Organizational structure is the internal, formal framework of a business that shows the way in which management is linked together and how the authority is transmitted. It is basically a framework used to describe the hierarchy in an organisation. Every business needs to have their own organizational structure as it helps in identifying the job at each level of an individual followed by its functions and it also assists in obtaining their own goals for development. There is a need for every type of organisation to have their own structure specially when it comes to large enterprises as it becomes difficult activities of the various departments and functions.
A business will opt for an organisation structure which is best suited to them and the way they would like to be working, and the chart they create will reflect this.
A flat organisation is one that has eliminated most or all of middle management, therefore putting top line management in direct contact with frontline staff and customers. This structure is much more likely to be used by small companies or those who have recently started up, as it wouldn’t work as well for a business with many employees and service areas. The benefits of this particular way of working are that decisions affecting the business can be made quickly, as there aren’t several layers of hierarchy to work through. This increased and more effective communication will produce a higher job satisfaction for employees, as they can be more involved in the decision making process and be given more responsibility. This will also produce a faster response time to change in working conditions and customer preferences to increase overall satisfaction with the company. An increase in job satisfaction will reduce staff turnover, retaining the skilled and experienced members of staff. By eliminating the need for more layers of management, the structure could also save a business the costs relating to this and will see profits increase. A potential disadvantage of this structure is that the top line management rely on the knowledge and expertise of the frontline staff for the important decisions. If a member of staff is not trained or skilled enough in their area, they may make poor recommendations which affect the business poorly. The structure lacks in close supervision, which could lead to staff members being less productive possibly deliberately or simply because they need more help and support. Another negative is that a flat structure is restrictive in terms of promotional opportunities for staff, and they may feel like they want to find work elsewhere if there are no advancement routes.
For larger organisations, the hierarchical structure is most commonly used and means that there will be a clear supervisor for a group of employees. This could be broken down based on factors such as staff location and job role. This structure provides a clear line of authority and there is no confusion about boundaries set between departments. Supervisors within the structure have a specific management level, and can therefore allocate resources and give commands to fit this. This also enables a clear line of communication, where employees know that they have an allocated manager to report to, who is then the spokesperson for top line management. Staff are managed more closely which can increase productivity and ensures they have a strong support system they can use should they need it. The team groupings by job category ensure that the business is using their resources in the most efficient way possible for cost saving, and allows staff a strong support network for those who are doing a similar role to them or working on a combined project. However, although this helps create a stronger connection between those within each team, it could mean that other departments become isolated from each other and do not communicate as effectively as they should. This could lead to departments developing their own agendas and not working towards the company’s overall aims and objectives as they should. Another disadvantage is that because the hierarchy is extended, the decision making process and actions are slowed down, due to communication travelling up and then back down the chain of command. This will impact customers as well and could reduce their satisfaction based on the experiences they have with the company.
Within a matrix organisational structure, a traditional hierarchy is not used and is instead displayed as a grid to show reporting relationships. Staff with the required skills could be grouped by which project they are working on, and will therefore have more than one manager to report to. For instance, they will still have the same supervisor for their team area, but will also have a project manager to work with around that particular piece of work. This means that some of the management for an individual staff member will be fluid and will change based on which projects are being worked on at that time. This style provides a company with an efficient use of staff skill and resources, and gives minimal organisation disruption when the project ends and the staff return to their teams fully. It will also help to improve interdepartmental communication and staff will build stronger relationships with those who are in other teams. Staff will be given the opportunity to strengthen their existing skills and learn different areas by working on certain projects, which will continue to enhance the organisation as a whole and provide customers with a better service. However, this structure can become complicated due to the nature of the dual management style. An employee might be unsure who they should report to if both managers are giving conflicting opinions, and could cause division amongst managers and staff. Miscommunication can then lead to dissatisfaction in the workplace and ineffective management. This organisation style can be costly to maintain because of the dual management, and can also slow down actions required by management because of the need for staff to seek a decision from more than one person in authority.