Configuring Organisational Structures

Following the importance of organisations in our life from the last post, I continue here on the different types of organisations which exists. However, these are not exhaustive and any company may come up with a new structure. 

TYPES OF ORGANIZATIONAL STRUCTURES

Functional Organization

• Brings together in one department everyone engaged in one activity or several related activities that are called FUNCTIONS.
• This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.
• Mainly used by the smaller firms that offer a limited line of products.
• Makes supervision easier as each manager must be expert in only a narrow range of skills. It also helps to group a particular set of people with the specialized kind of skill set.
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 Disadvantages:

• As each department functional managers need to report to central headquarters (President), it can be difficult to make quick decisions.
• Harder to judge performance because which department to blame when a new product fails.
• Difficult to coordinate the functions of members of the entire organization as each department may have difficulty working with other departments in a unified way to achieve organizational goals.

Product/Market/Divisional Organization

• Brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.   

i) DIVISION BY PRODUCT

• Employees have in effect 2 bosses i.e. 2 chains of command. One chain of command is functional or divisional and the second is a horizontal overlay that combines people from various divisions or functional departments into a project or business team led by a project or group manager who is an expert in the team's assigned area of specialization. For example, many large companies have a corporate human resources division, with individual HR representatives stationed at local facilities. At the local level, the HR representative may report to the operations manager charged with responsibility for that facility.
• Bring together the diverse specialized skills required to solve a complex problem.
• Problems of coordination are minimized here because the most important personnel for a project work together as a group. They come to understand the demands faced by those who have different areas of responsibility.
• Gives the organization a great deal of cost-saving flexibility because each project is assigned only to the required people and unnecessary duplication is avoided.
• To be effective, team members must have good interpersonal skills and flexibility and cooperation.
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 Disadvantages:

·         Everyone fails to adapt

·         Without proper outlining of hierarchy it will not function

ii)                  DIVISION BY GEOGRAPHY: Grouping jobs on the basis of territory or geography

iii)                DIVISION BY PROCESS: Grouping jobs on the basis of product or customer flow

iv)                DIVISION BY CUSTOMER: Grouping jobs by type of customer and needs

This is all about the organisational structure followed generally. There exists another level where a company may enter into a hybrid model of these structures which can be a combination of any two or more.