Common organizational Designs
There are three common organizational designs- Simple structure, bureaucracy and the matrix structure.
- Simple Structure:- Simple structure is characterized by a low degree of departmentalization, wide span of control, authority centralized in a single person and little formalization. The simple structure is a “felt ” organization, it usually has only two or three vertical levels, a lower body of employees and one individual in whom the decision making authority is centralized. The simple structure is most widely practiced in small businesses in which the manager and the owner are one and the same. The strength of the simple structure less in its simplicity. It’s fast flexible and inexpensive to maintain and accountability is dear.
- Bureaucracy:- The key concept that underlies all bureaucracy is standardization. It is a structure with highly routine operating tasks achieved through specialization very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow span of control and decision making the chain of command.The primary strength of bureaucracy lies in its ability to perform standardized activities in a highly efficient manner. Putting like specialties together in functional departments results in economics of scale, minimum duplications of personal and equipment. Furthermore bureaucracy gives opportunity to less talented and hence less costly middle and lower level managers. The pervasiveness of rules and regulations substitutes for managerial discretion. Standardized operations, coupled with high formalization allow decision making to be centralized. There is little need therefore for innovative and experienced decision makers below the level of senior executives.
- Matrix Structure:- Matrix structure creates dual line of authority and combines functional and product departmentalization .The strength of functional departmentalization lies in putting like specialists together, which minimizes the number necessary while allowing the pooling and sharing of specialized resources across products. Its major disadvantage is the difficulty of coordinating the tasks of diverse functional specialists so that their activities are completed on time and within budget. Product departmentation, on the other hand, has exactly the opposite benefits and disadvantages. It facilitates coordination among specialties to achieve on-time completion and meet budgets targets. Further more, it provides clear responsibility for all activities related to a product, but with duplication of activities and costs. The matrix attempts to gain the strength of each, while avoiding their weaknesses. The most obvious structural characteristics of the matrix is that it breaks the unity of command concept. Employees in the matrix have two bosses-their functional department managers and their product managers. Therefore, the matrix has a dual chain of command.The strength of the matrix lies in its ability to facilitate coordination when the organization has a multiplicity of complex and interdependent activities. As an organization gets larger, its information processing capacity can become overloaded. In a bureaucracy, complexity results in increased formularization. The direct and frequent contact between different specialists in the matrix can make for better communication and more quickly reaches the people who need to take account of it.