Organizational structure of an organization is highly determined by the kind of the products, services it is engaged in. Equally important is the size of the organization in determining which type of management structure will be well suited for it. Organization structure thus, is the way the organization is organized according to leadership of the organization. Many studies today reveal that, the nature of organization structure has a direct impact on its performance and success. For the purpose of this short study paper we shall examine organizational structure, as noted before a key aspect within an organization.
Traditional organizations structures
The organizations structure of each organization differs with others in some ways. However all organizational structures are meant to help the organization attains its stated objectives. Normally, a structure of an organization will change as the organization develops over period.
In general, scholars have advanced four main decisions that managers are supposed to make when formulating the structure of their organization. Though, they may formulate a structure not necessarily following these four decisions. To begin with, managers must divide the organizations work into separate jobs or duties. This process is termed as division of labor. This is then followed by grouping the jobs into a specific manner that is called departmentalization. The third process involves deciding how many people will perform those jobs. This will as well involve knowing how many people can be managed by one person. Lastly, decision making power has to be distributed towards different people, and this has to be settled.
In making these decisions, various choices can be made. When the management wants to create highly specialized workforce, then it has to narrow the jobs performed by the employees, where employees are allowed to perform a large range of duties, specialization is not encouraged. In traditional bureaucratic organizational structures, they seem to increase job specialization when the organization grows big. Jobs are mainly grouped by their functions, for instances marketing jobs can be grouped into marketing department. Similarly, the size of the group will depend on how big the size of the organization. Decision making power also differs; normally the highest authority in decision making is laced on the top management. Though, with a lot of pressure to incorporate employees in decision making, some organizations are giving considerable authority to their employees.
Thus, traditional organizational structure is entails job specialization of workers, functional departments for groups of workers, narrow range o control and centralized power. This form of organizational structure is usually termed as classical or formal structure. This type of structure can easily be illustrated in a graphical chart as a hierarchical structure or pyramidal where the CEO is at the top of the chart, a few vice presidents follows below, and a number of levels of management come behind the vice presidents. Majority of employees are at the bottom, in various departments.
Reasons for departmentalization
As mentioned above, a lot of organizations group their jobs in different ways and allocate them in different departments within the organization. However, there are some reasons for this. These reasons are discussed below:
Each organization has to perform some form of task for it to operate. For instance, a manufacturing company will have to have the following departments, processing, marketing, finance and marketing, while a hospital will require nursing, surgery, pharmacy, billing among other departments. Creating department s based on these functions results in better performance and efficiency. As noted by Bonoma & Zaltman (1981) when jobs that require similar skills and knowledge are grouped together, it becomes more effective for the organization. This as well promotes expertise among employees. However, this structure has a limitation in that, grouping employees who have similar skills together makes it hard for these employees to appreciate the overall objectives of the organization.
Some organizations have their branches in several regions or countries and may form their structures based on the geographical regions where they operations are located. In this way, all their operations in one region can be carried out together and controlled as one unit. Bonoma & Zaltman (1981) points out that in large companies such as multinationals; their sheer physical distance makes it hard for them to have a centralized organizational structure. In addition, specific competitive advantages of a given region may be beneficial more if the company has a local office. For example, production plant in India, maybe need different management approach from that one operating from America. Most of multinational use geographical structures, which have proved to be more effective in managing this type of companies.
Maund (2001) explains that departmentalization structure allows the organization to be divided in small management units depending on their functions which operates with some autonomy. Therefore, the level of effectiveness is increased because it is easy for the managers to manage smaller units. Influence of organizational structure of the organization. Though many scholars agree that a strong organizational structure if good for an organization because it improves the efficiency, communication and the overall performance of an organization, it also leads to some disadvantages. One, strong organizational structure could be damaging to the organization supposing the rules and procedures end up being more important to the employees, rather than the real goals and objectives of the organization
Matrix Organizational Structure
Other organization because of their nature of activities or objective finds the above discussed organizational structures not applicable to them. To solve this problem is using a matrix structure. This simply means that two or more structures are combined together. For instance, when a company is involved in production of a new product, it will need to get employees form various departments such as production, research, engineering and even marketing. These employees will have to work less than one manager during the course of the product development. This means that the employees will report to tow manager, their current manager in charge of product development and their previous manager where they were initial working (Figure 3 shows this aspect).
The biggest advantage of a matrix organizational structure lies in the fact that it is able to facilitate the utilization of highly specialized employees and tools. Instead of duplicating function or roles as it would be in a case of straightforward product department. Matrix structure also allows the company to share its resources as required, where needed, specialized employees may undertake to perform more than two projects. In addition, this structure is able to enhance functional expertise within the organization. However, this type of organizational structure may create confusion because the roles and duties of managers not be well defined leading to double duties.
Strategic Business Units
When companies become very big, they normally restructure so that they can revitalize their operations. As noted by Brews and Tucci (2004) business growth normal goes hand in hand with growth in bureaucratic aspects as more positions are formed within the organization to address the opportunities that comes with growth. Continuous changes witness within the organizations or outside the organization may result in making bureaucracy an obstacle instead of being assisting the organization towards to achieve its goals. This arises not because of the complexity that comes with growth in size, but because of the sluggish aspects associated with bureaucratic structures. An effective of way of dealing this challenge is to promote innovative ways of thinking is by reorganizing some parts of the organization into largely independent groups known as strategic business units.
Normally, these units are formed in different companies, and the whole responsibility of making them profitable given to the top manager of these units, who is known as unit president (this could be a vice-president of a big company). Accordingly, the manager in charge of the unit reports back…