Organizational Structures and Departmentalization
Organizational Structures
A) Linear or Hierarchical Structure
This structure is the most straightforward. Orders originate from top management and cascade down to lower levels. It’s suitable for small businesses. Disadvantages: Slow communication, lack of specialization, and senior managers can be overwhelmed with administrative details.
B) Line and Staff Structure
This structure combines direct authority with advisory support. Line departments handle decisions, while staff departments advise and perform support tasks. Disadvantages: Potential conflicts between line and staff.
C) Committee Structure
Authority and responsibility are shared by a group, allowing for diverse perspectives. Disadvantages: Slow decision-making and decisions may be influenced by personal interests.
D) Matrix Structure
Some members report to two superiors, fostering innovation and project-based work. It’s flexible. Disadvantages: Potential for conflicting directives and conflicts between managers.
E) Functional Structure
Senior management is responsible for planning, organizing, and decision-making, based on different functions handled by specialists. Each person receives orders from a single chief (unity of command). It’s suitable for small and medium-sized enterprises (SMEs). Disadvantages: Lack of horizontal communication and coordination between departments.
F) Divisional Structure
When companies grow, top management decentralizes functions. Divisions are organized by product, customer, or territory. It’s used by large companies. Disadvantages: Slow communication and lack of horizontal communication.
Departmentalization
The goal of any organization is the division of labor. This division is grouped according to criteria set by top management, a process called departmentalization, which creates divisions or departments. Each department has managers and executives with authority.
Types of Departmentalization
- A) Functional: Departments are formed by the functions each performs in the company (e.g., production, marketing).
- B) Geographic: Common in marketing departments to better meet customer needs or product characteristics.
- C) By Products or Services: For firms with very different products (e.g., food). A department is created for each product type.
- D) By Customers and Distribution Channels: A cosmetics company might have departments for pharmaceutical establishments, perfume stores, and department stores.
- E) Process or Machinery: Machinery or similar labor features work in the same direction.
New Organizational Trends
- Horizontal Organization: The company focuses on customer service and maximizing satisfaction. It’s based on the information and knowledge of professionals and aims to eliminate unproductive tasks.
- Learning Organization: Based on the learning ability of all people within the organization. Learning must be constant, and all information and learning will allow for good decision-making.
- Clover Organization: This is the organization of the future. Companies try to reduce costs, leading to temporary employment and outsourcing. This organization has three parts:
- Core Professional Workers: The structural part of the company, formed by executives and professional workers.
- Flexible Work: Workers employed part-time or for training seasons.
- Outsourced: Processes the company needs but doesn’t want to conduct with its own resources.