Which organisational structure is most complex

Explain the functional structure within the larger context of organizational structures in general. An organization can be arranged according to a variety of structures, which determine how the organization will operate and perform. In a functional structure, a common configuration, an organization is divided into smaller groups by areas of specialty such as IT, finance, operations, and marketing.

Communication generally occurs within each functional department and is transmitted across departments through the department heads. Functional structure at FedEx : This organizational chart shows a broad functional structure at FedEx. Each different functions e. Functional departments arguably permit greater operational efficiency because employees with shared skills and knowledge are grouped together by functions performed.

Each group of specialists can therefore operate independently with management acting as the point of cross-communication between functional areas. This arrangement allows for increased specialization.

A disadvantage of this structure is that the different functional groups may not communicate with one another, potentially decreasing flexibility and innovation. Functional structures may also be susceptible to tunnel vision, with each function perceiving the organization only from within the frame of its own operation. Recent trends that aim to combat these disadvantages include the use of teams that cross traditional departmental lines and the promotion of cross-functional communication.

Functional structures appear in a variety of organizations across many industries. They may be most effective within large corporations that produce relatively homogeneous goods. Smaller companies that require more adaptability and creativity may feel confined by the communicative and creative silos functional structures tend to produce. Describe the basic premise behind divisional structures within the general framework of organizational structure.

Organizations can be structured in various ways, with each structure determining the manner in which the organization operates and performs. A divisional organization groups each organizational function into a division. Department of Energy organization chart : The DOE organization chart shows a divisional structure with different divisions under each of three under-secretaries for energy.

Each of the three division is in charge of a different set of tasks: environmental responsibilities, nuclear-energy responsibilities, or research responsibilities. Each division within this structure can correspond to either products or geographies of the organization. Each division contains all the necessary resources and functions within it to support that particular product line or geography for example, its own finance, IT, and marketing departments.

Product and geographic divisional structures may be characterized as follows:. In this form, one parent company owns subsidiary companies, each of which uses its brand and name. The whole organization is ultimately controlled by central management; however, most decisions are left to autonomous divisions. This business structure is typically found in companies that operate worldwide—for example, Virgin Group is the parent company of Virgin Mobile and Virgin Records.

As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. The divisional structure can be useful because it affords the company greater operational flexibility. In addition, the failure of one division does not directly threaten the other divisions. In the multidivisional structure, subsidiaries benefit from the use of the brand and capital of the parent company.

Some disadvantages of this structure include operational inefficiencies from separating specialized functions—for example, finance personnel in one division do not communicate with those in another division.

Disadvantages of the multidivisional structure can include increased accounting and tax implications. The matrix structure is a type of organizational structure in which individuals are grouped via two operational frames. Illustrate the way two different operational perspectives can be crossed in a matrix structure to organize a company. Organizations can be structured in various ways, and the structure of an organization determines how it operates and performs.

The matrix structure is a type of organizational structure in which individuals are grouped by two different operational perspectives simultaneously; this structure has both advantages and disadvantages but is generally best employed by companies large enough to justify the increased complexity.

Matrix organizational structure : In a matrix structure, the organization is grouped by both product and function. Product lines are managed horizontally and functions are managed vertically. This means that each function—e. In matrix management, the organization is grouped by any two perspectives the company deems most appropriate.

Common organizational perspectives include function and product, function and region, or region and product. In an organization grouped by function and product, for example, each product line will have management that corresponds to each function. This example illustrates how inherently complex matrix structures are in comparison to other, more linear structures.

Matrix structures also allow for specialization that can both increase depth of knowledge and assign individuals according to project needs. A disadvantage of the matrix structure is the increased complexity in the chain of command when employees are assigned to both functional and project managers.

This increase in complexity can result in a higher manager-to-worker ratio, which can in turn increase costs or lead to conflicting employee loyalties. It can also create a gridlock in decision making if a manager on one end of the matrix disagrees with another manager.

Blurred authority in a matrix structure can result in reduced agility in decision making and conflict resolution. Matrix structures should generally only be used when the operational complexity of the organization demands it. A company that operates in various regions with various products may require interaction between product development teams and geographic marketing specialists—suggesting a matrix may be applicable. Generally speaking, larger companies with a need for a great deal of cross-departmental communication benefit most from this model.

The team structure is a newer, less hierarchical organizational structure in which individuals are grouped into teams. Classify team-based structures within the larger context of the most common organizational structures. It might require significant analysis, for instance, to determine how a complex organization can rearrange itself without jeopardizing vital processes.

This enables a complex corporate structure to be cost-effective. In contrast, a simpler organization might not have many employees, so some will have to multi-task. As a result, a simpler corporate structure might not be able to achieve the same economies of scale as a complex but well-functioning corporate structure. Decision-making in a complex corporate structure might take longer than it would in a simpler organization.

If employees were empowered to make their own decisions, for instance, decisions would be more rapid and fewer opportunities would be missed. Stan Mack is a business writer specializing in finance, business ethics and human resources. Mack studied philosophy and economics at the University of Memphis. The matrix structure requires a great deal of planning but can allow for the creation of the best possible teams to tackle the biggest challenges. The flat structure dispenses with the usual hierarchy of a functional structure, decentralizing management and doing away with the need for middle manager bosses.

Employees essentially act as their own boss, giving them the ability to communicate directly with peers on ideas and projects. A flat structure is common in incubators and startups where the focus is on product and services design, not production or top-down management structures. All four types of organizational structures in business can work well in the right situations. While most companies will choose from the functional or divisional approaches, a flat approach is becoming increasingly popular with modern companies.

All Rights Reserved. Privacy Policy Terms and Conditions. All rights reserved. Search for:. Picking The Right Organizational Structure While there are variations, most companies are created based on one of the following four organizational structures.

Functional A functional structure is the most traditional approach.