Organizational Structures: From Simple to Matrix
Item 10. Basic Organizational Forms and Generic Structures
The organizational structure determines what to do, what activity is going to play, and what people should perform:
- What should I do?
- Who should do it?
A more formal definition of organizational structure is as follows:
The organizational structure refers to the way activities of the organization are divided, grouped, and coordinated. It determines the relationships between managers and employees.
The role of structure is twofold:
- Coordinate activities of employees to work more efficiently.
- Motivate employees to try to achieve greater business efficiencies.
1. Simple Structure
This type of organizational structure is applicable in two situations:
- For very small businesses.
- In the first stage of a company’s birth, where terms of innovation and flexibility are important.
The organizational design of a simple structure is as follows:
ORGANIZATIONAL TRENDS | DESIGN VARIABLES | SIMPLE STRUCTURE | FEATURES |
ORGANIZATIONAL DIFFERENTIATION | Horizontal specialization (Departmentalization) | Very Low | Minimum division and specialization of labor. There are no departments. |
Vertical specialization | Very Low | ||
ORGANIZATIONAL INTEGRATION (Any division of labor in an enterprise requires coordination. If a company has the best workers but is not able to coordinate, it will not succeed. Whereas, if another company is able to coordinate regular workers, it will be more productive.) | Organizational formalization (norm) | Very Low | There is no standardization or formalization of behavior. Control through direct supervision. Coordination of tasks by mutual adaptation. |
Organizational centralization | Very High (Because the feature of the few who is the manager who is close in activity due to the size of the company, not as many jobs as the manager to distribute tasks and since there is little he can do it) | The manager has all the power of decision. Fast and flexible organization. |
2. Functional Structure
Typical flowchart of the functional structure
STAFF: departments directly under the general direction, but departments are not considered because they have enough staff to do so. Support departments are generally neutral.
The organizational design of the functional structure is as follows:
ORGANIZATIONAL TRENDS | DESIGN VARIABLES | SIMPLE STRUCTURE | FEATURES |
ORGANIZATIONAL DIFFERENTIATION | Horizontal specialization | Added | Expertise from the division of labor reduces duplication of effort and support staff equipoà importancia – – – – – – – – – – – – – – – – – – – – Departmentalization which is the union of people with similar problems. Clear reporting lines. |
Vertical specialization | Added | ||
ORGANIZATIONAL INTEGRATION | Organizational formalization | Added | Some degree of standardization and formalization of behaviors. |
Organizational centralization | Very high | High degree of centralization and that each manager only expert in the skills which they are entitled. |
Disadvantages:
- People care more about their work in their unit than the overall service and general product that the company provides or sells. This can lead to an overall inability to make decisions and excess staff.
- High formalization prevents flexibility in the inner workings of the company since the rules cannot be changed continuously. This makes it an inadequate structure for dynamic environments.
- Not applicable to diversified firms as each department could not reach desirable levels of expertise for each market.
3. Divisional Structure
Typical flowchart of the divisional structure
The organizational design of the divisional structure is as follows:
ORGANIZATIONAL TRENDS | DESIGN VARIABLES | SIMPLE STRUCTURE | FEATURES |
ORGANIZATIONAL DIFFERENTIATION | Horizontal specialization | Baja | Dentrote functional specialization divisions, expanding global functions. |
Vertical specialization | Very high | Responsible for division are added to functional levels. | |
ORGANIZATIONAL INTEGRATION | Organizational formalization | Baja | Low level of common standards between divisions due to the difference in needs standardization of outputs (results). |
Organizational centralization | low | Each division has a high level of autonomy in decision-making control for results. |
It is used in complex and not very dynamic environments. Complex because the complexity of the environment obliges us to put too many divisions and not dynamic because you cannot be changing divisions every day.
Examples of divisional structures:
- The portfolios of Unilever (detergents, cleaning, hair care, oral hygiene …)
- The product portfolios of Coca-Cola (Coca-Cola, Northern Mist, Aquabona, Minute Maid …)
- The portfolios of Danone products, etc.
Disadvantage:
- Information asymmetries between the Directorate General of the Organization and addresses of each division.
Advantage:
- Business flexibility. The results of one division do not affect the rest of the divisions, allowing for easy adaptation to the environment of each division.
4. Multidivisional Structure
This is a variation of the Divisional structure.
Each division is independent and has its own support functions. The corporate headquarters staff oversees the activities of divisional managers and there are three levels of management: corporate, divisional, and functional.
5. Matrix Structure
Typical flowchart of the matrix structure
An option that a company has when the functional and divisional structures are not adapted to their conditions. Therefore it is a combination of functional and divisional.
ORGANIZATIONAL TRENDS | DESIGN VARIABLES | SIMPLE STRUCTURE | FEATURES |
ORGANIZATIONAL DIFFERENTIATION | Horizontal specialization | Very high | Combination of functional departments with divisions. |
Vertical specialization | Baja | Highly qualified personnel necessary not to vertical specialization. There is a certain freedom to upgrade because of the great skills so you do not need supervision. | |
ORGANIZATIONAL INTEGRATION | Organizational formalization | Very Low | Assumes the efficiency and professionalism of staff selected for their qualifications. Standardization of outputs (results). |
Organizational centralization | Very Low | Highly skilled staff capable of developing their work and decision making. |
It is used in highly dynamic and very complex environments, such as projects that have beginnings and ends, and are constantly changing. This structure is adapted so well because people are so skilled that they not only know the function but can be relocated once the project is complete.
Disadvantages:
- The existence of dual authority can be a source of conflict between the functions and product divisions on the distribution of resources.
Advantages:
- Using functional teams reduces the functional barriers and orientation of the subunit.
- Very flexible structure that allows the addition of new projects or products, expanding the structure without affecting the existing operation.
6. Hybrid Structure
These structures can be seen throughout the organization, or any part of the company, etc.
of the company, etc.
- HYBRID STRUCTURE