(iii) Product departmentation may sometimes lead to difficulties in coordination of certain specialised activities like marketing, financing and accounting. A functional design may be effective when an organization has a narrow product line, competes in a stable environment, pursues a low-cost or focused business strategy, and does not have to respond to the pressures of serving difficult types of customers. Team-Based Organisation 7. (v) Attempts to enforce uniform marketing and personnel policies in all the regional units may be contrary to the local needs of some units. It is very useful where it is desired to introduce specialisation in the performance of various functions like production, finance, marketing, etc. However, this can be treated as an operational problem which can be overcome through experience over the period of time. It relies heavily on information technology. There is an urge to focus on short-term performance, because divisional performance is measured on ROI and revenue growth. It’s not possible to name one organizational structure as the best for every kind of companies or projects. The atmosphere of mistrust may lead to inter-departmental conflicts. 3. At the same time, divisionalisation involves certain negative points in the form of being expensive, presenting control and coordination problems, lack of suitable personnel for heading divisions, and lack of specialisation of activities. Although there are monitoring programs that can track productivity or worker presence, that isn’t always the same as having a manager be responsible for team productivity. Divisional structure is formed by creating a set of autonomous units or divisions which are coordinated by the central headquarters. (iv) There will also be problems in providing centralised services to various departments which are located in different regions. The Importance of a Good Organizational Structure, The Impact of Organization Structure on Productivity. Sampson Quain is an experienced content writer with a wide range of expertise in small business, digital marketing, SEO marketing, SEM marketing, and social media outreach. ii. Divisional structure based on territories served. So even if they are released from projects, they turn back to their department and start doing departmental work. Organizational structures also can be created with some flexibility to add new departments or employees so as not to burden one manager in the company. It is the oldest and most common organisation structure. Uploader Agreement. Importance of Sound Organisational Structure . Therefore, some people tend to call it T-form (technology-based) organization. Special knowledge and experience contribute to the common goals of the concern. And improving skills, knowledge, and competence in that specialization can be proposed as a career path for the resource. Which organizational structure gives the most authority to the project managers? Similarly, a commercial organisation may be divided into wholesale, retail and export departments. Staff experts many provide line officers with expert advice, such as dealing with certain technologies. Instead of having a defined role, many companies that incorporate a flat organizational structure tend to ask people to do a little bit of everything. Instead, it has limitless span of control without the existence of hierarchical control. The old adage “failing to plan is planning to fail” is most applicable to the organizational structure you implement at your business. v. In order to develop multi skills among employees, emphasis is put on horizontal transfer, just as is the case with job rotation. The project manager has control over resources. Second, creating self-managing teams is a long-drawn process full of anxiety and tension. Plagiarism Prevention 5. It is a structure that improves employee morale. Which organizational structure works the best for the company’s overall sustainability. The first advantage of functional organization is that it makes the management of specialists easier. A sound company structure can benefit your organization in several ways, including making it easier to delegate responsibility and affecting change throughout the workplace. The flat organizational structure naturally increases the levels of independence that workers experience in their job every day. It allows different organisations engaged in research and development, consultancy, manufacturing, financing, transportation, security etc. Content Guidelines 2. Activities related to a function are grouped in a single unit with a view to give a well-defined direction to the whole group. Divisional structure offers many advantages over functioned structure especially in terms of autonomy for efficient management, management development, increasing organizational size up to any limit, and taking into account of specific problems related with each product or territory contributing to the overall objectives of the firm. In addition to vertical communication, lateral and horizontal communications are quite common. Meaning of Organisational Structure: Organisational structure means a developed enterprise being operated to achieve the given goals. The design permits division of labour and encourages specialization. Briefly, Project manager’s role, resource availability, control of the project manager on the project are highest in projectized organizations, while the functional manager’s is the lowest. Similarly, matrix superior has to share the facilities with others. Can I Change an LLC From Members to Managers? Besides, the individual himself appraises his performance, known as self-appraisal, which is used along with 360-degree appraisal to arrive at the conclusion about the individual’s performance. Or when a new project is initiated, they can be re-assigned to new projects. (ii) Lack of prescribed organisational processes, lack of clearly defined responsibility, lack of communication lines and measurement yardsticks make the job of a project manager often more challenging. Departments can work together on a developmental plan to help encourage the training of managerial candidates within any department. Two complementary structures—pure project structure and functional structure—are merged together to create matrix structure. Departmentation by territory is commonly found among enterprises having business spread over a vast geographical area. The products are often unrelated and require different emphasis on different functions. Therefore, there is direct interaction between those who manage and those who are managed. There are several advantages to using the matrix organizational structure. Virtual or Network Organisation 14. This can be true even if you have a top-down structure in which authority rests in the hands of your senior management team. Decentralized Organizational Structure, Organization Structures: Theory and Design, Analysis and Prescription; Helmy H. Baligh; 2006. This causes project management to be underestimated by the staff. This is appropriate specially when each product is relatively complex and large amount of capital is required for each product. Each product line or product group gets concentrated attention. Functional structure lacks responsiveness necessary to cope with new and rapidly changing work requirements. The disadvantages of functional structure are as under: (i) Each department concentrates on a narrow range of activities relating to its function only. iii. Divisional Structure 4. Further, in large organizations, the basic organization structure may be supported by other forms for performing various activities like team-based organization, virtual organization, and boundary less organization. For example, one of the virtual organizations created by Intel, USA and a Japanese company could not work properly because the Japanese company was not able to complete its part of the project, leaving Intel with a major product delivery problem. (ii) There may be problems of integration between various regional offices. iv. Network structure is created around a central organisation that relies on other organisations to perform manufacturing, distribution, financing and other crucial business functions on a contract basis. If there will be lots of projects to initiate, this will cause resource allocation problems respectively. Because the team members are dedicated to a project and their existence in the organization solely depends on the project they are working for. Rights and obligations of each position are precisely defined and assigned. Divisional managers can concentrate on responsible area and can improve performance. All courses are 100% Online, Self-Paced and 30 Day Money Back Guaranteed. There are rigid hierarchical relationships in the organisation. Business owners rely on organizational structures because the owner may not be able to visit each location in a timely manner.
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