What is Organizational Structure?
An organizational structure is a definitive configuration of operations. It determines the management of the group or the organization as a whole. So, it discerns the position and task of a worker to achieve the desired business goal. Organizational structure is flexible and can be tweaked according to the size and requirements of the company. A startup firm adopts a structure that is most convenient to manage with very little complexities. However, as the size of the company scales up, the setup has to be shifted to suit the situation. A self-sufficient structure is the best way to save extra costs. Hire professionals that can serve your company's overall objective.
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Attributes of Organizational Structure
Organizational structure is the foundation of any business. So, while selecting a structure, look for certain features that benefit your business in the long run.
Span of Control
This feature provides control over people, who work under a hierarchy. Suppose if the manager has a team of 8 members, she/he has the potential to regulate the work between other employees.
Departmentalization specifies the position and work of an individual. The departments consist of smaller groups, who work to achieve similar goals.
In this feature, the power is distributed to different managers. The diffusion of power starts from the top and goes down the line.
In centralization, the top management takes all the decisions and also plans to improve the economic stability of the business.
In simpler words, it refers to the allotment of work. As a manager, you can break the complex project into the nuclear unit for efficient working. This segregation process permits workers to finish a task in a short period.
Formalization stands for the guidelines and regulations of a firm that helps the workflow. Managers can instruct the guidelines to the whole organization.
COC stands for Chain of Command. This attribution is responsible for the organization's reporting hierarchy. This process assures that every manager is accountable for entrusted tasks.
These features are mandatory for every organizational structure to ensure business expansion. Here are a few factors that leverage organizational structures:
Kinds of Organizational Structure
There are 5 primary kinds of organizational structure which the majority of the organizations implement. However, the type of structure that companies adopt is based on the size, employee-strength and investment.
Organizations start with the most basic structure but make necessary changes as the company grows. This is important to ensure smooth continuity and utmost transparency.
Simple organizations tend to adapt to market changes skillfully. This structure is flexible and is distinguished by having lesser regulations and management hierarchy. It is designed to formulate decentralized decision making.
The simple organization design goes well with today's marketing needs. As the industry is dynamic, adapting to new changes is essential. Employees can work side by side and can transmit information easily.
Here the role of a project manager is diminished as the structure has a decentralization layout.
This structure is widely adopted by small enterprises and is the simplest of all organization structure. Line organization has specified administration levels in the hierarchy. Power flow starts from the top and flows down the chain.
A hierarchical structure clarifies accountability, responsibility and authority at each grade. Due to its simple approach, authority and accountability are transparent and traceable. Quick feedback smoothens the communication process.
The role of the project manager depends on the position in the hierarchy. Some companies do not hire a project manager, although this structure restricts the chores of a project head.
Line and Staff Organization
This structure is the modified version of the line organization. In this, functional experts collaborate with line managers to lead the way.
This is a go-to approach for the present-day scenario. Most of the large enterprises adopt this setup. The staff comprises two sections; the specialized and common team.
Common or General Staff
The general staff includes regular employees. These employees are not experts and work under top management.
Expert or Specialized Staff
This category consists of experts who cater services to the company. They are offered various positions, such as quality control executives, maintenance experts or advisors.
FAQs on Formal Organization and Project Management Organization
1. What is the Most Basic Form of Organisational Structures?
Ans: There are two forms of organisational structure that are very easy on the setup. They are:
Organic Organization: Organic organizations are flexible in regulation. The execution is very easy as there are negligible regulations and hierarchy on the management. It has a decentralized structure, which encourages simple decision-making.
Line Organization: Line organization is very common among small companies. There is a very specific level of hierarchy in the administration, which has a chain of the flow of power from the top to the bottom. The benefit with Line Organization is that it brings responsibility, accountability and authority at every level of the management. Due to this simple approach, everything is transparent.
2. Is it Better for Big Enterprises to Adopt Departmentalization and Decentralization?
Ans: Centralization and decentralization are two of the most debatable attributes of any organization. The most common idea is that the choice among the two attributes is made based on the size of the organization.
For any small organization, centralization is easier to handle and also more lucrative. The organization does not need to build various departments. Also, when the employee strength is small, it is easier to make all the management decisions from one centralized head.
On the other hand, large corporate establishments will not find it feasible to implement a centralized approach. The most common factor here is the size of the company, where the employee strength is too high to be managed under one head. Instead, departmentalization and decentralization ensure smooth distribution of power, roles and responsibilities.