Organizational Structure

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.

An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs.

Organizational structure affects organizational action in two big ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.

Organizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today's post-industrial structures.

The early theorists of organizational structure - Taylor, Fayol, and Weber saw the importance of structure for effectiveness and efficiency and assumed without the slightest question that whatever structure was needed, people could fashion accordingly. Organizational structure was considered a matter of choice... When in the 1930s, the rebellion began that came to be known as human relations theory, there was still not a denial of the idea of structure as an artefact, but rather an advocacy of the creation of a different sort of structure, one in which the needs, knowledge, and opinions of employees might be given greater recognition." However, a different view arose in the 1960s, suggesting that the organizational structure is "an externally caused phenomenon, an outcome rather than an artefact.

What are the ways through which Organization action is affected by Organization Structure?

    a) Laying the foundation on which standard operating procedures and routines rest.
    b) Determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.

What an Organizational structure like be? 

Organizational structures shall be adaptive to process requirements, aiming to optimize the ratio of effort and input to output.

TYPES OF ORGANIZATIONAL STRUCTURES

 a) Functional Organization

  

The structure is divided on the basis of the functions they perform in an organization. For example, functional divisions of an organization tend to perform a specialized set of tasks, for instance the engineering department would be staffed only with software engineers.

This leads to operational efficiencies within that group and increases the productivity.  However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.

b) Product/Market/Divisional Organization

This type of structure brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer.

 It Can follow three patterns as described below:

• Division by product

 

 As shown the categorization (division) has been done on the basis of broad category of products. And each category of related group of products has its own marketing, sales, purchasing and inventory manager.

• Division by geography

Geographical organization is logical when a plant must be located as close as possible to sources of raw materials, to major markets, or to specialized personnel.

• Division by customer 

 c) Matrix Organization/ Multiple Command System

 

An example would be a company that produces two products, "product a" and "product b". 

Using the matrix structure, this company would organize functions within the company as follows:

 "product a" sales department, "product a" customer service department, "product a" accounting department. 

 "product b" sales department, "product b" customer service department, "product b" accounting department.

Without having an organizing structure company cannot take a step forward. We can take an example of AMUL without the guidance of Dr. Verghese Kurien the path to success for AMUL may not be the same. Dr. Verghese Kurien is just an illustration the key people from his company plays an equal important role.  

Behind the success of a company there is a more successful organizational structure. And talking about the failures lack of a proper guidance is the main reason and organizational structure for poor performance of a company.