Organization structure refers to the way in which all the employees of the organization are arranges in a specific structural way. Some of the employees will be the board members, some of them will be placed at the senior management level positions, some of them will be the middle-level managers, and finally the rest will be the ones that will work actually at the ground levels. The positions of these employees are so designed with a view to delegate the tasks as per the requirements of the objectives for the organization as well as to work in a collaborative fashion. The top-level management wants to focus upon expansion, and under such cases, they alone want be able to achieve this mission. They communicate this message to rest all the employees, and then will work upon the strategies to achieve that mission (Daft 31-47).
A formal organization structure is unnecessary in the case where there are fewer employees. Consider an organization that is having a team of 20 members. However, here, they can have two members placed at the board level, since they will be deciding upon the strategies. But, rest all will be working in a functional team so as to achieve these objectives. But, as the organization expands, we need a particular formal structure in order to handle various divisions or departments of a given organization.
Such organization structure will help the employees to identify their roles and responsibilities. They will be able to know who their manager is, and what type of reporting that they need to do to him. The best organization structure for any organization will depend upon the strength of the employees, their revenues, the range of business operations, and the geographic dispersion of all the functions of the organization.
During the earlier days, the organization structure used to be a hierarchical one in order to address the needs and requirements of different job roles. It seemed to be more of a bureaucratic structure, since the lower level employees were not allowed to participate in any of the management discussions and decisions. During the early time of 1930s, organization Ford used to have this type of organization structure. There is the President of the organization. Under him, there will be Vice-President (VP) of Operations, Vice-President of Human Resources and Vice-President of Administrative functions. Under each of the Vice-President team, there will be the Directors of Purchasing, Warehouse, Information Technology and other associated functions. Under them, there will be separate departments that will be functioning independently, but will be reporting to the Manager or the Head of that respective Department, such as of Purchasing. The Purchasing Manager will be reporting to the Vice-President of Operations, who in turn will inform the President about various working activities, current issues, current trends, and any of the requirements of the organization. The President will then discusses with rest of the Vice-Presidents and will accordingly, take the decision. This structure was good in sense of delegating the responsibilities, but it used to face a lot of bureaucratic issues (Heifetz & Linsky 65-72).
The next form of organization structure is the Traditional Organizational Structure, wherein the working is completely different. Here, the managers need to divide the work into different jobs, which will be completed by specific employees. It is just like the division of labor system. In addition, the jobs are grouped in some way so as to formulate teams. Finally, the decision-making authority is distributed in order to improve the working process and achieve higher efficiencies at a ground level. So, Under VP of Marketing, we shall find Managers of Customer Service, Sales, and Market Research. Under Manager of Sales, we shall find region-specific Managers that will be handling different territories. And, under these Managers, we shall find the actual working teams. Thus, this structure is characterized by functional departments, centralized authority, high job specialization, and narrow spans of control. During the early days, General Motors used to have this type of organization structure. However, today, they have evolved with their structure and have improved a lot. General Motors used to adapt to the departmentalization format in their organization structure, which included four major departments. These included - functional departmentalization, product departmentalization, geographic departmentalization, and market departmentalization. This structure increased the complexity, but helped in achieving the objectives of expansion.
Today, we have the most efficient and majorly adopted organization structure, the Matrix Structure. This structure is utilized to facilitate the usage of equipment and highly specialized staff. The resources are shared, and hence, we can avoid the duplicating of the functions. The highly specialized staff will be dividing their time, so that they can work upon more than one project (Ghemawat 98-108). It thus achieves greater functional expertise, and at the same time helps in fostering the cross-fertilization of ideas. Today, large Multinational Corporations (MNCs) adapt to this structure, wherein they combine geographic units with their product groups. The product-level managers thereby have more responsibility for all the functions such as manufacturing, development and distribution of the entire product line. So, under President, we will be having the functional heads, such as of Marketing, Manufacturing, Research, Materials, Engineering, and Human Resource. Under each of these heads, we will be having specific skilled employees.
However, today, we find one more form of organization structure that has evolved within these corporations. These include the strategic business units, which are meant to avoid the bureaucracy issues within the organization. It also helps in overcoming the complexity issues and reorganizing the parts of the organization into autonomous groups. Today, we shall find organizations such as Tata Consultancy Services, General Motors, Ford Motors, Nike, and several others adapting to this model.
The emerging trends of the organization structure will help the organizations to split all their responsibilities and achieve desired levels of efficiency and effectiveness in all their working activities at the organization (Robinson et al. 65-90). The structures are now focusing upon horizontal and vertical integration. It will help in improving the communication between the manager and his given team member. Today, majority of the U.S. companies have adapted the downsizing strategy, and have reduce the number of mangers. It will help in reducing salary expenses as well as will help in streamlining the organizational functions. It will thereby also enhance decision making and communication throughout the organization. Today, technology is also helping in flattening the organization. With the help of computer networks, the group decision making process and communications have improved. With the development of virtual organizations, the boundary spanning roles have vanished, and all the employees of the organization are able to communicate in a better way.
Thus, today, we can easily adapt to any of the organization structure, we want. But, we need to analyze the employee strength, the working responsibilities, the scope, and the geographic dispersion. It is important to analyze all the pros and cons associated with each of these structures, before applying within the organization.
Daft, R.L. Management. Stamford, CT: Cengage Learning, 2013. Print.
Heifetz, R.A., and M., Linsky. “A survival guide for leaders.” Harvard Business Review, 80.6 (2002): 65-72.
Ghemawat, P. “Regional Strategies for Global Leadership.” Harvard Business Review, 12 (2005): 98-108.
Robinson, M., P.R., Sparrow, C., Clegg, and K., Birdi. “Forecasting future competency requirements: A three-phase methodology.” Personnel Review, 36.1 (2007): 65-90.