Organizational structure is the foundation stone for setting up a new business. A formal layout of the business units, departments, and tasks to be allocated to employees. It's a structural flow that depicts the reporting relationships between the objects.
Authority travels downward from the top, and accountability from the bottom, where the line represents the relationships between superiors and subordinates, lateral relationships between different departments at the same hierarchical level, staff relationships between managerial assistants and other areas (can advise the line manager, have no authority over their actions), and functional relationships between specialist positions and other areas (can insist that line managers implement).
Objects identified to design the organizational model of a business are:
- Hierarchy – Identifying the number of divisions, positions as per employees.
- Span of control – Manager - Sales & Manager - Marketing report to GM - Sales & Distribution. Here the GM will have a span of control for the two reportees.
- Work Specialization – Identifying the functional specialists for the business units.
- Geography – Decentralization of various functional areas, region-wise, as customer tastes might vary from region to region.
There are three types of organization structures: Functional, Divisional, & Matrix structure.
a) Functional Structure: Categorized function-wise, where employees have the opportunity to become specialists, leading to higher efficiency and perfect product delivery. It is ideal for small businesses where strategies are less inclined to change or dynamism. However, this structure may restrict innovative ideas, which are often required in the market scenario. Business expansion may complicate coordination among units and relationships within the team.
b) Divisional Structure: Suitable for businesses operating chain stores & subsidiaries locally or globally. Decision-making is decentralized at the business unit level to execute the end-to-end product cycle efficiently. Clear patterns of work accountability create a collaborative environment for employees to enhance their skills. Structured coordination with units minimizes complications.
c) Matrix Structure: Used for multiple reporting, e.g., HR manager reporting to HR director and Sr. Manager. This structure can be complex for employees in terms of prioritizing work and managing multiple reporting lines.
From India, Delhi
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48Authority travels downward from the top, and accountability from the bottom, where the line represents the relationships between superiors and subordinates, lateral relationships between different departments at the same hierarchical level, staff relationships between managerial assistants and other areas (can advise the line manager, have no authority over their actions), and functional relationships between specialist positions and other areas (can insist that line managers implement).
Objects identified to design the organizational model of a business are:
- Hierarchy – Identifying the number of divisions, positions as per employees.
- Span of control – Manager - Sales & Manager - Marketing report to GM - Sales & Distribution. Here the GM will have a span of control for the two reportees.
- Work Specialization – Identifying the functional specialists for the business units.
- Geography – Decentralization of various functional areas, region-wise, as customer tastes might vary from region to region.
There are three types of organization structures: Functional, Divisional, & Matrix structure.
a) Functional Structure: Categorized function-wise, where employees have the opportunity to become specialists, leading to higher efficiency and perfect product delivery. It is ideal for small businesses where strategies are less inclined to change or dynamism. However, this structure may restrict innovative ideas, which are often required in the market scenario. Business expansion may complicate coordination among units and relationships within the team.
b) Divisional Structure: Suitable for businesses operating chain stores & subsidiaries locally or globally. Decision-making is decentralized at the business unit level to execute the end-to-end product cycle efficiently. Clear patterns of work accountability create a collaborative environment for employees to enhance their skills. Structured coordination with units minimizes complications.
c) Matrix Structure: Used for multiple reporting, e.g., HR manager reporting to HR director and Sr. Manager. This structure can be complex for employees in terms of prioritizing work and managing multiple reporting lines.
From India, Delhi
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