The next step in organization designs is to cluster the differentiated tasks into departments. There are several reasons for making these grouping. For example, activities may be clustered based on whether they
- are related to the same product
- have similar skill requirements
- serve particular customer or clients
- are performed in a particular geographic area
Various groupings are as
- Simple structure – The simple structure has a low degree of departmentalization, ample spans of control, centralized authority in one person and having virtually no formulization. This is a structure known as flat organizational structure. This is linked with small business organizations and its power is in its simplicity and its adaptable and inexpensive maintenance of responsibility. The major fault in such structure is when it gets bigger and over loads the top resulting in decision making sluggish and inadequate. This is undoubtedly a comparison with a tent with a single supporting pole. Visualize what happens when the pole crakes or damages or falls suddenly.
- The Bureaucracy – It is defined by a highly routine operating tasks attained through specialization, great number of rules and regulations, task grouped in functional departments with limited span of control, centralized authority with decision making following the chain of command. The plus point of the bureaucracy is in the ability to perform standardized activities in an effective manner. The economy is accomplished by getting together specialities in functional departments, reducing duplication of personnel and equipment. This structure can be handled by less able and talented. Therefore, at a lesser cost and be managed at a lower category. This limits the innovative and experienced decision makers at executives. A nation government is a good example of bureaucracy the major witness of which is experienced by all of us. This results in reduced efficiency of performance and resulting in impediment in decision-making.
- The Matrix Structure – This is a new term in the organizational structure and we find this usually in service industry like advertising, education, hospital, construction, research and development and management consulting firms. Ideally, the Matrix combines the two forms of departmentalization: functional and productive. It has a double line of authority as mentioned above. The strength of functional departmentalization is in putting like specialist together, reducing the number actually necessary; on the other hand permitting the putting and sharing the specialized resources across the products. The major disadvantages lies in the problem of co-ordinating the task of varied functional specialist counting on time and money spent on it. On the other hand, product departmentalization works exactly in reverse. It provides accountability of all activities related to a product. One big disadvantage is that, it breaks the concept of unity of command. An employee’s two bosses, the functional departmental manager, product manager, resulting in double line of command. Eventually, the struggle for power is the real drawback in this structure. Hence, this old concept of three types of structures is being over shadowed by new designed options. Namely; the team structure, the virtual organization and the boundary less organization.
- The Team Structure – We have observed that teams are very popular as a means of organizing work activities. When teams are utilized as a central co-ordination element or device it results in a horizontal organization which is known as “team structure”. The team structure breaks down departmental barriers, decentralized decision making. In small companies, the team’s structures characterize the entire organization. In large organizations it complements the bureaucracy which means it allows the organization to achieve the usefulness of bureaucracy and concurrently achieving the flexibility that the team offers.
- The Virtual Organization- A small core organization which outsourcer’s major business functions is the core of virtual organization. This is also known as network or modular organization. This also is a highly centralized organization having no departmentalization. Big companies in UK, USA and now some Asian countries are today outsourcing their jobs to minimise the cost of their establishment to contest in the world market. To highlight this point, research and development is completed at one source, the owner, production is given on outsourcing, sales or marketing are also either completed by the companies own employees or outsources. The major benefit of the virtual organization is its flexibility. It permits individuals having innovative ideas and limited money to successfully compete against others. The major difficulty however, is the reduction in the control over part of the business.
- Boundary less organization – The boundary less organization seeks to do away with the line of command, has immeasurable spans of control and substitutes departments with empowered teams. This word was coined by former chairman of General Electric Company, namely Jack Welch. This is followed by many American multi-national companies such as AT&T, Hewlett Packcard, Motorola, etc. but they have yet to accomplish the totality of boundary less organization. The present network computer system, which is an exclusive technological thread that makes the boundary less organization probable because communication across intra-organizational and inter-organizational boundaries is possible for people. This aids in sharing information concurrently, direct communication with senior. As a matter of fact the entire range of information technology may quickly result in developing the boundary- less organization in the world.
