How the various organization structures work.
Pre-bureaucratic structures are simple. They are sometimes referred to as flat or horizontal organizations. They work well for entrepreneurs and small businesses.
They are referred to as horizontal, because there are no branches. Employees report to a single owner or manager.
There are no specialized tasks among the employees. Everyone takes part in all of the business activities. There are no middle managers.
According to business management theory, there comes a time when flat organizations are no longer effective. Sticking with the structure can impact productivity, efficiency and customer service.
At this point, small companies that wish to continue to grow may implement a more bureaucratic system. However, there has been some return to the flatter organizational structures as companies “downsize”.
Types of bureaucratic organizations include production, procedural, craft and coping organizations. Those four categories are used primarily to describe governmental bureaucracies. They have to do with whether or not the output and outcome of the agencies or employees are observable and measurable.
In the business world, we usually look at functional and divisional organizational structures. A functional structure is one in which the employees are divided according to the tasks they perform.
There might be an engineering department, an accounting department and a product development department, among others. The disadvantages may be numerous.
The employees in a specific department typically report to a supervisor or manager. Their supervisor might report to another manager or directly to the CEO if it is a corporate structure. There may be little communication between the different departments, which can cause employee dissatisfaction.
The advantages of the functional structure have to do with efficiency. The engineers don’t need to know anything about accounting. The employees can focus on their areas of expertise.
In the divisional or product structure, the employees are divided according to the products they are involved with or the location of their branches. Within each division, there might be a sales staff, an accounting staff and a management staff. Each division head would report to main or central office.
Divisional and functional organizational structures are often necessary for large world-wide corporations. Although as technology advances, post-bureaucratic structures have often replaced them and may continue to do so.
The matrix is one of the post-bureaucratic business models. Employees are grouped by both function and products. For example, if three products were produced, there would be three different sales, accounting and customer service departments, as well as many others.
The virtual organization is one of the newest types of organizational structure. It relies on the internet to allow for global operations with a minimum of employees. It may be the future for all businesses.
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