Organizational Structures - Essay Example

Organizational Structures A matrix structure is superior to a functional and a divisional structure Organizational structures define the difference between the matrix oriented organization and a decentralized one. An organization using a matrix structure crosses an organizational structure with another firm to complete a grid or a matrix, which makes it superior to both the functional and the divisional structure. Small businesses typically use functional and divisional structures to create their respective matrices. The functional structure categorizes employees into several departments performing company functions. For instance there might be a department of accounting that categorizes people specializing in the auditing and bookkeeping skills. Supervisors govern the managers that manage these departments. Then the supervisors are placed in layers building up to the top of the formation where the major stakeholders of the firm are. The owners of the company hold most of the power which is contrary to decentralized firm. On the contrary the matrix structure is a modified shape of a functional structure. Its prime feature is ascending, or vertically oriented hierarchy. Therefore, it resides the Y axis of the matrix. The vertical line emerging from every functional department runs downward. The divisional structure is horizontal and structure groups employees into several marketing divisions. Every division occupies its respective matrix grid and horizontal line. And when these vertical and horizontal lines intersect each other it represents the employees sharing common areas. Matrix Structures Organizations use matrix structure when they need expertise that a functional structure offers along with the ability for coping with rapid changes occurring in a specific product line. The structure is superior to both the divisional and functional structures because it allows the functional and divisional aspects of an organizational structures to simultaneously operate. The matrix structure is supported by rigorous planning between the functional divisions (Miles, Snow, Meyer, & Coleman, 1978). For instance, the employees respond to both their line managers as well as their product managers. The matrix structure works well when there is pressure for sharing scarce resources across different product lines. It is also highly beneficial when the environment is rapidly changing and extreme predictive coordination is required across departments. Theoretically speaking, the balance of power between the products a functional leaders is almost equal and a high degree of cooperation occurs between managers. It has the following strengths: Strengths: • It offers adjustable sharing of human resources across the organization. • It has more flexibility to deal with complex decisions and offers wider range of input • The matrix structure has the ability to cope with larger product range • Functional specialization can avail more opportunities compared to a divisionalized structure in the organization when the matrix form of structure is implemented Weaknesses • Sometimes the shared authority can create confusion and frustration • The company has to hold many meetings to resolve several conflicts which takes a lot of productive time • This form of organizational structure cannot work on inexperienced internees • Sometimes the shared authority can lead to competition which might lead to a failure for department if there is domination observed from a single department Functional Structures The teams or groups created in the functional structure are based on common functions and create a decentralized organizational environment. This is created with a bottom up style, the process oriented business activities deemphasize the functional structure within and between organizations (Cooper, Lambert, & Pagh, 1997). The top level management controls and coordinates with the resulting units like marketing, finance, or human resources etc. functional style of managing is more technical and less business oriented. Decentralized decision making is required to create and manage diversified organizations (Miles, Snow, Meyer, & Coleman, 1978). The people managing this style are skilled in taking decisions in their functional areas. However, there are not tightly integrated or controlling the product business plans. Strengths: • It maximizes functional performance. The human knowledge and skill required for specific functional activity are maximized in a single sub organization. Hence, this facilitates the superiors by maximizing the productivity from subordinates. • Creates specialists. If functional structure promotes career development of employees that want to excel in technical capabilities in their respective fields. If the organization crafts performance management it is promoting the visibility of its individual skills and functional structures. Hence in such an organization it is easier to climb the ladder of hierarchy through acquiring various skills. Weaknesses • It restricts the organizational view because each functional unit focuses on its own field of expertise. It lacks the broader vision or the core organizational goals and objectives. Successfully integrating the whole organization depends on only the top level management. Similarly this structure limits the capabilities of functional managers to climb onto top level management positions. In the short term the functional structure can be very protective but in the long-term it can be less dependable. • If functional structure offers poor accountability because there is a weak link between the product and functional areas. Similarly the company finds a hard time trying to pinpoint its strong and weak areas to maximize profits. Divisional structure In the divisional structure the teams get organized in divisions. This system can be thought of as similar special purpose machines operating independently to serve a particular market (Snow & Miles, 1992). Each division refers to the end product or the service that the firm is providing. Because it is a modified version of the functional structure each division has its own functional units like manufacturing, research etc. In this structural form there is more focus on the functionality than the hierarchy of the firm. The structure is more productive in the sense that the functional structure is in line with the product. It might lack the core technical competencies but it focuses more along the product business. Strengths: • The divisional structure offers clear accountability and offers clear correlation between the profit and expense of each division. Hence, the company can form the business objectives without prejudice or a murky view of the future expectations. • This form of structuring the organization offers departmental coordination and leads to objective accountability that creates productive cohesion in a department. In essence, teams coordinate and cooperate with each other for better productivity as the goals are shared. Weaknesses • An obvious weakness for divisional structure is the resource get duplicated because each division is independent therefore it needs to be produced for every unit. • The technical specialists are not big fans of the structure because it inhibits the career opportunities. They do not get the maximum exposure for development in the organization. • Despite the increased integration the employees can feel alienated because of the departmental structure. References Cooper, M. C., Lambert, D. M., & Pagh, J. D. (1997). Supply chain management: more than a new name for logistics. International Journal of Logistics Management, The, 8(1), 1-14. Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J. (1978). Organizational strategy, structure, and process. Academy of management review, 3(3), 546-562. Snow, C. C., & Miles, R. E. (1992). Causes for failure in network organizations. California management review, 34(1), 53-57. Read More