There are a number of alternative ways of deploying the intangible webs of relationships that make up an organization structure.
The functional structures
In a functional organization structure, tasks are linked together on the basis of common functions. Thus, all production activities or all financial activities are grouped together in a single function, which undertakes all the tasks required of that function. The chart below explains this.
Advantages
1. By grouping people together on the basis of technical and specialist expertise, the organization can facilitate both their utilization and their coordination in the service of the whole enterprise.
2. It provides better opportunities for growth and career development.
Disadvantages
1) The growth of sectional interest - this may conflict with the needs of the organization as a whole.
2) It is difficult to adopt this form of organization to meet issues such as product diversification or geographical dispersion.
3) Functional structures are best suited to a relatively stable environment.
THE MATRIX STRUCTURE
These are organizations that have come about as a result of coordination problems in highly complex industries such as aircraft manufacture, where functional and product types of structure have not been able to meet organizational demands for a variety of key activities and relationships arising from the required work processes.
A matrix structure combines a functional form of structure with a project-based structure and entails a dual rather than single chain of command. Every matrix contains three unique and critical roles.
i) Top manager who leads and balances the dual chain of command
ii) The matrix bosses (i.e. functional manager + project manager) who share subordinates
iii) The subordinate managers who report to two different matrix bosses.
Dual authority comes about, for example, because a project has two bosses. i.e. the production director because he belongs to the production department and Project A director because he forms part of the team working on Project A, headed by Project A director. The same applies for the other subordinates.
ADVANTAGES OF A MATRIX STRUCTURE
1. It combines lateral and vertical lines of communication and authority. This combines the relative stability and efficiency of a hierarchical structure with the flexibility and informality of an organic form of structure.
2. It provides coordination necessary to satisfy dual environmental demands e.g. new product introduction and computerization of processes.
3. It leads to better control of project and greater security
4. It leads to better customer relations and higher employee morale
5. Lowers program costs and leads to higher profit margins
6. Project development time is shortened
7. Aids the developments of managers as they are given more responsibility
DISADVANTAGES OF A MATRIX STRUCTURE
1. Organization members experience dual authority which leads to ambiguity, frustration and confusion (It violates the unity of command principle) given by Fayol.
2. Conflicts may arise concerning the allocation of resources
3. Relative dilution of functional management responsibility
4. Divided loyalty on the part of members of project teams in relation to their own manager and functional superiors
5. Managers and other participants need good interpersonal skills - not always available
6. Extensive training is required
7. Conflict resolution becomes time consuming, so is the agreement on objectives and plans
8. May lead to power struggles a managers fight for services of a joint subordinate
9. Too much shifting of staff from project to project may hinder training of new employees
THE MULTIDIVISIONAL STRUCTURE
The organization is divided into divisions on the basis of products and/or geography, and each division is operated in a functional form, but with certain key functions retained at company headquarters e.g. planning, finance and personnel policy. This is a common organizational form for highly diversified firms operating in more than one country. A typical chart for a divisionalised company would be as given below:
The regions act very much like self standing companies, producing and marketing the products developed by the parent company.
Research and development activities and key corporate standards are controlled worldwide via the functional divisions while the headquarters provide group policy in key areas such as finance and personnel.
It is possible to maintain a balance between necessary corporate control from the centre and desired divisional independence at the regional and functional levels.
Kavungya answered the question on
April 26, 2021 at 14:43