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Lecture notes study book Reinventing Organizations of Frederic Laloux (Organization) - ISBN: 9782960133509 (Organization)
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LECTURE 5An organizational structure defines how activities such as task allocation, coordination and
supervision are directed towards the achievement of organizational aims.
Early Organizational 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.
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.
Modern Organization 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.
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.
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.
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.
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.
Five Approaches to Organizational Design
Managers must make choices about how to group people together to perform their work. Five
common approaches — functional, divisional, matrix, team, and networking—help managers
determine departmental groupings (grouping of positions into departments). The five structures
are basic organizational structures, which are then adapted to an organization's needs. All five
approaches combine varying elements of mechanistic and organic structures. For example, the
organizational design trend today incorporates a minimum of bureaucratic features and displays
more features of the organic design with a decentralized authority structure, fewer rules and
procedures, and so on.
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