Organization Structure
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Organization structure is defined as the way that an organization arranges its employees and management so that efficient work can be performed and it can meet its targeted goals.2 When an organization is small, a sole proprietorship or partnership where face-to-face communication is frequent, formal structure may not be necessary. In a larger organization such as a corporation or limited liability company, a more defined structure must be utilized, as decisions have to be made about the delegation of various tasks. As a result, management procedures and structure are established to assign responsibilities for essential functions. These decisions and procedures determine the organizational structure within the organization. There are several organizational structures that can be implemented by organizations. These organization structures are classified in two different categories: traditional and contemporary.
The following sections will explain these organizational structures and provide a look into their advantages and disadvantages. The first section will address traditional organization structure along with the advantages and disadvantages. The second section will address contemporary organizational structure along with the advantages and disadvantages. The third section will compare and contrast the traditional and contemporary organization structures. Then concluded by addressing emerging and potential future organization structures that managers might need to handle in the future.
Traditional Structure
At the beginning of the twentieth century in the United States most organizations in the industry were forced to take on the idea of mass production, or producing services or products are a more rapid rate and at a lower price. With this expansion in the U.S industry, there were new opportunities for behavioral scientists to conduct research into the behavior of people in organizations and the behavior of different types of organizations.
During this time, there were three predominate behavioral scientist who had developed principles on how to efficiently and productively structure organizations; the three behavioral scientist where Fredrick Taylor, Henri Fayol and Max Weber. Max Weber developed the theory of bureaucracy or where there is a set hierarchy and the power is entitled to the positions opposing to the individuals acting as them. Fredrick Taylor developed the idea of scientific management or the “one best way” to complete a given task using studies of time and motion. Henri Fayol developed the theory that there should be a clear chain of command and authority; discipline and task specialization would provide the best conditions. All three were influential in what became known as the traditional organization structure.
The traditional or classic organization structure included the following ideas: specialized individual positions and jobs with detailed specific required qualifications to fill the position, a formal hierarchy of all positions with a clear “chain of command” from top to bottom, a set of formal rules and standard operating procedures in which all must follow, set departmental boundaries between their environment and organization, and standardized training.1
The traditional organization structure has many advantages. Among them were predictability and reliability, impartiality, expertise and clear lines of control. With a strong emphasis on the rules and procedures the structure ensured that most of the time the outcome of products and services would be predictable and reliable. Also as a result of the strong emphasis on the rules came the ability to be impartial; the outcomes of all processes were without bias. By specializing individual positions, individuals and departments were allowed to grow their knowledge in certain aspects thusly becoming experts at what they did. With valued workers the use of clear lines of control made decisions along with rights based on authority easy. The information would flow from the bottom up and decisions would flow from the top down which ensured assurance between all departments.
The traditional organization structure also has many disadvantages. As the industry and working environment evolved, so did the need for innovation and cross-departmental cooperation. Due to the fact that the traditional organization structure was dependent on a hierarchy of command and standardized on rules, this was hard to achieve. Operations and services had become much too predictable and didnt leave any room for new ways; this was a liability to many organizations, as they couldnt create different products. Cross-departmental relationships were non-existent as each department had to work through the hierarchy to communicate its objectives. These reason lead organizations to look towards new methods and organization structures to reach their goals.
Contemporary Structures
In the late nineteen hundreds organizations had to deal with many new changes within environment and industry. These changes forced organizations to take a look at the way they were managed. They found that it had become increasingly hard to have cross-departmental cooperation due to the specializations and internal “walls” between departments. This led to the formation of more innovated structures where there was less standardizations, cross-departmental cooperation and flatter hierarchies. These new structures are grouped into what we call the contemporary organization structures.
Team Approach
The team approach was a new method in which organizations were trying to brake from the inefficiency of the vertical “chain of command.” It basic idea was to find ways to delegate authority and push responsibility to lower levels rather than keeping responsibility at the top of the hierarchy. By doing so, decision-making was facilitated and organizations became more flexible and responsive to their global environments.1
The team approach has many advantages over the traditional structure. Since authority and responsibility was delegate to lower levels, decision-making became much quicker and required less managers. Team members became much more motivated and participated more often. Cross departmental cooperation had increased as department barriers were removed. It also allowed the organization to more quickly adapt to customer requests and environmental changes.
The team approach has disadvantages as well. A large amount of time and resources are spent on meeting to coordinate goals rather than on the goals themselves and productivity.2 Some members might be part of one or more teams and face conflict between timing