Organizational Structures

Organizational Structures

            The definition of organizational structure is the task of reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve and organization’s goals formally. Organizational structure is the way an organization arranges their employees and jobs so that work can be done properly and all goals can be met. Formal structure may not always be necessary under certain circumstances. For instance, when the work group is small and frequently has face-to-face communication with their customers. In a case such as this, formal structure is not needed. In larger organization, there will come a time where decisions have to me made about the various tasks that need to be handled. In these situations is where organizational structure is determined. The best organizational structure for any organization depends on many factors including the work it does; its size in terms of employees, revenue, and the geographic dispersion of its facilities; and the range of its business (Distelzweig, 2010). Different organizational functions of each organization like marketing, finance, operations, human resources, etc. impacts the organizational structure.

Hierarchical

Hierarchical organization is as a common pyramid-like organization where one person is in charge of a functional area (finance, marketing, human resources) with one or more subordinates handling the sub-functions.   In a hierarchical organization (whether business, military, political, or religious) higher levels imply greater superiority and domination than the lower ones, and gain the chain of command extends straight from the top to the bottom. (BusinessDictionary.com)  an organized setting as described would hold true in most business and/or corporate settings.

 A common structure example would be in the fast food restaurant business.  The management circle of a store would be:  General manager, who is in charge of the whole store; Co-Manager, who is second in command of the General Manager, and will typically exercises some of the same strengths that a General manager would have, but, would not always have the final say in a major decision concerning the store; and finally, the  Assistant Manager; who would be in charge in some of the day to day actions, working the employees and shift managers, not fully involved in the schedule making, nor are they typically involved in major decisions involving the financial structure of the business.  The structure outside of the business outside of the restaurant would be the corporate offices.  The corporate office is the central mainframe delegating how their business should function within the laws of their organization.  Central office will decipher the marketing campaign, the type of IT structure and all other areas that run and make it a successful business.  In a large setting such as the restraint industry with many locations, a central office outside of the actual restaurant is important for overseeing the comings and goings of any and all of the restaurants within their franchise.  An organized business model such as this one is important and very much necessary for consistent success.   The central office can control the background of the business, and the front line management can concentrate on running the restaurant and its day to day happenings.

Matrix

Scottsdale Insurance Company uses two organizational structures depending on the type of work performed and the span of impact of essential business decisions.  One CEO and multiple vice presidents represent each area of the company.  HR, Claims, Underwriting, Finance, and Operations have leaders who also have associate vice presidents to assist with running each division.  Although similar to the hierarchical structure with primarily vertical management, the matrix structure is also heavily used to implement large projects and when changes affect more than one department.  “A matrix organization is a hybrid form of organization in which functional and divisional forms overlap” (Bateman & Snell, 2009, p. 306).  Because many projects require representatives from every division and level of the organization, project managers may not always be the functional manager of the employee.

Projects that use less than 100% of an employee’s time create the need for a matrix structure.  The employee will report to his or her functional manager (the manager he or she reports to on a permanent basis in his or her specific department) and the project manager (the manager responsible for the planning, organizing, and implementation of the project deliverables).  The need for rapid change outside of project work also dictates that the matrix structure be used as decisions made in one division can affect other areas of the company.  For example, a mid-level manager in Operations cannot decide to change a process that impacts Underwriting without input from the Underwriting Directors or Vice President. 

The company is primarily decentralized so important decisions can be made quickly by both employees and managers at all levels and across the organization.  As a result, change can be implemented quickly to adjust to the changing market and collaboration is increased.  Scottsdale Insurance Company has increased its opportunity for success by empowering its employees to propose change based on business knowledge, alleviating a large amount of the burden on upper management who should focus more time on strategic planning.  Decisions carry meaning to individual employees and managers because each has had a hand in proposing changes.  Compliance with said changes improves, as does the effectiveness.

Traditional

            Citi Trends retail store is a growing company and at the present time it can be described mainly as a functional organization. Focusing on the horizontal structure of the organization, it is broken down into different departments, also known as departmentalization; “subdividing an organization into smaller subunits” (Bateman & Snell, 2009, p. 302). Each department within the organization handle separate task that are different from one another and specialize in their area of the business. The organization is traditional in the manner that decisions are made from a higher level within the company and passed down along the ranks. As a traditional organization they “have clearly defined line of authority for all levels of management” (acmm.org).
The different departments within the company may consist of the purchasing, marketing, accounting, and human resource departments. Each department focuses on their own task, whose skills only pertain to their specific department or job; this type of function is called functional differentiation.  Within each department there is span of control in which the operational level workers will report to their middle-level managers. Each department does not correspond with one another and the decisions that are made in the departments do not effect the other departments.

The Organization follows the centralized organization functions in which “ high-level executives make most decisions and pass them down to lower levels for implementation” Bateman & Snell, 2009, p. 302). This in a way hinders the company because lower level managers cannot make immediate decisions that they see fit for their store or department on their own, they have to follow the chain of command and get approval before they can move forward if at all with their idea. The lower level managers and operational employees have direct contact with the customers and inventory of the store, therefore they have a better idea than the top-level managers does of what is needed. Unfortunately being a traditional organization in this manner does not provide the organization with much benefit when it comes to customer service or immediate decision making needs. The top-level managers are benefited because they have complete control over all of the decisions that are made within the company, so they can make the decisions based on what they think is the best for the company as a whole.

            Organizational structure is the way that organizations and companies arrange their workers and jobs so that goals can be met and work can be preformed properly. There are three main types of organizational structures. The first is hierarchical organization which is a common pyramid-like organization where one person is in charge of a functional area (finance, marketing, human resources) with one or more subordinates handling the sub-functions. The second is the matrix structure which is also heavily used to implement large projects and when changes affect more than one department. The third and final organizational structure is traditional in which the manner that decisions are made from a higher level within the company and passed down along the ranks. All of these different structures play a vital role in how a company operates and performs on a daily basis. These organizational structures are set up in a way so that goals can be met and work can be preformed properly.

References

Bateman, T.S., & Snell, S.A. (2007). Management: the new competitive landscape (7th ed.). New York, NY: McGraw-Hill/Irwin.
Organizational structure, (2008), retrieved on April 1, 2010 from,
                        http://acmm.org/structure.php
Definition of Hierarchical organization, Retrieved April 2, 2010, from Business Dictionary.com.
http://www.businessdictionary.com/definition/hierarchical-organization.html
Distelzweig, H. (2010). Organizational Structure. Retrieved April 03, 2010 from Reference for Business: http://www.referenceforbusiness.com/management/ob-or/ organizational-structure.html.

Mandy Brister is an avid fan of the automotive industry. She is a junior in college and is studying for her degree in business administration. Check out her site Four Wheel Drive Lift Kits to see all of her Pro Comp Lift Kits.