The same reporting process would be true for other functions, such as finance or operations. In functional structures, employees report directly to managers within their functional areas who in turn report to a chief officer of the organization.
Management from above must centrally coordinate the specialized departments. This structure works best for organizations that remain centralized i. Given the centralized decision-making, the organization can take advantage of economies of scale in that there are likely centralized purchasing functions. An appropriate management system to coordinate the departments is essential.
The management system may be a special leader, like a vice president, a computer system or some other format. Also a vertical arrangement, a divisional structure most often divides work and employees by output, although a divisional structure could be divided by another variable such as market or region.
For example, a business that sells men's, women's and children's clothing through retail, e-commerce and catalog sales in the Northeast, Southeast and Southwest could be using a divisional structure in one of three ways:.
This type of structure is helpful when the product base expands in quantity or complexity. But when competition among divisions becomes significant, the organization is not adapting quickly enough, or when economies of scale are lacking, the organization may require a more sophisticated matrix structure. A matrix structure combines the functional and divisional structures to create a dual-command situation.
In a matrix structure, an employee reports to two managers who are jointly responsible for the employee's performance. Typically, one manager works in an administrative function, such as finance, HR, information technology, sales or marketing, and the other works in a business unit related to a product, service, customer or geography.
These disadvantages can be exacerbated if the matrix goes beyond two-dimensional e. Matrix structures are common in heavily project-driven organizations, such as construction companies. These structures have grown out of project structures in which employees from different functions formed teams until completing a project, and then reverted to their own functions.
In a matrix organization, each project manager reports directly to the vice president and the general manager. Each project is, in essence, a mini profit center, and therefore, general managers usually make business decisions.
The matrix-structured organization also provides greater visibility, stronger governance and more control in large, complex companies. It is also well suited for development of business areas and coordination of complex processes with strong dependencies. Matrix structures pose difficult challenges for professionals charged with ensuring equity and fairness across the organization.
Managers working in matrix structures should be prepared to intervene via communication and training if the structure compromises these objectives. Furthermore, leadership should monitor relationships between managers who share direct reports. These relationships between an employee's managers are crucial to the success of a matrix structure. Open boundary structures hollow, modular virtual and learning. More recent trends in structural forms remove the traditional boundaries of an organization.
Typical internal and external barriers and organizational boxes are eliminated, and all organizational units are effectively and flexibly connected. Teams replace departments, and the organization and suppliers work as closely together as parts of one company.
The hierarchy is flat; status and rank are minimal. Everyone—including top management, managers and employees—participates in the decision-making process. The use of degree feedback performance appraisals is common as well. Boundary-less organizational structures can be created in varied forms, including hollow, modular and virtual organizations.
Hollow organizations. Hollow structures divide work and employees by core and noncore competencies. Hollow structures are an outsourcing model in which the organization maintains its core processes internally but outsources noncore processes.
Hollow structures are most effective when the industry is price competitive and choices for outsourcing exist. An example of a hollow structure is a sports organization that has its HR functions e. Modular organizations. Modular structures differ from hollow organizations in that components of a product are outsourced. Modular structures may keep a core part of the product in-house and outsource noncore portions of the product.
Networks are added or subtracted as needs change. For a modular structure to be an option, the product must be able to be broken into chunks. For example, computer manufacturer Dell buys parts from various suppliers and assembles them at one central location. Suppliers at one end and customers at the other become part of the organization; the organization shares information and innovations with all. Customization of products and services results from flexibility, creativity, teamwork and responsiveness.
Business decisions are made at corporate, divisional, project and individual team member levels. Disadvantages include concerns about the actions of suppliers outside the control of the core management company. Risk occurs if the partner organization removes itself form the quality check on the end product or if the outsourced organization uses a second outsourced organization. Examples of supplier concerns include the following:.
Virtual organizations. A virtual organization sometimes called a network structure is cooperation among companies, institutions or individuals delivering a product or service under a common business understanding.
Organizations form partnerships with others—often competitors—that complement each other. The collaborating units present themselves as a unified organization. Virtual structures are collaborative and created to respond to an exceptional and often temporary marketing opportunity.
An example of a virtual structure is an environmental conservancy in which multiple organizations supply a virtual organization with employees to save, for example, a historic site, possibly with the intent of economic gain for the partners.
Understanding the organizational environment is crucial in open boundary models. For example, some industries cannot outsource noncore processes due to government regulation.
For example, health insurance organizations may be unable to outsource Medicare processes. Or, in some cases, outsourcing may have to be negotiated with a union. The key to effective boundary-less organizations is placing adaptable employees at all levels. Management must give up traditional autocratic control to coach employees toward creativity and the achievement of organizational goals.
Employees must apply initiative and creativity to benefit the organization, and reward systems should recognize such employees. Learning organizations. A learning organization is one whose design actively seeks to acquire knowledge and change behavior as a result of the newly acquired knowledge.
In learning organizations, experimenting, learning new things, and reflecting on new knowledge are the norms. At the same time, there are many procedures and systems in place that facilitate learning at all organization levels. Organizations typically mature in a consistent and predictable manner. As they move through various stages of growth, they must address various problems.
Fostering employee development and promotion opportunities. Related: Hierarchical Structure: Definition and Examples. In a functional structure, the organization is divided into groups by roles, responsibilities or specialties. For example, within an organization you may have a marketing department, finance department and sales department with each overseen by a manager who also, has a supervisor that oversees multiple departments.
A functional structure can be beneficial because departments can trust that their employees have the skills and expertise needed to support their goals. The matrix organizational structure resembles a grid in which employees with similar skills are grouped together and report to more than one manager. This often includes a functional manager who oversees projects and their progress and a product manager who is responsible for the company's strategy and success regarding product offerings.
The matrix structure is typically used by large, multinational organizations and promotes the sharing of skills and knowledge across departments to complete goals. Promoting open communication and shared resources across the business. Limiting efficiency of key performance indicators KPIs.
In a flat organizational structure, most levels of middle management are removed so there is little separating staff-level employees from upper management. Employees are given more responsibility and decision-making power without the usual hierarchical pressures or supervision and can often be more productive. This type of structure is mostly used by small companies and early-stage start-ups because they often have fewer employees and projects to manage.
Facilitating a quicker, easier decision-making process. Read more: What is a Flattened Organizational Structure? With Benefits and Tips. In a divisional structure, organizations are split into divisions based on specific products, services or geographies. For this reason, this structure is typically used by large companies that operate in wide geographic areas or own separate, smaller companies.
Each division has its own executive leadership, departments and resources. For example, a large software company may separate its organization based on product type, so there's a cloud software division, corporate software division and a personal computing software division.
In a network structure, managers at an organization will coordinate relationships with both internal and external entities to deliver their products or services. For example, a retail company will just focus on selling clothing items but will outsource the design and production of these items in a partnership other companies. This structure focuses more on open communication and relationships than hierarchy. In a line structure, authority within the organization flows from top to bottom and there are no specialized or supportive services.
It is one of the simplest types of organization structure. The organization is typically divided into departments that are overseen and controlled by a general manager, and each department has its own manager with authority over its staff. The departments work independently to support the organization's primary goal. Adapting easily to changing conditions or situations. In a team-based organizational structure, employees are grouped into skills-based teams to work on specific tasks while all working toward a common goal.
Often, this is a flexible structure that allows employees to move from team to team as they complete projects. An organizational structure is a visual diagram of a company that describes what employees do, whom they report to, and how decisions are made across the business. Organizational structures can use functions, markets, products, geographies, or processes as their guide, and cater to businesses of specific sizes and industries.
What's the point of an organizational structure? As a business leader, do you even need one? As I said, org structures help you define at least three key elements of how your business is going to run. As your company gets bigger, an organizational structure can also be helpful for new employees as they learn who manages what processes at your company.
Then, if you need to pivot or shift your leadership, you can visualize how the work flows would work by adjusting your organizational structure diagrams. To put it simply, this chart like a map that simply explains how your company works and how its roles are organized. Your chain of command is how tasks are delegated and work is approved.
An org structure allows you to define how many " rungs of the ladder " a particular department or business line should have. In other words, who tells whom to do what? And how are issues, requests, and proposals communicated up and down that ladder? Your span of control can represent two things: who falls under a manager's, well, management Centralization describes where decisions are ultimately made.
Once you've established your chain of command, you'll need to consider which people and departments have a say in each decision.
A business can lean toward centralized, where final decisions are made by just one or two entities; or decentralized, where final decisions are made within the team or department in charge of carrying out that decision. You might not need an org structure right away, but the more products you develop and people you hire, the harder it'll be to lead your company without this crucial diagram.
To dive deeper into what all of these different organizational structure components are, check out my earlier post, " The 6 Building Blocks of Organizational Structure. In this post, we'll explore how you can combine those components to form different types of organizational structures.
We'll also highlight the benefits and drawbacks of different structure types so you can evaluate which is the best option for your company, division, or team. Let's dive in. Organizational structures fall on a spectrum, with "mechanistic" at one end and "organic" at the other. Take a look at the diagram below. As you'll probably be able to tell, the mechanistic structure represents the traditional, top-down approach to organizational structure, whereas the organic structure represents a more collaborative, flexible approach.
Here's a breakdown of both ends of the structural spectrum, their advantages and disadvantages, and which types of businesses are suited for them. Mechanistic structures, also called bureaucratic structures , are known for having narrow spans of control, as well as high centralization, specialization, and formalization. They're also quite rigid in what specific departments are designed and permitted to do for the company. This organizational structure is much more formal than organic structure, using specific standards and practices to govern every decision the business makes.
And while this model does hold staff more accountable for their work, it can become a hindrance to the creativity and agility the organization needs to keep up with random changes in its market. As daunting and inflexible as mechanistic structure sounds, the chain of command, whether long or short, is always clear under this model. As a company grows, it needs to make sure everyone and every team knows what's expected of them.
Teams collaborating with other teams as needed might help get a business off the ground in its early stages, but sustaining that growth -- with more people and projects to keep track of -- will eventually require some policymaking. In other words, keep mechanistic structure in your back pocket Organic structures also known as "flat" structures are known for their wide spans of control, decentralization, low specialization, and loose departmentalization.
What's that all mean? This model might have multiple teams answering to one person and taking on projects based on their importance and what the team is capable of -- rather than what the team is designed to do. As you can probably tell, this organizational structure is much less formal than mechanistic, and takes a bit of an ad-hoc approach to business needs. This can sometimes make the chain of command, whether long or short, difficult to decipher.
And as a result, leaders might give certain projects the green light more quickly but cause confusion in a project's division of labor. Nonetheless, the flexibility that an organic structure allows for can be extremely helpful to a business that's navigating a fast-moving industry, or simply trying to stabilize itself after a rough quarter.
It also empowers employees to try new things and develop as professionals, making the organization's workforce more powerful in the long run. Bottom line? Startups are often perfect for organic structure, since they're simply trying to gain brand recognition and get their wheels off the ground. Now, let's uncover more specific types of organizational structures, most of which fall on the more traditional, mechanistic side of the spectrum. One of the most common types of organizational structures, the functional structure departmentalizes an organization based on common job functions.
An organization with a functional org structure, for instance, would group all of the marketers together in one department, group all of the salespeople together in a separate department, and group all of the customer service people together in a third department. Download this Template.
The functional structure allows for a high degree of specialization for employees, and is easily scalable should the organization grow. Also this structure is mechanistic in nature -- which has the potential to inhibit an employee's growth -- putting staff in skill-based departments can still allow them to delve deep into their field and find out what they're good at.
Functional structure also has the potential to create barriers between different functions -- and it can be inefficient if the organization has a variety of different products or target markets. The barriers created between departments can also limit peoples' knowledge of and communication with other departments, especially those that depend on other departments to succeed. A divisional organizational structure is comprised of multiple, smaller functional structures i.
0コメント