Organizational Structure Types

Matrix Structure

Some organizations find that none of the afore-mentioned structures meet their needs. One approach that attempts to overcome the inadequacies is the matrix structure, which is the combination of two or more different structures. When it comes to matrix structure, the company uses teams to complete tasks. The teams are formed based on the functions they belong to (ex: software engineers) and product they are involved in (ex: Project A).

Typically used in large multinational companies, the matrix structure allows for the benefits of functional and divisional structures to exist in one organization. This can create power struggles because most areas of the company will have a dual management--a functional manager and a product or divisional manager working at the same level and covering some of the same managerial territory.

A matrix structure provides for reporting levels both horizontally as well as vertically.Employees may be part of a functional group (i.e. engineer) but may serve on a team that supports new product development (i.e. new album). This kind of structure may have members of different groups working together to develop a new product line.

For example, a recording engineer who works for a music publisher, may have engineers who report to him but may also use his expertise and work with teams to develop new music albums.

Advantages:

1. Decentralised decision making.

2. Strong product/project co-ordination.

3. Improved environmental monitoring.

4. Fast response to change.

5. Flexible use of resources.

6. Efficient use of support systems.

7. Effective use of specialists

8. Job security for specialists

9. Friendly environment for specialists

10.Equipment and facilities: more and better

Disadvantages:

1. High administration cost.

2. Potential confusion over authority and responsibility.

3. High prospects of conflict.

4. Overemphasis on group decision making.

5. Excessive focus on internal relations.
6. Stress
7. Specialists with several bosses
8. Project managers requiring several specialists or shared specialist
9. Functional managers providing shared specialists
10. Sacrifice of territorial incentive

Where the matrix approach is best

Matrix organizations have been found to be best for complex activities in uncertain environments.

Requirements for a matrix organization

- Well-defined charters
- Communication
- Planning
- Teamwork
- Willingness to compromise
- Good management skills

                                                         

Flat Organizational Structure

A flat organizational structure is often used for a small company with 20 or fewer employees. This type of structure has very few levels of management between the Chief Executive Officer (CEO)/president and the lower level employees. In this type of structure, decisions can be made quickly due to the fact there are only a few levels of management. Flat organizations focus on empowering employees rather than adhering to the chain of command. By encouraging autonomy and self-direction, flat structures attempt to tap into employees' creative talents and to solve problems by collaboration. Here is an example of what a flat organizational structure looks like:

There are fewer levels with each level controlling a broad area or group in the flat structure organisation. In this example structure, there is one person at the top with everyone else reporting into them on an equal level.

Advantages of flat structures

• people feel more involved and can take on more responsibility
• greater communication
• better team spirit
• less bureaucracy and easier decision making
• lower costs

Disadvantages of flat structures

• Decisions can get stuck as a result of consulting with many people.
• People may have 'matrix management', with more than one manager.
• Limited to smaller organisations.
• The function of each department gets blurred as roles merge.

Team

One of the newest organizational structures developed in the 20th century is team that is less hierarchical, less structured, and more fluid than traditional structures and the related concept of team development or team building. In small businesses, the team structure can define the entire organization. Teams can be both horizontal and vertical. A team is a group of employees—ideally with complementary skills and synergistic efforts—working toward a common goal. Teams are created by grouping employees in a way that generates a variety of expertise and addresses a specific operational component of an organization. These teams can change and adapt to fulfill group and organizational objectives.

The Advantages of a Team-Based Lateral Organizational Structure

Less overhead management

Teamwork

Eliminate delays

Improved relationships

Increased productivity

Balance

Network

The network structure is a newer type of organizational structure viewed as less hierarchical, more decentralized, and more flexible than other structures. Rather than hiring workers for all of its business functions, a company using the network structure relies on outside companies. The networking company can employ few workers, while enjoying the reach, capacity and functionality of a larger business. It may, for instance, hire an outside manufacturer to produce its products. The network structure lowers costs and gains flexibility because it uses outside help according to need. Creating a network-based company, however, means losing control over whatever processes the company delegates to others.

 Network Organization includes a wide range of joint ventures, strategic alliances, business groups, franchises, research consortia, relational contracts, and outsourcing agreements. Network forms of organization can be characterized by a distinct ethic or value orientation on the part of exchange partners. It allows participating firms to learn new skills or acquire knowledge, gain legitimacy, improve economic performance, and manage resource dependencies. In addition, the widespread use of network forms of organization may have unintended social welfare benefits. 

Generally, at first, the management identifies its core competency, and then it outsources non critical tasks to other organization that have core competencies. The task is given to other organizations on the basis of contract. The responsibility of the management is to focus on strategies and to maintain coordination among experts for uniform progress of work. At present, the world's leading business organizations perform business through computer network. 

Benefits of the Networked Organization

• Being closer to the customer - there is rapid communication between those at the sharp-end and those who support them.

• Maximizing the knowledge potential of an enterprise; network members tap into expertise wherever it may reside.

• Minimizing disruption; a network has resilience to operate even if some parts fail (e.g. in a natural disaster).

• Responsiveness and adaptiveness. Like an amoeba, a network is sensitive to stimuli and adjusts accordingly.

• Eliminate over departmentation

• Minimize administrative cost

• Benefit of specialization

• Flexible in operation

• Facilitates for concentration 

• Foster learning 

• Maintain status

Disadvantages and limitation of Network Organization Structure

• Possibility of conflict 

• Lack of secrecy 

• Difficult to coordinate

• Minimize competency 

• Increase dependency

• Loss of control

• Problems with Digital Communication

• Too Many Supervisors

• Sharing Skilled Workers

• Increased Work Strees

Virtual

The term virtual organization is used to describe a network of independent firms that join together, often temporarily, to produce a service or product. Virtual organization is often associated with such terms as virtual office, virtual teams, and virtual leadership. The ultimate goal of the virtual organization is to provide innovative, high-quality products or services instantaneously in response to customer demands. The virtual organization exists within a network of alliances, using the Internet. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche. According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative Amazon.com so successful.

Examples of Virtual Organizations 

An industry that is known for its use of partners and alliances is the entertainment industry, which has partnered with the computing, communications, consumer electronics, and publishing industries to convert movies, textbooks, and other software into digital formats.

Increasing numbers of firms are moving to these new organizational forms. Corning, the glass and ceramics maker, is one such firm known for making partnerships work to their advantage. Corning has partnered with such firms as Siemens, Germany's electronics conglomeration, and Vitro, Mexico's largest glassmaker. Alliances are so important to Corning's business strategy that the corporation has defined itself as a network of organizations.

Computer organizations that have successfully implemented forms of this new structure include Apple Computer and Sun Microsystems. When Apple Computer linked its easy-to-use software with Sony's manufacturing skills in miniaturization, Apple was able to get its product to market quickly and gain a market share in the notebook segment of the PC industry.

Advantage

1.  It saves time, travel expenses and eliminates lack of access to experts.
2.  Virtual teams can be organised whether or not members are in reasonable proximity to each other.
3.  Use of outside experts without incurring expenses for travel, logging and downtime.
4.  Dynamic team membership allows people to move from one project to another.
5.  Employee can be assigned to multiple, concurrent teams.
6.  Teams’ communication and work reports are available online to facilitate swift responses to the demands of the (global) market.
7.  Employees can accommodate both personal and professional lives.
8.  Virtual teams allow firms to expand their potential labour markets enabling them to hire and retain the best people regardless of their physical locations.

Disadvantages

1. The lack of physical interactions with its associated verbal and non-verbal cues and also the synergies that often accompany face-to-face interaction

2. Non-availability of paraverbal and non-verbal cues such as voice, eye movement, facial expression, and body language which help in better communication.

3. Ability to work even if the virtual teams are miles apart and the members have never or rarely met each other face-to-face.

But the fact remains that despite these drawbacks; virtual organisations have become a reality and are growing in popularity. By now, several successful cases of virtual organisations abound in our country. It is the explicitly designed ‘Group Ware’, computer based system to support virtual groups, enables the virtual organisations to work in order to achieve a common goal.

Hierarchy-Community Phenotype Model of Organizational Structure

Lim, Griffiths, and Sambrook (2010) developed the Hierarchy-Community Phenotype Model of Organizational Structure borrowing from the concept of Phenotype from genetics. "A phenotype refers to the observable characteristics of an organism. It results from the expression of an organism’s genes and the influence of the environment. The expression of an organism’s genes is usually determined by pairs of alleles. Alleles are different forms of a gene. In our model, each employee’s formal, hierarchical participation and informal, community participation within the organization, as influenced by his or her environment, contributes to the overall observable characteristics (phenotype) of the organization. In other words, just as all the pair of alleles within the genetic material of an organism determines the physical characteristics of the organism, the combined expressions of all the employees’ formal hierarchical and informal community participation within an organization give rise to the organizational structure. Due to the vast potentially different combination of the employees’ formal hierarchical and informal community participation, each organization is therefore a unique phenotype along a spectrum between a pure hierarchy and a pure community (flat) organizational structure."

Conclusion

Every organization needs a structure in order to operate systematically. The organizational structures can be used by any organization if the structure fits into the nature and the maturity of the organization.

In most cases, organizations evolve through structures when they progress through and enhance their processes and manpower. One company may start as a pre-bureaucratic company and may evolve up to a matrix organization.