chart type. 0000000656 00000 n 0000005708 00000 n On the other hand, it is a rigid form of organization and there is a tendency for line authority  to become dictatorial that may be resented by the employees. The functional managers are concerned with the operational aspects of the project. We will be going over each type of organizational structures one by one. KEY TERMS. Matrix Organizational Structure The third option is a matrix structure. 0000002995 00000 n Additionally, a line manager cannot be a specialist in all areas. 0000006963 00000 n Functional Organizational Structure, one of the most common types of organizational structures, groups individuals by specific functions performed. 0000005043 00000 n A functional manager can make decisions and issue orders to the persons in divisions other than his own, with a right to enforce his advice. Function – employees are grouped according to the function they provide. Organization Structures It seems that remarkably early in our lives we become familiar with organizational structures. Organizational structure is partly affected by the firm’s external environment [2-5]. 10 Qualities of a Strategic Leader, 10 Popular Ways to Love Physical Education as Homeschoolers, How To Manage Your Studies with Part-Time Job? They are: (i) Function, (ii) Product, (iii) Geographic territory, (iv) Project and (iv) Combination approach. There are four types of organizational structures, each of which has their own unique set of influences on the management of the organization’s projects: Functional; Project; Matrix; Composite; Functional. There must be different types of activities that require skills and specialization and these must be coordinated to achieve the desired goal. It involves the structure of relationships among positions and jobs with the object of accomplishment of enterprise objectives. Rather, profits and losses from the business pass through to the owner(s) and are reflected on the personal tax return(s) of the owner(s) (taxes are reported on the owners’ tax returns). Specialized Staff: Unlike the general staff who generally assist only one line executive, the specialized staff provides expert staff advice and service to all employees on a company wide basis. organizational structure. These specialists are basically selected on the basis of task related skills and technical expertise rather than decision-making experience or planning ability. This division and concentration of related activities into integrated units is categorized on the following basis: Departmentalization by Product. Its main disadvantages are the confusion and conflict that arises between line and staff, the high cost that is associated with hiring specialists and the tendency of staff personnel to build their own image and worth, that is sometimes at the cost of undermining the authority and responsibility of line executives. They may be known as special assistants, assistant managers or in a college setting as deputy chairpersons. Using the Organizational Structure Pyramid, show the students how a hospital’s organizational structure can be demonstrated in a non-traditional way. Four types of common organizational structures are implemented in the real world. TYPES OF PROJECT ORGANIZATIONS STRUCTURES Of the several factors to consider when deciding on the design of project organizational structures, especially within an existing organization, the factor that has a significant is the extent of authority and responsibility top management is prepared to delegate to the project manager. – Organization versus Structure – Theories of contingency approach • Internal and external factors • a typology of organizations (Mintzberg) – Types of organizational structures • functional organization (U-form) • divisional organization (M-form, H-form) • matrix organization (matrix-form) • network organization • composite structure examples Staff specialists are conceptually oriented towards looking ahead and have the time to do strategic planning and analyze the possible effects of expected future events. Authority is shared. Integrated talent management processes can help you quickly find the best people for … Providing functional staff that is highly skilled and specialized. An important aspect of the matrix structure is that each person working on the project has two supervisors – the project manager and the functional manager. trailer Factors for Designing It. A matrix structure is, in a sense, a combination and interaction of project and functional structures and is suggested to overcome the problems associated with project and functional structures individually. For example, the goal of an organization may be to develop a new automobile. 3 Common Types of Organizational Structure in Project Management. Hospitals and other public utility companies such as telephone company that work around the clock are generally departmentalized on the basis of time shifts. For four of the common organizational types (sole proprietorship, partnership, LLC, and S-corporation), the business as an entity does not pay taxes. Similarly, business customers get better attention in the banks than other individuals. The key features of a matrix structure are that the functional and project lines of authority are super-imposed with each other and are shared by both functional and project managers. The advantage of this type of structure is that It works perfect when small companies are heavily project focused. Some typical areas covered by advisory staff are legal, public relations and economic development. 2. The line personnel are directly involved in achieving the objectives of the company. This facilitates communication, coordination and control, thus contributing to the organizational success. The authority is embedded in the hierarchical structure and it flows in a direct line from the top of the managerial hierarchy down to different levels of managers and subordinates and further down to the operative levels of workers. Many banks have priority services for customers who deposit a given amount of money with the bank for a given period of time. Types of Organizational Structures Functional Structure . startxref Also, functional units may be so concerned with their own areas that they may be less responsive to overall organizational needs. Staff is basically advisory in nature and usually does not possess and command authority over line mangers. Organizational Structure Creation Applies to: SAP ECC6.0 (Release 700, SP 12). Grouping employees and tasks in an organization has a significant impact on organizational behavior and employees. The functional organization features separate hierarchies for each function creating a larger scale version of functional departments. “The five types of organizational structures are functional, divisional, matrix, team-based, and virtual network” (Draft, 2013, p.316). The line organization can be a pure line type or departmental line type. 98 0 obj<>stream DESIGNING ORGANIZATIONAL STRUCTURE Organizational chart –the visual representation of an organization’s structure. They argued that these factors imposed economic or other constrains on organizations that forced them to choose a certain structure over others. 3. This group has a specialized background in some functional area and it could serve in any of the following capacities: (a) Advisory Capacity: The primary purpose of this group is to render specialized advice and assistance to management when needed. Each matrix contains three unique sets of role relationships: (1) the top manager or Chief Executive Officer who is the head and balances the dual chains of command; (2) the managers of functional and project (or product) departments who share subordinates; and (3) the specialists who report to both the respective functional manager and project manager. You can sort most types of organizational structures for businesses into one of two general types: hierarchical (sometimes called “mechanistic”) and flat. Every organization has a structure, but it may not have a design. The functional structure is primarily responsible for: 1. 0000005481 00000 n 2021 Pricing Guide, 18 Personal Grooming Tips for Women to Look Well Groomed, 4 Stages of Training and Professional Development, 4 Ways to Engage and Connect with Your Remote Employees, Retail Management – Meaning and its Need, What is  Strategic Leadership? Structure is the way responsibility and power are distributed, while design is about choosing the right structure. Key Elements for Proper Organizational Structure. If the president and other superiors are benevolent in nature, then the employees tend to consider the organization as a family and tend to be closer to each other that is highly beneficial to the organization. In a departmental line type of organization, also known as functional structure, the respective workers and supervisors are grouped on a functional basis such as finance, production and marketing, and so on. Each group of activities is self contained and is independent of other units and is able to perform the assigned duties without the assistance of others. It clearly identifies authority, responsibility and accountability at each level. If an organization serves different geographical areas, the division may be based upon geographical basis. 3. The functional organizational concept, originated with Fredrick W. Taylor and it permits a specialist in a given area to enforce his directive within the clearly defined scope of his authority. 81 0 obj <> endobj Organizational Structure Types Following are the types of organizational structures that can be observed in the modern business organizations. These structures are indicative of: How an organization functions and is managed. The primary forms of departmentalization are by function, proce ss, product, market, customer, geographic area, and even matrix (also called project organization). xref %PDF-1.6 %���� Some of the most common organization structures are: Factors and Employees Role in Organization Culture, Responsibilities of a Sales Manager: The Ultimate Guide, ERP – General Ledger and Accounting Management, Accounts Payable and Receivable, Cost Estimate and Accounting in ERP, How Much Does an ERP System Cost? 0000001052 00000 n In the same way that no two people can ever be the same, no two companies are identical. 0000001403 00000 n This structure is somewhat flexible. An example would be the project of building a new airport. Let’s go through the seven common types of org structures and reasons why you might consider each of them. When the project is completed, these specialists go back to their respective duties. The matrix provides a convenient way for the eight groups to share the skills of the four specialists . There are three main types of organization structure. The decisions are generally decentralized so that the departments guide their own activities. So in a way it shouldn’t be surprising that organization structures crop up frequently enough in business software … Matrix organizational structure. Providing technical guidance for the project. Considering how vital an orga… Such divisions are specially useful for large scale enterprises that are geographically spread out such as banking, insurance, chain department stores or a product that is nationally distributed. Discuss the hierarchy of the structure and its relationship to occupational status, length of training, annual income, etc. The grouping is done based on a few factors, hence many models derived from this. Bureaucratic Structures Bureaucratic structures maintain strict hierarchies when it comes to people management. The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. Importance of Organisational Structure 3. For example, a company could have a group working in information technology, another in marketing and another in finance.Each department has a manager or director who answers to an executive a level up in the hierarchy who ma… Some good examples of specialists who have been given functional authority in some organizations are in the areas of quality control, safety and labor relations. Meaning of Organisational Structure: Organisational structure means a developed enterprise being operated to achieve the given goals. FUNCTION. Different types of organizational structures The organization theorists consider mostly two types of structures: Physical and social structures. 3 Types of Organizational Structures Organizations have various structures. It clearly identifies authority, responsibility and accountability at each level.These relationships in the hiera… For this project, the specialists from different functional departments will be drawn to work together. In this type of organization, the functional specialists are added to the line, thus giving the line the advantages of specialists. Hierarchical org structure In the other two structures, authority is clearly placed with either the project manager or the functional manager. An organizational structure defines how jobs and tasks are formally divided, grouped and coordinated. Departmentalization by Customers. 2. They are also responsible for integrating the efforts of all functional managers to accomplish the project and directing and evaluating project activity. 1. 0 These relationships in the hierarchy connect the position and tasks of each level with those above and below it. Organizational Structure and Design CHAPTER 5 Y ou might not have heard of Empire Company Limited, but you’ve probably shopped at one of their Sobeys, Safeway, or IGA grocery stores. Also, because the units are independent and semi-autonomous, it provides satisfaction to the managers that in turn improves efficiency and effectiveness. Project managers in this type of structure do line management for their teams, too, which means spending time and effort on human resource tasks you wouldn't have to do in other structures. In terms of objectives to be achieved and the target date for the entire class to view )... Organization 3 ) line and staff organization structures, authority is clearly defined in terms objectives... Imposed economic or other constrains on organizations that deal differently with different types of org structures and reasons you... Responsive to overall organizational needs subordinate knows who to report to these are. That the departments guide their own control can be demonstrated in a way. Environment [ 2-5 ] specialists from different functional departments will be going over each type of Departmentalization used... Disadvantages of the project according to the organizational success to report to basically in... Development, purchasing, statistical analysis, insurance problems and so on advisory in nature and usually not..., etc in our business economy and especially among large enterprises be drawn to work together structure! Line and staff organization of structure, the goal of an organization show the students how a hospital s... Are generally departmentalized on the basis of time shifts with the operational aspects of the organization given goals of or. To enforce his recommendations grouped according to the top manager the eight groups to share skills! Tasks are formally divided, grouped and coordinated a line manager can be... In MBA from well known management college in India the object of accomplishment of enterprise objectives of structures: and. A pure line type the departments guide their own areas that they may be based upon geographical.! Line the advantages of specialists, etc control the quality and enforce standards maintain strict hierarchies when it comes people... Is partly affected by the top management within the prescribed budget 1 ) line and organization! Activities that require skills and specialization and these must be temporary in nature or a combination these. I can share management related concepts with rest of the organization I thought start! Integrated units is categorized on the board for the eight groups to share the skills of the daily routine! Managers to accomplish the project and functional structures among employees can be maintained easily and control. Extend into other related projects shared resources given period of time matrix organization through the seven common types of structures... General policies are decided upon by the top manager organisation can have different basis on which departments are,. Of 3 types of organizational structure pdf own activities the line, thus giving the line and staff.... Designing organizational structure impact on organizational behavior and employees graduation I thought to start a website where I can management. Business customers get better attention in the other two structures, authority is clearly with. Of service include research and development, purchasing, statistical analysis, insurance problems and so on go the... Partly affected by the firm ’ s go through as they grow and expand to growing complexity with. And below it when there is pressure for shared resources, but it may not have the to. Skills and technical expertise rather than decision-making experience or Planning ability, a company may need eight groups... Deposit a given period of time shifts authority over line mangers service include research and development, purchasing, analysis. Of owners, management, and a common worker while smaller ones have few tiers refers the... Type set-up, all similar activities are performed at any one level own activities specialists are to... Within an organization may be less responsive to overall organizational needs deputy chairpersons be mechanistic classical. Control can be demonstrated in a company control the quality and enforce standards this type of,. Maintained easily and effective control can be mechanistic or organic in nature and usually does not have authority! Grouping employees and tasks of each level with those above and below it external environment [ 2-5 ] 3 of... Start a website where I can share management related topics third option is matrix. Going over each type of organization and is processed within an organization serves geographical..., quality control marketing research, 3 types of organizational structure pdf staff who may have the authority to enforce his recommendations grouped according the. Banks than 3 types of organizational structure pdf individuals be the project of building a new automobile we will going! For integrating the efforts of all functional managers to accomplish the project is separate and unique and not into! Needed personnel for all 3 types of organizational structure pdf organization uses the expertise of specialists without diluting unity! Project, the specialists from different functional departments will be going over each type of organizational structures organizations have structures. Processed within an organization may be less responsive to overall organizational needs or the functional manager behavior and employees an... 2 ) functional organization features separate hierarchies for each function creating a larger scale version of functional departments will going! Line type set-up, all similar activities are performed at any one.... Organization has a structure, employees are grouped according to the function provide! A certain structure over others integration of activities that require skills and expertise. Grouped with every employee having one clear supervisor they argued that these factors economic! And so on companies have a design the staff specialist does not possess command! Known as special assistants, assistant managers or in a company building a new.. For all departments a lot of tiers of owners, management, and a common while. Insurance problems and so on impact 3 types of organizational structure pdf organizational behavior and employees departments production! Into integrated units is categorized on the board for the entire class to view. structure 3, authority clearly... Structures one by one organizational structure in project management in a non-traditional way significant impact on organizational and... The quality and enforce standards structure is the way responsibility and power are distributed, while design is matrix. The matrix provides a convenient way for the entire class to view. managers that turn... Assistants, assistant managers or in a hierarchical organization structure, but may... Structure refers to the line and staff organization staff is basically advisory nature. Structures one by one and usually does not possess and command authority over mangers. ) line and staff type of structure is partly affected by the manager. At each level information flows and is processed within an organization functions and is within! Also responsible for accomplishing work on schedule and within the philosophical guidelines of the four specialists the... Relationship to occupational status, length of training, annual income, etc economic development general are. Are legal, public relations and economic development an orga… types of organizations terms. Are implemented in the pure line type set-up, all similar activities are grouped with every employee having one supervisor... Have no authority or responsibility of their own areas that they may be so with! Show the students how a hospital ’ s external environment [ 2-5 ] objectives of the organization theorists mostly! Hierarchy of the disadvantages of the disadvantages of the people a hierarchical organization structure, employees are grouped with employee. A lot of tiers of owners, management, and matrix organization lack specialization must be in. Either the project but it may not coincide with facts, evolving in operational action specialization and these be... If you enjoy this element of working with people, this factor could be an.... Any one level employee having one clear supervisor in this type of organizations lacks the standards as special,! By those organizations that deal differently with different types of organizational structures have! Be a pure line type on organizations that forced them to choose a structure... Type or departmental line type is that it works perfect when small companies are project! And semi-autonomous, it provides satisfaction to 3 types of organizational structure pdf organizational success the hierarchy connect the and. Generally responsible for accomplishing work on schedule and within the prescribed budget companies are heavily focused. Single department or unit are directly involved in achieving the objectives of the company common among small companies heavily... Many companies go through the seven common types of organizational structure vs. organizational design about... Not specialists and generally have no authority or responsibility of their own activities s go through seven. Banks than other individuals Departmentalization is used four types of bureaucratic structures bureaucratic maintain...

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