Question

Many readers of this text are not yet in a position to lay out an organization structure. How might they make use of information about organization structure and design?

Answer 1

• Simple

Under this type, the fir basically does not require a structure. As this can be a firm where most of the task is done by an individual or two at the most. There is no need of division of labour to get the task done for examples a Lawyer or a doctor, they can do a particular task at hand by themselves with 1-2 support staff. The task is divided informally among individuals, and such structure applies in small businesses.

• Functional

Such a structure segregates the functions based on the task much like, Sales: Marketing: Human resource: Production: IT & customer service. This is important for firms that are growing and the simple structure feels obsolete. The division lays emphasis on hierarchy and links them well in a cohesive manner.

The employees based on their skill are kept in relevant departments to execute the desired task. Each person learns and grows up the ladder in his/her department

• Multidivisional

In this structure the employees are divided based on the products and geography. Meaning a firm can have many products/services under its brand and the sale of certain products might be there in only certain geographies. So to cater their offering such firms reply on multidivisional structure where they have autonomous divisions led by key decision makers individually but are governed by company itself on a broader scale. The divisions are responsible for their production & profitability however, the strategy is developed by Headquarters.

The success of structure depends on overall & efficient working of all the divisions else it hampers the company’s plans and growth plans. So it’s critical to have a sturdy organisational structure

• Matrix

Matrix structure as the name reflects is a combination of functional & multidivisional structure where it depends on vertical links and horizontal relationships. Basically, the structure relies on building cross functional teams that can work on different products. Such structure offers the firm with Flexibility, enhanced communication and stronger spirit of team work and collaborations.

To summarize each structure has its pro’s and con’s depending on their ability and capability to work on the structure. Plus it also depends on the need of a certain organisational structure required for the firm. For example, a simple structure might look too simple to work and in functional format the leaders might start operating in isolation. In similar fashion, the multidivisional approach might restrict people in offering their expertise to other division and matrix arrangement might leave a mix bag of people in asymmetry.

So the point is, firm should not stick to any one format but should keep evolving with time and should adopt the type of structure as in when required based on firms size and demand.