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Types of Organizational Designs
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This section
is presented by:
Adam Garcia |
Organizational designs fall
into two categories, traditional and contemporary. Traditional designs
include simple structure, functional structure, and divisional structure.
Contemporary designs would include team structure, matrix structure,
project structure, boundaryless organization, and the learning organization.
I am going to define and discuss each design in order to give an understanding
of the organizational design concept.
I. Traditional Designs
1. Simple Structure
A simple structure is defined as a design with low departmentalization,
wide spans of control, centralized authority, and little formalization.
This type of design is very common in small start up businesses. For
example in a business with few employees the owner tends to be the
manager and controls all of the functions of the business. Often employees
work in all parts of the business and don’t just focus on one
job creating little if any departmentalization. In this type of design
there are usually no standardized policies and procedures. When the
company begins to expand then the structure tends to become more complex
and grows out of the simple structure.
2. Functional Structure
A functional structure is defined as a design that groups similar
or related occupational specialties together. It is the functional
approach to departmentalization applied to the entire organization.
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 Revlon,
Inc. is organized around the functions of operations, finance,
human resources, and product research and development. Visit
Revlon, Inc at www.revlon.com |
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3. Divisional Structure
A divisional structure is made up of separate, semi-autonomous units
or divisions. Within one corporation there may be many different divisions
and each division has its own goals to accomplish. A manager oversees
their division and is completely responsible for the success or failure
of the division. This gets managers to focus more on results knowing
that they will be held accountable for them.
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 Wal-Mart
Stores, Inc. is organized by its divisions such as Wal-Mart
Realty, Wal-Mart International, Wal-Mart Specialty Stores, Sam's
Clubs, and Supercenters. Visit War-Mart Inc. at www.walmart.com |
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II. Contemporary Designs
1. Team Structure
A team structure is a design in which an organization is made up of
teams, and each team works towards a common goal. Since the organization
is made up of groups to perform the functions of the company, teams
must perform well because they are held accountable for their performance.
In a team structured organization there is no hierarchy or chain of
command. Therefore, teams can work the way they want to, and figure
out the most effective and efficient way to perform their tasks. Teams
are given the power to be as innovative as they want. Some teams may
have a group leader who is in charge of the group.
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 Whole
Foods Market, Inc. is structured entirely around teams. Each
store composed of an average of 10 self-managed teams with a
designated team leader, and the team leaders in each store are
a team -- called store team. Visit Whole Foods Market, Inc at
www.wholefoodsmarket.com |
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2. Matrix Structure
A matrix structure is one that assigns specialists from different
functional departments to work on one or more projects. In an organization
there may be different projects going on at once. Each specific
project is assigned a project manager and he has the duty of allocating
all the resources needed to accomplish the project. In a matrix
structure those resources include the different functions of the
company such as operations, accounting, sales, marketing, engineering,
and human resources. Basically the project manager has to gather
specialists from each function in order to work on a project, and
complete it successfully. In this structure there are two managers,
the project manager and the department or functional manager.
3. Project Structure
A project structure is an organizational structure in which employees
continuously work on projects. This is like the matrix structure;
however when the project ends the employees don’t go back
their departments. They continuously work on projects in a team
like structure. Each team has the necessary employees to successfully
complete the project. Each employee brings his or her specialized
skill to the team. Once the project is finished then the team moves
on to the next project.
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 Previously
known as Oticon Holding A/S, William Demant Holding A/S has
no organizational departments or employee job titles. All work
activities are project based, and these project teams form,
disband, and form again as the work requires. Once the project
is completed, employees move on to the next one. Visit William
Demant Holding A/S at
www.demant.com |
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4. Autonomous Internal Units
Some large organizations have adopted this type of structure. That
is, the organization is comprised of many independent decentralized
business units, each with its own products, clients, competitors,
and profit goals. There is no centralized control or resource allocation.
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 Asea
Brown Boveri (ABB) is a global organization. It is actually
about 1,000 companies operating in more than 140 countries around
the globe. The whole operation is managed by just eight top
executives at headquarters in Zurich, Switzerland, but each
individual company has its own products, resources, and so on.
Visit Asea Brown Boveri at
www.abb.com |
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5. Boudaryless Organization
A boundaryless organization is one in which its design is not defined
by, or limited to, the horizontal, vertical, or external boundaries
imposed by a predefined structure. In other words it is an unstructured
design. This structure is much more flexible because there is no boundaries
to deal with such as chain of command, departmentalization, and organizational
hierarchy. Instead of having departments, companies have used the
team approach. In order to eliminate boundaries managers may use virtual,
modular, or network organizational structures. In a virtual organization
work is outsourced when necessary. There are a small number of permanent
employees, however specialists are hired when a situation arises.
Examples of this would be subcontractors or freelancers. A modular
organization is one in which manufacturing is the business. This type
of organization has work done outside of the company from different
suppliers. Each supplier produces a specific piece of the final product.
When all the pieces are done, the organization then assembles the
final product. A network organization is one in which companies outsource
their major business functions in order to focus more on what they
are in business to do.
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 ChevronTexaco
now sends most of their accounting to the Philippines in order
to cut costs. They also send all their computer programming
to India . Visit ChevronTexaco at
www.chevrontexaco.com |
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6. Learning Organization
A learning organization is defined as an organization that has developed
the capacity to continuously learn, adapt, and change. In order to
have a learning organization a company must have very knowledgeable
employees who are able to share their knowledge with others and be
able to apply it in a work environment. The learning organization
must also have a strong organizational culture where all employees
have a common goal and are willing to work together through sharing
knowledge and information. A learning organization must have a team
design and great leadership. Learning organizations that are innovative
and knowledgeable create leverage over competitors.
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