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Essay: What are the various forms of organizational structures? How do they help successful organizations?

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  • Published: 3 October 2015*
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Formal organisational structure clearly spells out the job to be performed by each individual, the authority, responsibility assigned to every individual, the superior- subordinate relationship and the designation of every individual in the organisation. This structure is created intentionally by the managers for achievement of organisational goal.
Formal organisational structures are categorised as:
Line organisational structure
Staff or functional authority organisational structure
Line and staff organisational structure
Committee organisational structure
Divisional organisational structure
Project organisational structure
Matrix organisational structure
Bureaucratic Structure
Hybrid organisational structure
Advantages of Formal Organisation
Results in systematic and smooth functioning of an organisation
The structure is established to achieve organisational objectives
Work is systematically divided among various departments and employees to avoid overlapping
Coordinates the activities of various departments
The structure defines superior subordinate relationship, i.e., who reports to whom.
Gives more importance to work than interpersonal relations.
The Informal Organisation
An informal organisation is the set of evolving relationships and patterns of human interaction within an organisation which are not officially presented. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organisational members at every level. Since managers cannot avoid these informal relationships, they must be trained to cope with it
Advantages of having an Informal Organisational Structure
Helps in accomplishing the work faster
Helps in removing any kind of weakness in the formal structure
Extends the effective span of control
Compensation for violations of formal organisational principles
Provides an additional channel of communication
Provides emotional support for employees
Encourages better management
Line Structure
This is the kind of structure that has a specific line of command. The approvals and orders in this kind of structure come from top to bottom in a line. Hence it is known as a line structure. This kind of structure is suitable for smaller organizations like small accounting firms and law offices. This structure allows easy decision-making and is informal in nature.
It simplifies and clarifies authority, responsibility and accountability relationships
It is simple to understand and promotes fast decision making
Line and Staff Structure
Line and staff structure combines the line structure where information and approvals come from top to bottom, with staff departments for support and specialization. Line and staff organizational structures are more centralized. Managers of line and staff have authority over their subordinates, but staff managers have no authority over line managers and their subordinates. The decision-making process becomes slower in this type of organizational structure)
Use of expertise of staff specialists.
Span of control can be increased
Relieves line authorities of routine and specialized decisions.
No need for all round executives.
Staff or functional authority organisational structure
An organisation where staff departments have authority over line personnel in narrow areas of specialization is known as functional authority organisation.
The specific function is given to another manager. So, the line manager can concentrate on his regular job.
The specific function is performed by an expert. So that will be done efficiently.
The service of the staff managers will be utilised fully for the benefit of the organisation.
It is suitable for large organisations.
The authority and responsibility is well-defined
Committee organisational structure
The committee organizational structure is not like line or functional organization, but is similar to staff organization. Its decisions are implemented, whereas staff decisions are not necessarily implemented. It is a formal part of the organizational structure wherein the members are specifically mentioned.
Committee decisions are better than individual decisions
Better interaction between committee members leads to better co-ordination of activities
Committee members can be motivated to participate in group decision making
Group discussion may lead to creative thinking
Project organisational structure
A project organisation is a temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. The project team focuses all its energies, resources and results on the assigned project.
Directly reporting to the project manager indicates a clear line of authority which reduces conflict and makes decision making faster and more flexible.
Due to a single reporting system, there are shorter lines of communication which creates strong and effective communication within the project management team.
Due to a single authority, less time is consumed in communication, and response to stakeholders’ concerns is fast.
Due to a sense of urgency, milestones, good communication, and cooperation, the learning curve is faster for any new member.
Team members become versatile and flexible due to experience in different kinds of projects.
Functional Organizational Structure
This kind of organizational structure classifies people according to the function they perform in their professional life or according to the functions performed by them in the organization. The organization chart for a functional organization consists of a Vice President, a Sales Department, a Customer Service Department, an Engineering or Production Department, an Accounting Department, an Administration Department, etc.
Benefits of specialisation available
Coordination is established
Managerial efficiency is increased
Training is facilitated
Minimal duplication of efforts
Equal weight age to all functions
Matrix Organisational Structure
It is a permanent organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation.
Decentralised decision making
Strong product/project co-ordination.
Improved environmental monitoring.
Fast response to change.
Flexible use of resources.
Efficient use of support systems.
Divisional Organisational Structure
These are the kinds of structures that are based on different divisions in the organization.
In this type of structure, the organisation can have different basis on which departments are formed. They are:
Geographic territory,
Combination approach
It helps in the development of varied skills in a divisional head
All the activities of each division are carried out independently. Hence, the divisional results (profit/loss) can be assessed easily.
Decisions are quick and effective
Easy to expand the concern
Bureaucratic Structure
This kind of structure can be seen in big organizations where tasks, processes and procedures are all standardized. This type of structure is suitable for huge enterprises that involve complex operations and require smooth administration of the same. It is highly recommended for industries like food, beverage, etc. as they have to adhere to stringent rules and regulations. While the hierarchical structure of each department delivers the orders for the employees in that department, each department retains its own separate identity while working within similar sets of rules
Encourages specialization of tasks
Efficient decision-making
Standardized operating procedures
Usage of best practices
Hybrid organisational structure
A hybrid organizational structure is an approach to designing the internal operating structure of a company or other entity in a manner that makes use of several different organizational patterns, rather than relying on one particular model.
Alignment of corporate and divisional goals.
Functional expertise and efficiency.
Adaptability and flexibility in divisions.

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