This paper examines the two primary types of organizational structure: vertical and horizontal. It discusses how vertical structures, exemplified by military hierarchies, rely on centralized authority and clear chains of command to achieve specific goals, while horizontal structures, such as functional organizations, distribute decision-making across departments. The paper analyzes the benefits and drawbacks of each approach, including trust-building challenges in vertical systems and departmental silos in horizontal ones, concluding that organizational structure is fundamental to business success and productivity.
Goals are best accomplished when a business has a structured organization in place. The type of organizational structure used by each corporation may depend on the business's specific vision. As Alfred P. Sloan Jr. said, "Take my assets—but leave me my organization and in five years I'll have it all back." Sloan's statement emphasizes the importance of organization alone; as long as the structure remains intact, productivity will happen and future profits will be made. According to Bateman and Snell (2011), "there are two types of organization structure: Vertical and Horizontal" (ch. 8). The chief executive officers (CEOs) of companies need to decide which structure will better enforce their vision and allow productivity to achieve their goals.
Specific guidance to achieve one tailored goal is best accomplished by a vertical structure organization. In the United States, the military organization falls underneath this structure. According to Bateman and Snell (2011), "at the most fundamental level, the functioning of every organization depends on the use of authority, the legitimate right to make decisions and to tell other people what to do" (p. 279). For example, orders given by the President are disseminated all the way down to the newest recruit in the U.S. military to carry out that particular order. This is an example of how vertical structure works within an organization.
The main disadvantage of this structure is that once leadership changes, earning the trust of those under the new leader may be challenging at first because the different leadership style is unfamiliar to subordinates. Niccolò Machiavelli states, "a principality ruled by one absolute prince is difficult to enter, but once conquered, it is easily held." After gaining both the trust and respect of employees, productivity will happen and the new leader's vision will be seen. In the military, personnel become aware of their new Commander in Chief's leadership style and strive to emulate it to regain mission accomplishment.
Businesses that require a more dynamic structure in which one person does not make all necessary decisions may create a horizontal structure. According to Bateman and Snell (2011), there are four types of organizations that can be utilized: "The Functional Organization, The Divisional Organization, The Matrix Organization and The Network Organization" (ch. 8). Of these four, this discussion will focus on the functional organization.
"In a functional organization, jobs (and departments) are specialized and grouped according to business functions and the skills they require: production, marketing, human resources, research and development, finance, accounting, and so forth" (Bateman & Snell, 2011, p. 287). In this type of organization, the company may still have a CEO in charge of numerous departments, but each department has the authority to create its own vision. The primary advantage of this structure is cost; it may be cheaper to group like resources together. One major disadvantage is that employees may care only about the goals of their department and are less focused on the company's specific objectives overall. It is up to top management to create goals that also align with the CEO's vision. An example would be having the production department manufacturing one thousand widgets daily, but the marketing department is unable to find consumers to purchase the business's widgets. The company's goal of making a profit on widgets sold is not accomplished.
This paper has examined the two primary types of organizational structures used in business: vertical and horizontal. Both structures serve important but different organizational needs. Vertical structures provide clear authority chains and focused goal achievement, while horizontal structures offer flexibility and departmental specialization. The choice between them depends on a company's vision, industry demands, and leadership philosophy. Understanding these structures is critical for CEOs and managers who seek to build organizations capable of sustained productivity and long-term success.
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