Understanding Organizational Structure
Organizational structure is the foundation stone for setting up a new business. It involves a formal layout of the business units, departments, and tasks to be allocated to employees. It's a structural flow that depicts the reporting relationships between the entities.
Authority travels downward from the top, and accountability from the bottom, where the line represents the relationships between superiors and subordinates, lateral relationships between different departments at the same hierarchical level, staff relationships between managerial assistants and other areas (who can advise the line manager but have no authority over their actions), and functional relationships between specialist positions and other areas (who can insist that line managers implement).
Key Components of Organizational Model Design
Objects identified to design the organizational model of a business are:
- **Hierarchy** – Identifying the number of divisions and positions as per employees.
- **Span of Control** – For example, Manager - Sales & Manager - Marketing report to GM - Sales & Distribution. Here, the GM will have a span of control over the two reportees.
- **Work Specialization** – Identifying the functional specialists for the business units.
- **Geography** – Decentralization of various functional areas, region-wise, as customer tastes might vary from region to region.
Types of Organizational Structures
There are three types of organizational structures: Functional, Divisional, and Matrix structure.
a) **Functional Structure:** Categorized function-wise, where employees have the opportunity to become specialists, leading to higher efficiency and perfect product delivery. It is ideal for small businesses where strategies are less inclined to change or dynamism. However, this structure may restrict innovative ideas, which are often required in the market scenario. Business expansion may complicate coordination among units and relationships within the team.
b) **Divisional Structure:** Suitable for businesses operating chain stores and subsidiaries locally or globally. Decision-making is decentralized at the business unit level to execute the end-to-end product cycle efficiently. Clear patterns of work accountability create a collaborative environment for employees to enhance their skills. Structured coordination with units minimizes complications.
c) **Matrix Structure:** Used for multiple reporting, e.g., an HR manager reporting to an HR director and a Senior Manager. This structure can be complex for employees in terms of prioritizing work and managing multiple reporting lines.
Regards
From India, Delhi
Acknowledge(0)
Amend(0)
48Organizational structure is the foundation stone for setting up a new business. It involves a formal layout of the business units, departments, and tasks to be allocated to employees. It's a structural flow that depicts the reporting relationships between the entities.
Authority travels downward from the top, and accountability from the bottom, where the line represents the relationships between superiors and subordinates, lateral relationships between different departments at the same hierarchical level, staff relationships between managerial assistants and other areas (who can advise the line manager but have no authority over their actions), and functional relationships between specialist positions and other areas (who can insist that line managers implement).
Key Components of Organizational Model Design
Objects identified to design the organizational model of a business are:
- **Hierarchy** – Identifying the number of divisions and positions as per employees.
- **Span of Control** – For example, Manager - Sales & Manager - Marketing report to GM - Sales & Distribution. Here, the GM will have a span of control over the two reportees.
- **Work Specialization** – Identifying the functional specialists for the business units.
- **Geography** – Decentralization of various functional areas, region-wise, as customer tastes might vary from region to region.
Types of Organizational Structures
There are three types of organizational structures: Functional, Divisional, and Matrix structure.
a) **Functional Structure:** Categorized function-wise, where employees have the opportunity to become specialists, leading to higher efficiency and perfect product delivery. It is ideal for small businesses where strategies are less inclined to change or dynamism. However, this structure may restrict innovative ideas, which are often required in the market scenario. Business expansion may complicate coordination among units and relationships within the team.
b) **Divisional Structure:** Suitable for businesses operating chain stores and subsidiaries locally or globally. Decision-making is decentralized at the business unit level to execute the end-to-end product cycle efficiently. Clear patterns of work accountability create a collaborative environment for employees to enhance their skills. Structured coordination with units minimizes complications.
c) **Matrix Structure:** Used for multiple reporting, e.g., an HR manager reporting to an HR director and a Senior Manager. This structure can be complex for employees in terms of prioritizing work and managing multiple reporting lines.
Regards
From India, Delhi
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
IPL Business Model.pdf
Organizational Structure.doc