Project managers in this type of structure do line management for their teams, too, which means spending time and effort on human resource tasks you wouldn't have to do in other structures. of organizational structure: functional, product, customer, geographic, divisional, matrix, amorphous, hybrid, and some current ideas that are creating the new, emerging forms—which 10 Qualities of a Strategic Leader, 10 Popular Ways to Love Physical Education as Homeschoolers, How To Manage Your Studies with Part-Time Job? A matrix structure is, in a sense, a combination and interaction of project and functional structures and is suggested to overcome the problems associated with project and functional structures individually. The larger the company, therefore, the more detailed its organizational structure will be.To meet organizational needs, different companies embrace different structures as explained below; Completing the project within prescribed technical specifications. The general policies are decided upon by the top management within the philosophical guidelines of the organization. The below image shows a functional org chart with finance, technical, HR and ad… If the president and other superiors are benevolent in nature, then the employees tend to consider the organization as a family and tend to be closer to each other that is highly beneficial to the organization. These specialists are basically selected on the basis of task related skills and technical expertise rather than decision-making experience or planning ability. Every organization has a structure, but it may not have a design. These functional departments are production, engineering, quality control marketing research, etc. organizational structure. For this project, the specialists from different functional departments will be drawn to work together. However, most organizational structures are still designed along mechanistic or classical lines. I hold a degree in MBA from well known management college in India. These complexities, both internal(size, technology) as well as external (markets, competitors), create problems of information processing and communication that are best dealt by matrix type of organization. For example, the telephone company may have a day shift, on evening shift and a night shift, and for each shift a different department may exist, even though they are all alike in terms of objectives. The functional structure is primarily responsible for: 1. I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. 0000003292 00000 n The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. Authority is shared. Hospitals and other public utility companies such as telephone company that work around the clock are generally departmentalized on the basis of time shifts. Because of the small size of the company, the line structure is simple and the authority and responsibility are clear-cut, easily assignable and traceable. The grouping is done based on a few factors, hence many models derived from this. 0000001188 00000 n Hierarchical org structure With the advice of these specialists, the line managers also become more scientific and tend to develop a sense of objective analysis of business problems. This group has a specialized background in some functional area and it could serve in any of the following capacities: (a) Advisory Capacity: The primary purpose of this group is to render specialized advice and assistance to management when needed. Some of the most common organization structures are: Factors and Employees Role in Organization Culture, Responsibilities of a Sales Manager: The Ultimate Guide, ERP – General Ledger and Accounting Management, Accounts Payable and Receivable, Cost Estimate and Accounting in ERP, How Much Does an ERP System Cost? These relationships in the hierarchy connect the position and tasks of each level with those above and below it. Importance of Organisational Structure 3. KEY TERMS. If you’ve had a job, you likely worked in a functional organizational structure.The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. 2021 Pricing Guide, 18 Personal Grooming Tips for Women to Look Well Groomed, 4 Stages of Training and Professional Development, 4 Ways to Engage and Connect with Your Remote Employees, Retail Management – Meaning and its Need, What is  Strategic Leadership? It clearly identifies authority, responsibility and accountability at each level.These relationships in the hiera… 0000002753 00000 n 0000000016 00000 n For more information, visit the Enterprise Resource Planning homepage. Some typical areas covered by advisory staff are legal, public relations and economic development. 0000001052 00000 n They are also responsible for integrating the efforts of all functional managers to accomplish the project and directing and evaluating project activity. On the other hand, it is a rigid form of organization and there is a tendency for line authority  to become dictatorial that may be resented by the employees. Departmentalization by Customers. 3 Common Types of Organizational Structure in Project Management. One of the main disadvantages of the functional design is that it encourages narrow specialization rather than general management skills so that the functional managers are not well prepared for top executive positions. Matrix organizational structure is almost like a blend between project and functional structures. Greiner sees matrix organization, in which cross-functional teams are used, as a response to growing complexity associated with the organizational growth. If you enjoy this element of working with people, this factor could be an advantage. TYPES OF PROJECT ORGANIZATIONS STRUCTURES Of the several factors to consider when deciding on the design of project organizational structures, especially within an existing organization, the factor that has a significant is the extent of authority and responsibility top management is prepared to delegate to the project manager. These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. Providing functional staff that is highly skilled and specialized. Meaning of Organisational Structure: Organisational structure means a developed enterprise being operated to achieve the given goals. 0000003216 00000 n In a departmental line type of organization, also known as functional structure, the respective workers and supervisors are grouped on a functional basis such as finance, production and marketing, and so on. Function – employees are grouped according to the function they provide. They argued that these factors imposed economic or other constrains on organizations that forced them to choose a certain structure over others. Organizational Structure Types Following are the types of organizational structures that can be observed in the modern business organizations. In this case, the units are formed according to the type of product and it is more useful in multi-line corporations where product expansion and diversification, and manufacturing and marketing characteristics of the product are of primary concern. Functional departmentalization is the basis for grouping together jobs that relate to a single organizational function or specialized skill such as marketing, finance, production, and so on. trailer The decisions are generally decentralized so that the departments guide their own activities. This division and concentration of related activities into integrated units is categorized on the following basis: Departmentalization by Product. (b) Service Capacity: This group provides a service that is useful to the organization as a whole and not just to any specific division or function. Thus, the customers are the key to the way the activities are grouped. Considering how vital an orga… An example would be the project of building a new airport. If an organization serves different geographical areas, the division may be based upon geographical basis. All Rights Reserved . The first and most common is a functional structure. The authority is embedded in the hierarchical structure and it flows in a direct line from the top of the managerial hierarchy down to different levels of managers and subordinates and further down to the operative levels of workers. In organization theory, social structure refers to the relations between social … In the same way that no two people can ever be the same, no two companies are identical. 3. (c) Control Capacity: This group includes quality control staff who may have the authority to control the quality and enforce standards. 98 0 obj<>stream Departmentalization by Area. Organizational Design –a process involving decisions about six key elements: •Work specialization •Departmentalization •Chain of command •Span of control •Centralization and decentralization •Formalization 10 - 4 The classic management hierarchy appears on an org chart early in our career, but even by then we’ve already come across the notion in plenty of places. Departmentalization by Time. © 2020 . Below are few of those factors 1. The advantage of this type of structure is that It works perfect when small companies are heavily project focused. Types of Organizational Structures Functional Structure . Summary HR applications touch upon many processes in an organization. Grouping employees and tasks in an organization has a significant impact on organizational behavior and employees. The line and staff type of organization is widely used and is advantageous to the extent that the specialized advice improves the quality of decisions resulting in operational economics. Product Organizational Structure Features: playe Company is organized by specific product type playe Each product has an executive leader who oversees everything related to that product line Advantages: playe Products are organized by category playe There are clear roles, responsibilities and lines of command FUNCTION. Line organization is the simplest form of organization and is most common among small companies. There are three types of bureaucratic structures: 1 - Pre-bureaucratic structures This type of organizations lacks the standards. In the pure line type set-up, all similar activities are performed at any one level. We will be going over each type of organizational structures one by one. The functional organizational concept, originated with Fredrick W. Taylor and it permits a specialist in a given area to enforce his directive within the clearly defined scope of his authority. <<7091D1E379926041A2B29A096E27BA0B>]>> They are not specialists and generally have no authority or responsibility of their own. %PDF-1.6 %���� Rather, profits and losses from the business pass through to the owner(s) and are reflected on the personal tax return(s) of the owner(s) (taxes are reported on the owners’ tax returns). The type of organizational structure would depend upon the type of organization itself and its philosophy of operations. According to Soltonstoff, a staff member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist, and so on. 0000001403 00000 n Describe Each of the Three Major Types of Organizational Structure. An organizational structure defines how activities such as task allocation, coordination, ... Mintzberg's other organization types (for example, the Professional Bureaucracy and the Simple Structure) fall in between these two. Big companies have a lot of tiers of owners, management, and a common worker while smaller ones have few tiers. The functional managers are concerned with the operational aspects of the project. 1. One of the disadvantages of the line organization is that the line executives lack specialization. This facilitates communication, coordination and control, thus contributing to the organizational success. Functional structure in an organization that is developed by grouping departments by the skills, level of knowledge, activities done daily, and the resource used. 1) Line organization 2) Functional organization 3) Line and Staff organization. The project managers are generally responsible for overall direction and integration of activities and resources related to the project. In the other two structures, authority is clearly placed with either the project manager or the functional manager. xref Such divisions are specially useful for large scale enterprises that are geographically spread out such as banking, insurance, chain department stores or a product that is nationally distributed. ManagementStudyHQ . 81 18 The authority is embedded in the hierarchical structure and it flows in a direct line from the top of the managerial hierarchy down to different levels of managers and subordinates and further down to the operative levels of workers. They may be known as special assistants, assistant managers or in a college setting as deputy chairpersons. Operational and informal The set organizational structure may not coincide with facts, evolving in operational action. Structure is the way responsibility and power are distributed, while design is about choosing the right structure. The divisional or departmental organization involves grouping of people or activities with similar characteristics into a single department or unit. 0000005481 00000 n There are three main types of organization structure. Hierarchical vs flat structures . Also, there is no provision for specialists and specialization that is essential for growth and optimization and hence for growing companies, pure line type of structure becomes ineffective. 0000005708 00000 n startxref A functional manager can make decisions and issue orders to the persons in divisions other than his own, with a right to enforce his advice. Hierarchical structures are the most common and have been around the longest. “The five types of organizational structures are functional, divisional, matrix, team-based, and virtual network” (Draft, 2013, p.316). Organizational structure is partly affected by the firm’s external environment [2-5]. It is easy to develop a sense of belonging to the organization, communication is fast and easy and feedback from the employees can be acted upon faster. The primary forms of departmentalization are by function, proce ss, product, market, customer, geographic area, and even matrix (also called project organization). They are: (i) Function, (ii) Product, (iii) Geographic territory, (iv) Project and (iv) Combination approach. The line organization can be a pure line type or departmental line type. The functional organization features separate hierarchies for each function creating a larger scale version of functional departments. 1. This type of departmentalization is used by those organizations that deal differently with different types of customers. The staff consists of two types: General Staff: This group has a general background that is usually similar to executives and serves as assistants to top management. 0000005043 00000 n Line Organization (Oldest and Simplest Style) In this type of organization, the line of authority flows directly from top to bottom and the line of responsibility flows from bottom to top in opposite direction. This structure is somewhat flexible. In this type of organization, the functional specialists are added to the line, thus giving the line the advantages of specialists. Integrated talent management processes can help you quickly find the best people for … The discipline among employees can be maintained easily and effective control can be easily exercised. These are Functional Organization, Projectized Organization, and Matrix Organization. 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