It is the arrangement of roles, responsibilities and reporting structure within an organization. There are two forms of organizational structure namely tall/flat structure and open/closed structure. In a tall structure, the main focus is on hierarchical layering and decision making lies with the top management. There is a huge chain of command and narrow span of control. A flat structure depicts fewer levels of management and many people reporting thereof.
In an open/closed organizational structure, existence of the organization or decision making is
impacted by external factors. However, a closed structure is not affected by external factors, all the organization affairs are confined within its internal activities. Whereas an open structure is affected by the external factors thus roles and responsibilities are adjusted to suit the varying changes in external activities.
An organizational structure can also be described as centralized or decentralized. In a centralized
structure, decision making, and strategic planning lie in the hands of senior management. This allows for congruency in goal setting, easy setup of benchmarks for performance review and unit of purpose. However there are also disadvantages of centralized structure in that is it takes longer to deduce a decision due to bureaucratic procedures that have to be followed and by the time the decision is made ad communicated it would be too late to mitigate the problem or other problems might have arisen. It also demotivates employees in the sense that they won’t have the autonomy to make decisions in cases where quick action is required.
A decentralized structure allows for decision making in and across the organization. It improves workers morale in that they are given the privilege to make decisions on behalf of the company in matters that either affect their respective departments or the organization. It also allows for efficiency and enhances profitability in that decisions are made swiftly and corresponding action is taken. However in a decentralized structure , there is lack of goal congruency as employees are mainly concerned with issues that may affect their respective departments and neglect other isues that may affect the organization as whole. There is also duplication of responsibilities and the senior management might lose control over the employes if they are given the decision making power.
2. Discuss the different types of organizational structure highlighting the advantages and disadvantages of each type.
There are three types of organizational structures namely entrepreneurial,functional, divisional and matrix structure.
Entrepreneurial Structure This exist and is especially common in small businesses. There is only one owner and individuals report directly to the owner. The diagram below illustrates an entrepreneurial structure.
One of the many advantages of an entrepreneurial structure include the fact that there is room for quick decision making and flexibility if the organization changes its modus operandi. There is quick response to customers varying needs within the organization and employer - employee relationship is at its best. The employer is equally aware of all the matters directly affecting the employees and the organization.
However, there are limited prospects for career growth as all employees directly repot to the owner as illustrated in the diagram 1.1. The employees also lack room for personal improvement and growth in that roles and responsibilities are just carried out without the necessary qualifications for example the administration personnel may carry out marketing and recruitment activities without the necessary expertise, thus lack of professionalism or technocracy. It also limited in terms of diversification, in that they lack the necessary qualifications hence introducing a new product or service might prove difficult for the organization hence limits the growth of the organization.
Functional Structure
In this structure employees are grouped according to function or similar responsibilities Figure 1.2 below depicts a functional structure.
As highlighted in fig 1.2 . the CEO is the superior within the organization and oversees all departments. Thus, employees are placed according to expertise. This prevents duplication of roles within the organization. All employees are grouped according to their areas of knowledge and experience. It also allows for total commitment amongst the employees as they are able to perform tasks that best suit their respective departments.
However in functional structures there is poor communication across functions which might be the result of lack of interaction amongst employees as they work in different departments. There is also lack of goal congruency in that employees are mainly concerned about issues affecting their own departments. Lastly the employees in a functional organization there is no equal measurement of performance indicators. For example an administration or human resources department performance cannot be measured against the marketing or finance department.
Divisional Structure
It consists of teams or groups focusing on a certain product line or service. Its more of a functional structure but divisions are more independent and have specific focus unlike a functional structure where employees are just grouped according to responsibilities. A divisional structure is characterized according to product or geographic locations, and there are decision making powers at all stages.
It enhances management morale in that the managers are given the opportunity to make decisions according to the specific needs of their divisions. It also improves performance review techniques and setting up of key performance indicators across divisions thereby enhancing profitability and employee performance. A divisional structure also allows for specialization be it in terms of product being offered or customer needs or geographical requirements. All divisions are set up in such a way that they focus on specific individual needs or customer / geographical requirements.
However, there is possible lack of communication as employees from different geographic divisions might not share information easily. There is also duplication of roles and responsibilities which might reduce the organizations efficiency and profitability. In a divisional structure, there is possible competition within similar divisions. For example, two divisions might propose similar interests to prospective clients.
Matrix Structure
It is the combination of both the divisional and functional structures. Its quite common in project- based organizations in that projects and employees are set accordingly. It allows for effective communication and boosts team work in that individuals in similar departments work together and share knowledge in order to achieve the same objective. There is also flexibility amongst the employees, in that they can perform tasks as new teams are set up or dissolved as and when projects are taken up and completed.
However, a matrix structure is costly in that there are a large number of people in divisions/functions thus administrative costs tend to be higher as compared to other structures. It also leads to conflict or confusion in that there will be at least two superiors to which an employee reports to, sometimes commands can be issued from an immediate supervisor and an executive might issue a totally different directive. 3. Why is the knowledge of an organization’s structure important to a virtual administrator.
A virtual administrator should know the organization’s structure to work on his/her planning procedure in tasks execution as structures differ from one organization to another. It also allows for improved communication in and across departments and the administrator get to know the personnel they immediately report to. For example, in an entrepreneurial structure the administrator only interacts with the owner and sort out all correspondence between the owner and the employees whereas in a matrix structure they might not be any interactions with the owner.
A virtual administrator also has to have the knowledge of how each department function and thus work on the correspondence thereof. This improves performance in that tasks are executed efficiently and timeously. Lastly, it’s important for a virtual administrator to know the structure in order to avoid duplication of responsibilities and roles with other staff members.
