Organizational structure is the system used to define a hierarchy within an organization. It identifies each task, its function and where it reports within the organization. This structure has been developed to establish how an organization operates and assists an organization in achieving its goals for future growth. The structure is depicted using an organizational chart.
Types of organizations:
Below we will learn about different types of organizations and explore different categories that can fall into the organizational structure. Organizational structures can be formal, informal, lengthy, meaning that there are multiple levels between entry-level workers and top managers of the company. They can also be quite flat, meaning that there are very low levels between employees and their manager.
1. Formal Organization:
Formal organization sees growth and stability in business. The establishment and development of this type of organization is very formal in nature. It helps in shaping various organized activities. Formal organization is developed for a consistent purpose that primarily involves repetitive activities in nature. In formal organization, the design is such that it serves as great support for distribution of authority, creation of posts, links to various functions and so on.
The formal organization itself is not born. Formal organizations are involved in making it a judicial person to attempt to establish someone as an organization. It is registered with certain types of legal provisions such as the establishment of a shop, its purpose for companies, cooperatives, trusts, societies, etc., to give it a legal existence in its own name.
Advantages of Formal Organizations:
1. Formal organization clearly outlines the relationship between employees. Therefore, it becomes easier to fulfill the responsibilities.
2. It is an established chain of commands maintains unity of command.
3. As the duties of each member are clearly defined, there is no doubt or confusion in an individual role. Likewise, there is no duplication of efforts which eliminates any wastage.
4. In a formal organization, there is a clear definition of rules and procedures. This means that behavior and relationships between members are predictable. As a result, there is stability and no confusion in the enterprise.
5. Finally, it leads to the achievement of organizational goals and objectives. The reason for this is that work cultures and relationships exist to be organized and well thought out.
Disadvantages of Formal Organizations:
1. Decision making speed is slow in formal organization. It is important to realize that before any organizational need is addressed it is to flow through the respective chain.
2. Formal organization is very rigid in nature. This means that correct discipline is coupled with no deviation from the processes. Therefore, this may lead to the under-identification of talent.
3. Finally, the formal organization does not take into account the social nature of human beings because it only talks about structure and work. The interesting thing is that we cannot eliminate this integral part of our nature. Therefore, it does not fully reflect the functioning of the organization.
2. Informal Organization:
The informal organization is born of itself. Here people come together informally through their acquaintance. Informal relationships are formed within the same organization, which may not be formally employed. Informal organization comes with the help of social relations such as trust, dependence, choice etc.
As a matter of fact, informal organization originates from a formal organization. This is because when people often approach each other we cannot bind them to a rigid and completely formal structure. Instead, they bond over common interests and groups, based on friendship and social relationships. Status and problems in the informal structure are informally given great weight. A separate communication channel is formed by the informal organization and is known as the grapevine. With the help of informal communication, the state of the organization can be realized in a different way with everyone. Finally, since no defined structures or no lines of communication, so contact can be completely random and emerging independent lines of communication.
Advantages of Informal Organizations:
1. In this type of organization, communication does not need to follow a defined chain. Instead, it can flow through different routes. This means that communication is much faster in an informal organization relative to a formal organization.
2. The informal organization ensures that there is socialization within the enterprise. As a result, members realize belonging and job satisfaction.
3. Informal organization, true feedback and getting feedback is not easy. Therefore, in an informal organization, various boundaries of the formal organization are covered.
Disadvantages of Informal Organizations:
1. The informal organization is random and can result in spreading rumors. Again, we cannot manage and control informal organization. As a result, it can result in chaos within the enterprise.
2. It is important to realize that without the support of the informal organization it is not possible to influence and grow the changes. It can work both ways for the growth or decline of the enterprise.
3. Informal organization conforms to group standards and behaviors. If such behaviors are against organizational interests, they may eventually lead to the disintegration of the organization.
As its name itself suggests. Flat organizations are described as self-management and everyone is same. The idea behind this organizational structure is to reduce bureaucracy so that employees are empowered to make decisions, solve creative problems, and take responsibility for their actions. Since there are no levels of middle-management. A company that adopts this structure well can be more productive by speeding up decision-making processes.
In addition to increased productivity, firms with flat organizations have very low budgets because they do not include any middle-management salaries. The only thing to keep in mind is that this structure works best for small and medium-sized businesses. In this way, a firm can decentralize decision making while maintaining its corporate integrity.
A functional organization is also known as a bureaucratic structure, a functional organization is one that divides the operations of a firm on the basis of specialties. Ideally, there is a person in charge of a particular function. It is like any specific business which includes the sales department, human relations and marketing department. This means that each employee receives tasks and is accountable to a particular expert.
A functional organization provides many benefits:-
1. The total specialization of work means that each employee receives professional guidance from an expert.
2. The work is done more efficiently because each manager is responsible for a single task.
The divisional organizational structure divides employees into segments that correspond to particular products, services, or markets. Each Division has autonomy to some extent, which meets with the functional units such as operations, personnel, marketing and research and development departments, which are designed to focus on specialized markets and product lines. This organizational structure is suitable for businesses that operate chain stores and subsidiaries in the country and internationally.
A matrix organizational structure is somewhat more complex in that there is more than one line of reporting managers. This simply means that employees are accountable to more than one boss. Most organizations that take over this organizational structure often have two chains of command:-
1. Functional and
2. Project managers.
However, this organization works best for businesses with large-scale projects.
A matrix organization provides many benefits. These include a clear description of the company’s mission and objectives, effective use of limited resources and retention of professionals throughout the life of a company. Additionally, the matrix structure provides a practical way to integrate the firm’s objectives with operations.