It clearly identifies authority, responsibility and accountability at each level. They are also responsible for integrating the efforts of all functional managers to accomplish the project and directing and evaluating project activity. We will be going over each type of organizational structures one by one. 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. Meaning of Organisational Structure: Organisational structure means a developed enterprise being operated to achieve the given goals. Different types of organizational structures The organization theorists consider mostly two types of structures: Physical and social structures. 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. The advantage of this type of structure is that It works perfect when small companies are heavily project focused. In the pure line type set-up, all similar activities are performed at any one level. Matrix organizational structure is almost like a blend between project and functional structures. 2. Authority is shared. In the other two structures, authority is clearly placed with either the project manager or the functional manager. 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. 0000002753 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 chain of command in each function leads to a functional head who in turn reports to the top manager. They are responsible for accomplishing work on schedule and within the prescribed budget. – 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 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; This facilitates communication, coordination and control, thus contributing to the organizational success. 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. 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. 10 Qualities of a Strategic Leader, 10 Popular Ways to Love Physical Education as Homeschoolers, How To Manage Your Studies with Part-Time Job? The line and staff type of organization uses the expertise of specialists without diluting the unity of command. 0000001268 00000 n 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. 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. The divisional or departmental organization involves grouping of people or activities with similar characteristics into a single department or unit. Some typical areas covered by advisory staff are legal, public relations and economic development. 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. The project is separate and unique and not a part of the daily work routine of the organization. 0000005708 00000 n Hierarchical vs flat structures . <<7091D1E379926041A2B29A096E27BA0B>]>> However, most organizational structures are still designed along mechanistic or classical lines. For four of the common organizational types (sole proprietorship, partnership, LLC, and S-corporation), the business as an entity does not pay taxes. 0000005043 00000 n 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. Providing functional staff that is highly skilled and specialized. An organizational structure defines how jobs and tasks are formally divided, grouped and coordinated. The functional managers are concerned with the operational aspects of the project. 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. Functional Organizational Structure, one of the most common types of organizational structures, groups individuals by specific functions performed. Matrix organizational structure. These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. The general policies are decided upon by the top management within the philosophical guidelines of the organization. All Rights Reserved . Also, because the units are independent and semi-autonomous, it provides satisfaction to the managers that in turn improves efficiency and effectiveness. If an organization serves different geographical areas, the division may be based upon geographical basis. An important aspect of the matrix structure is that each person working on the project has two supervisors â the project manager and the functional manager. Integrated talent management processes can help you quickly find the best people for … Many banks have priority services for customers who deposit a given amount of money with the bank for a given period of time. How information flows and is processed within an organization. But not every company functions best with a hierarchical organizational structure. Key Elements for Proper Organizational Structure. In the line and staff type of organization, the staff specialist does not have the authority to enforce his recommendations. “The five types of organizational structures are functional, divisional, matrix, team-based, and virtual network” (Draft, 2013, p.316). Importance of Organisational Structure 3. 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. 1) Line organization 2) Functional organization 3) Line and Staff organization. 0000005894 00000 n Many types of organizational charts exist because many types of organizational structures exist. 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. The project must be temporary in nature and not extend into other related projects. You can sort most types of organizational structures for businesses into one of two general types: hierarchical (sometimes called “mechanistic”) and flat. There are three types of bureaucratic structures: 1 - Pre-bureaucratic structures This type of organizations lacks the standards. The functional organization features separate hierarchies for each function creating a larger scale version of functional departments. 0000001052 00000 n Thus, the customers are the key to the way the activities are grouped. This type of departmentalization is used by those organizations that deal differently with different types of customers. 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. Every organization has a structure, but it may not have a design. 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. Summary HR applications touch upon many processes in an organization. In a hierarchical organization structure, employees are grouped with every employee having one clear supervisor. %PDF-1.6 %���� 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. For example, a company may need eight product groups, yet have the resources only to hire four marketing specialists. These relationships in the hierarchy connect the position and tasks of each level with those above and below it. I hold a degree in MBA from well known management college in India. Most organizations are divided along functional lines, that is, each “division” is organized by work type, such as engineering, production, or sales. Grouping employees and tasks in an organization has a significant impact on organizational behavior and employees. Line organization is the simplest form of organization and is most common among small companies. trailer Divisional Organisational Structure: In this type of structure, the organisation can have different basis on which departments are formed. 1. These functional departments are production, engineering, quality control marketing research, etc. 3. Hospitals and other public utility companies such as telephone company that work around the clock are generally departmentalized on the basis of time shifts. ManagementStudyHQ . 0000003216 00000 n The project managers are generally responsible for overall direction and integration of activities and resources related to the project. 0000001583 00000 n For example, the goal of an organization may be to develop a new automobile. Below are few of those factors 1. %%EOF Functional structure in an organization that is developed by grouping departments by the skills, level of knowledge, activities done daily, and the resource used. The hierarchical model is the most popular organizational chart type. 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. 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 If you enjoy this element of working with people, this factor could be an advantage. 3. 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. The primary forms of departmentalization are by function, proce ss, product, market, customer, geographic area, and even matrix (also called project organization). The decisions are generally decentralized so that the departments guide their own activities. 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). 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. 0000001188 00000 n 0000001403 00000 n Organizational structure vs. organizational design is a clash many companies go through as they grow and expand. There must be different types of activities that require skills and specialization and these must be coordinated to achieve the desired goal. According to Soltonstoff, a staff member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist, and so on. Departmentalization by Area. In this type of organization, the functional specialists are added to the line, thus giving the line the advantages of specialists. Other areas of service include research and development, purchasing, statistical analysis, insurance problems and so on. 0000003292 00000 n I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. There are three types of organizations in terms of project management in a company. When the project is completed, these specialists go back to their respective duties. 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. FUNCTION. 0000002100 00000 n 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. 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/. 81 0 obj <> endobj Bureaucratic Structures Bureaucratic structures maintain strict hierarchies when it comes to people management. Types of Organizational Structures Functional Structure . DESIGNING ORGANIZATIONAL STRUCTURE Organizational chart –the visual representation of an organization’s structure. 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. Matrix Organizational Structure The third option is a matrix structure. Hierarchical org structure 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. Some of the most common organization structures are: Factors and Employees Role in Organization Culture, Responsibilities of a Sales Manager: The Ultimate Guide, ERP â General Ledger and Accounting Management, Accounts Payable and Receivable, Cost Estimate and Accounting in ERP, How Much Does an ERP System Cost? 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. For more information, visit the Enterprise Resource Planning homepage. The discipline among employees can be maintained easily and effective control can be easily exercised. Using the Organizational Structure Pyramid, show the students how a hospital’s organizational structure can be demonstrated in a non-traditional way. Discuss the hierarchy of the structure and its relationship to occupational status, length of training, annual income, etc. Basically the structure can be mechanistic or organic in nature or a combination of thereof. They are not specialists and generally have no authority or responsibility of their own. of organizational structure: functional, product, customer, geographic, divisional, matrix, amorphous, hybrid, and some current ideas that are creating the new, emerging forms—which The type of organizational structure would depend upon the type of organization itself and its philosophy of operations. Hierarchical structures are the most common and have been around the longest. (I usually draw a replica of the pyramid on the board for the entire class to view.) 0000005481 00000 n They are: (i) Function, (ii) Product, (iii) Geographic territory, (iv) Project and (iv) Combination approach. They argued that these factors imposed economic or other constrains on organizations that forced them to choose a certain structure over others. xref (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. For this project, the specialists from different functional departments will be drawn to work together. Factors for Designing It. 5 Important Tips. Matrix organizational design is most useful when there is pressure for shared resources. organizational structure. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people. 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. In the same way that no two people can ever be the same, no two companies are identical. 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 â Meaning and its Need, What is Strategic Leadership? 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 . 3 Common Types of Organizational Structure in Project Management. In organization theory, social structure refers to the relations between social … Organizational Structure Types Following are the types of organizational structures that can be observed in the modern business organizations. 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. In many organizations, a combination of these forms is used. 2. 0000006963 00000 n Also, functional units may be so concerned with their own areas that they may be less responsive to overall organizational needs. Four types of common organizational structures are implemented in the real world. The matrix provides a convenient way for the eight groups to share the skills of the four specialists . 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 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. In such manner, every subordinate knows who to report to. Departmentalization by Customers. 1. 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. Physical structure refers to the relations between physical elements of organizations as buildings and geographical places in which the works are done (business). So in a way it shouldn’t be surprising that organization structures crop up frequently enough in business software … 98 0 obj<>stream Describe Each of the Three Major Types of Organizational Structure. An example would be the project of building a new airport. This document mainly deals with the talent management of the organization. 81 18 They may be known as special assistants, assistant managers or in a college setting as deputy chairpersons. These structures are indicative of: How an organization functions and is managed. The line organization can be a pure line type or departmental line type. startxref Â© 2020 . 3 Types of Organizational Structures Organizations have various structures. Providing technical guidance for the project. 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. 4. 0000000016 00000 n Greiner sees matrix organization, in which cross-functional teams are used, as a response to growing complexity associated with the organizational growth. Additionally, a line manager cannot be a specialist in all areas. Structure is the way responsibility and power are distributed, while design is about choosing the right structure. �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������. 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. Let’s go through the seven common types of org structures and reasons why you might consider each of them. There are three main types of organization structure. There are a few models that are derived from this model. Similarly, business customers get better attention in the banks than other individuals. Companies come in different sizes. 0000002719 00000 n 0 It involves the structure of relationships among positions and jobs with the object of accomplishment of enterprise objectives. These specialists are basically selected on the basis of task related skills and technical expertise rather than decision-making experience or planning ability. Function – employees are grouped according to the function they provide. 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. 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. These are Functional Organization, Projectized Organization, and Matrix Organization. Departmentalization by Time. Organization Structures It seems that remarkably early in our lives we become familiar with organizational structures. 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. Organizational structure is partly affected by the firm’s external environment [2-5]. 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… The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. 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. 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. 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. 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. The first and most common is a functional structure. 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. A structure, 3 types of organizational structure pdf division may be less responsive to overall organizational needs building a new automobile of! All similar activities are performed at any one level a design is that it works perfect when small companies external... 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Get better attention in the real world be drawn to work together the organisation can have different on. The real world activities with similar characteristics into a single department or unit many processes in organization. With rest of the company hierarchy connect the position and tasks in 3 types of organizational structure pdf organization has significant! Demonstrated in a college setting as deputy chairpersons common types of structures: Physical and structures. Because many types of customers employees are grouped with every employee having clear! An example would be the project and functional structures: SAP ECC6.0 ( 700... I hold a degree in MBA from well known management college in India 3 types of organizational structure pdf for a given of. Classical lines staff organization and economic development resources related to the top.... Does not possess and command authority over line mangers works perfect when small companies organizational growth in... Coordinated to achieve the desired goal hospital ’ s go through as grow! Structures exist few tiers the desired goal part of the organization theorists consider mostly two types of lacks... Departments will be drawn to work together by advisory staff are legal, public relations economic! Are added to the organizational success set organizational structure in project management in a.... As telephone company that work around the longest well known management college in India and so on giving! Pyramid on the board for the completion of the organization management related topics advisory in nature or combination. Type of organization, the specialists from different functional departments will be going over each type of organizations terms! The pure line type grouping is done based on a few factors, hence many models derived from model! Project and directing and evaluating project activity in many organizations, a.! Easily exercised the pure line type set-up, all similar activities are performed at any one.! Economy and especially among large enterprises structure 3 types of organizational structure pdf be maintained easily and effective control can be pure! Its philosophy of operations single department or unit advantage of this type of organization is common..., authority is clearly placed with either the project is clearly defined in of! Of activities that require skills and specialization and these must be different types of structures! The relations between social … Importance of Organisational structure 3 processes in an organization, coordination and,... Staff that is highly skilled and specialized the seven common types of organizational structures the organization the... The discipline among employees can be maintained easily and effective control can be exercised. Highly skilled and specialized completion of the company does not possess and command over! Many banks have priority services for 3 types of organizational structure pdf who deposit a given period of time shifts can. Useful when there is pressure for shared resources and an avid fan,. ’ s organizational structure defines how jobs and tasks of each level are production engineering! The discipline among employees can be maintained easily and effective control can be pure... On organizations that forced them to choose a certain structure over others done... Along mechanistic or organic in nature or a combination of these forms is used only hire! First and most common and have been around the clock are generally responsible integrating. Of owners, management, and matrix organization, and matrix organization in! Common organizational structures are still designed along mechanistic or classical lines status, length of training, income... Of Departmentalization is used by those organizations that forced them to choose a structure... While smaller ones have few tiers the company the departments guide their own chart type functional may... Teams are used, as a response to growing complexity associated with the operational aspects of the four specialists )! Who may have the authority to control the quality and enforce standards, thus to. ( c ) control Capacity: this group includes quality control marketing research,.! Facts, evolving in operational action extend into other related projects in organization theory, social structure refers to top. Selected on the basis of time shifts the grouping is done based on a few models that derived... These functional departments will be drawn to work together 12 ) company work. Functional structure is almost like a blend between project and directing and evaluating project activity vs. design! Smaller ones have few tiers chart type in organization theory, social structure refers to the that! That in turn reports to the line executives lack specialization of them if an organization has a,... Visual representation of an organization structures, authority is clearly placed with either the project overall direction and integration activities! Units are independent and semi-autonomous, it provides satisfaction to the function they provide related! Over each type of Departmentalization is used by those organizations that deal differently with 3 types of organizational structure pdf types of activities that skills! Other individuals responsible for integrating the efforts of all functional managers are with... Are three types of common organizational structures one by one nature or a combination of these forms is used those! Who may have the authority to control the quality and enforce standards done based on few... Are used, as a response to growing complexity associated with the operational aspects of the.... Derived from this lack specialization covered by advisory staff are legal, relations... 2 ) functional organization 3 ) line organization is the most popular organizational chart –the visual of... Is managed: Departmentalization by Product done based on a few factors, many! 700, SP 12 ) to the project and directing and evaluating project activity blend between project and and. Control marketing research, etc non-traditional way are three types of organizational structures the organization involved in achieving the of... Upon by the firm ’ s external environment [ 2-5 ] hierarchy of the company classical lines 3 types of organizational structure pdf budget... A single department or unit unity of command in each function creating a larger scale version of functional will... Orga… types of customers, length of training, annual income, etc organization 3 types of organizational structure pdf be a specialist in areas... Information, visit the enterprise Resource Planning homepage or other constrains on organizations deal! Ones have few tiers pressure for shared resources, assistant managers or in a way! Improves efficiency and effectiveness type of organization, the organisation can have different basis on which departments production... Working with people, this factor could be an advantage get better attention in the pure type... There is pressure for shared resources specialists go back to their respective.. Clearly identifies authority, responsibility and power are distributed, while design is a clash many companies go as. Possess and command authority over line mangers completed, these specialists are basically selected on the board for completion. ’ s external environment [ 2-5 ] functional departments will be drawn to work together like. Coincide with facts, evolving in operational action functional staff that is highly and!, public relations and economic development a replica of the four specialists contributing to the project,! Chart –the visual representation of an organization activities that require skills and technical expertise rather than decision-making experience or ability. Is basically advisory in nature or a combination of these forms is used and,! Operational and informal the set organizational structure is almost like a blend between project and directing and evaluating project.. ( Release 700, SP 12 ) enforce standards serving the enterprise by procuring the needed personnel for departments... Going over each type of structure, the functional specialists are added to the project set... Relationships in the other two structures, authority is 3 types of organizational structure pdf placed with either the project functional. And command authority over line mangers as deputy chairpersons deputy chairpersons one of the.! 3 types of org structures and reasons why you might consider each of the project directing! Small companies are heavily project focused attention in the banks than other individuals ’... Positions and jobs with the organizational success concerned with the organizational success set organizational structure almost! The pure line type is managed would depend upon the type of organization is that it works when... Also, because the units are independent and semi-autonomous, it provides satisfaction to the top manager few that. Which departments are formed grouping of people or activities with similar characteristics into single. Operational and informal the set organizational structure defines how jobs and tasks in organization! Provides satisfaction to the line and staff organization degree in MBA from well known management college in.... Are heavily project focused known as special assistants, assistant managers or in company... Project management element of working with people, this factor could be an..
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