Organizational structure and design principles

Org Structure

There are a number of different organizational structures that a company can utilize, each with its own set of benefits and challenges. The simplest structure is the functional structure. The different functions within the company are the basis for its organization (Davoren, 2014). A company with multiple products and services under this type of structure would essentially downplay the differences between products and services and focus on the core functions as the primary. For companies that do not rely too heavily on specialized marketing or production for the different products/services, this structure might work, but there are better ones.

Another type organizational structure is a product-based structure. Under this design, the company is focused around each product so that the different functions are all captured under the product umbrellas. Products have their own marketing, production and research teams, for example, and possibly their own accounting teams, too. A company like HP might have this type of structure, because it deals in significantly different products -- 3M is another good example. Such conglomerates, where there are significant differences between their product/service offerings, might benefit from structuring the company where each product/service functioned with a high degree of independence and its own dedicated support teams.

The machine bureaucracy is a structure is highly standardized, in terms of being based on formal routines and procedures (Mantkelow, 2014). Government organizations often work with this type of structure, where everybody has a specific role. There is not a lot of flexibility within these types of organizations, and management plays the role of ensuring that the roles within this organizations move it to the overall objective. This type of structure might be appropriate for a multiproduct/multiservice company, but only where the products/services have a high level of standardization. At lower levels, some companies might have this -- a good example would be quick service restaurants, which have a machine structure at the retail/franchise level. They might have a different structure at higher levels where more innovation and creativity is required, but at the lower levels everything is based on a machine-like system -- that system is what the franchisees pay for.

Another type of organization is the professional bureaucracy. This type of organization also has a high level of bureaucracy to its nature, but differs from the machine bureaucracy in that there is also a high degree of specialization. Organizations that rely on knowledge workers often have this strategy. While there are a lot of rules and procedures, the actual output is produced by highly-trained professionals, not unskilled labor. An example of this type of organization is a hospital or university (Mantkelow, 2014).