The foundation for how employees operate is determined by their roles and places within the organization. Organizational structure, which primarily consists of a hierarchy of the roles and responsibilities of the personnel, is crucial for streamlining internal operations and procedures. This is a crucial component of a business since it establishes workflow, accountability, and decision-making power.
The Importance Of Organizational Structure
In order for a corporation to fulfill its objective, a variety of roles must collaborate. To build the firm, each function requires a diverse group of individuals with a range of skill sets. Employers have clear roles and duties for their staff, and there is a framework in place to guarantee the flow of information and work. The term “organizational structure” refers to this. By doing this, the hierarchy, roles, positions, responsibilities, and capacity for decision-making of every employee are clearly defined.
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A typical organizational structure places the CEO at the top of the hierarchy.
Vertical or functional leads for several areas, including marketing, finance, HR, operations, IT, and administration, are located below that. They all answer to the CEO. There are other staff members with subject-matter knowledge below each lead. An organizational structure is therefore a pyramid-shaped framework that connects all employees according to their job profiles. Departmentalization of organizational structures can be done depending on functions, geography, products, customers, and processes.
Organizational structure characteristics
The following are some of the key components of an organizational structure:
- Clearly outlines an employee’s position, authority over decisions, and roles.
- It specifies how work and communication flow.
- Segments operate based on functions and skill sets.
- It establishes a chain of command and a process for delegation.
- It specifies a direct line of communication between several departments.
As each job profile’s work is established, the organizational structure is essential for assigning tasks to teams and keeping an eye on them.
Types of Organizational Structure
The following are examples of popular organizational structures:
Functional Structure
In a company, employees are organized using a functional organizational structure. The workforce is divided into groups based on their specific abilities and knowledge. Each department is organized vertically, with roles ranging from president to finance and sales, customer service, and employees assigned to a single product or service. Functional organizations are made up of specialized units that report to a centralized authority known as top management.
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Divisional Structure
The divisional organizational structure of a business organizes its activities around geographical, market, or product and service groups. For instance, a company is structured along divisional lines could have operating groups for the United States or Europe, for commercial customers, or for the green widget product line. Each of these divisions contains a comprehensive set of functions. Thus, the green widget division would be liable for its own accounting, sales and marketing, engineering, production, and so on.
Matrix Structure
A matrix organizational structure is a hybrid of two or more types of organizational structures.
The matrix organizational structure connects these other organizational structures in order to provide balance. In this type of organizational structure, there are typically two chains of command, with project team members reporting to two bosses or managers, a functional manager, and a project manager. Because the hierarchical structure between these two types of managers is not organizationally defined, these roles are fluid and not fixed.
Pre-Bureaucratic Structure
The pre-Bureaucratic structure is most common in smaller organizations and is best suited for dealing with simple tasks like sales. Task standardization is lacking in pre-bureaucratic (entrepreneurial) structures, and the organization is entirely centralized. All key decisions are made by the strategic leader, and the majority of communication occurs through one-on-one conversations. It is especially beneficial for new businesses and start-ups as it allows the founder to control the company’s growth and development.
Bureaucratic Structure
Many layers of management exist in bureaucratic organizational structures, varying from senior executives to regional managers to departmental managers – all the way down to shift supervisors who work alongside frontline employees. As a result, authority is concentrated at the top, and information generally flows downward. The bureaucratic organizational structure is highly organized and operates with a high degree of formality. Every department has an organizational chart, and decisions are made in a systematic manner. At all times, a strict command and control structure is in place.
Post-Bureaucratic
Post-bureaucracy structure refers to organizational forms and managerial practices that are flat, flexible, and responsive as a result of the reduction or elimination of traditional bureaucracy.
Conclusion
From the above-given explanation, an ideal organizational structure can be implemented depending on the size of the business. A good and clear organizational structure is required for a company to function effectively and efficiently.