In a centralized system, decisions are made at the top and trickle down through the ranks. In a decentralized structure, decision-making power is distributed among various levels of the organization. Setting up a hierarchical framework can help businesses stay focused and productive. We’re going to take a look at the structure of organization in management and discuss related matters in this topic.
The organizational structure of a company sets out the roles, teams, and people in a company in a hierarchical way. Every level of a company uses organizational structures to explain how they perform tasks, who is responsible for them, and how they make decisions. A group’s organizational structure is a plan for how it will do its jobs and reach its goals. There may be rules, roles, and responsibilities for these things.
Top 10 – Structure of Organization in Management
Organizational structure is important for growth because it tells everyone what their jobs are. Because the team’s leader doesn’t take any nonsense, everyone is working hard. Even though employees usually take pride in their work when they know their roles and who they report to, this isn’t always the case in businesses that are growing quickly. Check out these structure of organization in management to enhance your knowledge.
Structure of Divisions Based on the Market
In a market-based structure, an organization splits into different parts based on the market, industry, or type of client. If your business sells to or serves a small group of customers, you might find that a market-based structure will help you reach your goals.
Its organizational structure also lets it keep up with the changing tastes of its many different types of customers. The structure of organization in management should support the company’s strategy and business model.
In a hierarchical management structure, a single boss is in charge of a group of workers. In most businesses and groups, it is the norm. Managers can group employees based on where they work, what they sell, or even what they do for a living.
This type of management often shows the different levels of authority by a pyramid, with the most senior executives at the top, their direct reports below them, and so on down the line.
The shape of a hierarchical organization chart is like a pyramid. In this type of management, from the top (the CEO or manager) to the bottom, each worker reports to a different boss (the entry-level and low-level workers).
Structure of a Network
The network structure of organization in management is fluid, where employees collaborate in a decentralized manner, utilizing technology to stay connected. Businesses commonly use network structures when they share resources or have multiple locations with distinct responsibilities and management.
This framework can help understand how your business operates with numerous independent contractors or providing services to other businesses. This structure looks a lot like the Divisional Structure. Apart from that, it might focus on outsourcing services or establishing satellite locations instead of real offices.
Structure Based on the Products
A divisional structure comprises smaller functional organizations, each having its own marketing, sales team, etc. A company set up by product has each department working with only one type of product.
This structure works well for companies that sell more than one product and can speed up the introduction of new products. This makes it easy for small businesses to bring new products to market quickly. Organizational structure can evolve as companies grow, new technologies emerge, and business models change.
In a traditional structure, there can be multiple supervisors, managers, and directors between workers and leadership, despite all employees being within a few administrative levels of leadership. Not all pyramids are pyramids, and not all shapes are forms. It fits into the category of “Organic Structure,” as was already said.
Unlike the other organization structures we’ve looked at so far, a matrix structure doesn’t follow the traditional, hierarchical model. On the other hand, the people in the green boxes work for two managers. In most organizations, there is also a product-based reporting line (shown in red) that is separate from the functional reporting line (shown in yellow).
In an organizational chart with a matrix structure, solid lines show direct lines of reporting, while dotted lines show less important relationships. For this situation, functional reporting is more important than product-based reporting.
Structure of Geographical Divisions
How close things are to each other splits the geographical organizational structure. Territories, regions, and districts are all examples of separate parts of the earth’s surface. This configuration is best for companies that need to be close to their suppliers and/or customers (e.g. for deliveries or for on-site support).
It facilitates decision-making based on a broader range of information by combining individuals with diverse business experience. A clear and effective structure of organization in management ensures smooth operation of business processes.
Functional Organizational Structure
In a functional organizational structure, the company groups employees based on their functions. One of the most common types of organizational structure is the functional structure, which divides an organization into sections based on the tasks they do the most. A functional structure assigns different divisions to marketing, sales, and customer service teams.
The functional organization supports a highly specialized staff that can be added to quickly if the business grows. Unfortunately, the fact that this setup is so mechanical may stop an employee from growing. Still, putting people into different groups based on their skills can help them specialize and figure out what they’re good at.
Even though the circular structure looks very different from the other organizational structures we’ve talked about so far, it is still hierarchical, with higher-level employees in the inner rings and lower-level employees in the outer rings.
In a circular organization, leaders and executives are not seen as being at the top of the hierarchy and giving orders to everyone below them. Instead, they sit in the middle of the company and talk about their ideas there.
Structure Based on Process
Organizational structures based on processes include tasks such as research, development, acquiring customers, and order fulfillment. A process-based structure considers the inter-dependency of tasks, unlike a purely functional structure.
To get the full picture, read this diagram from left to right: If the product hasn’t been made, you can’t find clients. In the same way, you need to find customers and accept product orders before you can start fulfilling orders. A good structure of organization in management should be adaptable and able to accommodate changing circumstances and new challenges.
Frequently Asked Questions
Who is Responsible for the Structure of an Organization?
A well-thought-out organizational structure helps a company set up clear lines of authority and responsibility. In most organizations, a director reports to a vice president, who reports to the chief executive officer, who reports to the board of directors or business ownership.
What Factors can Influence the Structure of an Organization?
Size, life cycle, strategy, environment, and technology are the key factors influencing a company’s structure. The bigger a company is, the more complicated its structure will be.
How Effective is the Structure of an Organization?
The structure also makes operations a lot more effective and efficient. The organization can do more than one thing at the same time because it splits up the work into different groups. Also, a clear organizational structure helps employees figure out the best way to do their jobs.
Leaders of businesses need to think carefully about the different ways they can set up their organizations. So, if business leaders want to get the most done, they need to choose the best type of organization. There are many different ways for businesses to organize themselves. Some examples are the B., the Flat, the Matrix, and the Departmental structures. In this article, we will discuss about structure of organization in management in brief with examples for your better understanding. To explore purpose of organization in management issue further, read this informative article.