The right organizational structure is a unique chance to succeed

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

When a firm is small, any issues related to subordination and separation of powers are easily resolved. But as soon as she grows up a little, she inevitably begins to experience the difficulties of a “transitional” age: some people have too many powers, while others cannot withstand the burden of duties assigned to them, others simply shirk work, etc. This situation, I think, is familiar to many. In order to quickly survive this period, the manager needs to think carefully about what the company should have the final organizational structure. Let's take a quick look at the advantages and disadvantages of the main types.

Linear-functional organizational structure

Systems that use this type of organization of interaction are built on the principles of a strict hierarchy. Such a scheme has proven itself in small enterprises and is based on authority and high professionalism.manager, who, as a rule, is also the owner of such a company. The essence of this structure is that employees report to their immediate superiors, while individual verticals can perform special functions (OTC, accounting, security).

The advantages of such an organization of labor are that everything is set up to obtain the result of labor, there is good control and discipline, and the products produced are of consistently the same quality. The main disadvantages that this organizational structure has are the large losses of time for making important decisions, the distortion and loss of information when it is transferred through the hierarchy, as well as the lack of flexibility. Since market conditions are changing quite quickly these days, this structure is outdated and only suitable for small firms or monopolists like Gazprom.

Divisional organizational structure

This is a form of organization of work that involves the functioning of relatively independent units. These divisions are managed from headquarters. The principle of creating divisions can be based on the geographical location of fixed assets, product range, orientation towards corporate and mass customers, etc. This type of business building has become quite widespread in our country. Its main advantages are the excellent quality of customer service and flexibility. But the disadvantages include the complexity of controlling branches (divisions) andhigh management costs due to the emergence of many directors.

Project organizational structure

This is the youngest and most progressive type of organization of interaction between employees. Companies in which this structure was implemented appeared in the second half of the twentieth century. At that time, market instability forced many owners to expand their product range in order to be able to take advantage of changing demand and the current situation in time. Such a structure involves the organization of a unit for each new major client. Such a department has its own project director and all the necessary links at different levels of subordination. Moreover, the same employees can participate in several projects at once. The advantage of such an organization lies in maximum flexibility, and the main disadvantages are the high costs of maintaining managers.

Matrix organizational structure

This is a kind of symbiosis of linear-functional management with project management. Despite the fact that this term has now become very fashionable, it is not so easy to implement the matrix approach in practice. However, General Electric, which had been perfecting its management system for almost 12 years, eventually decided that this was the best organizational structure for it. The success story of this and many other firms that use the matrix approach haunts many executives, which is why it is so popular now.

The essence of this structure is that management occurs both vertically andas well as horizontally. That is, here, instead of one, there are several equal centers, in the role of which project managers usually act. For example, all marketers working in each of the verticals are part of the marketing department. The matrix approach is good because it eliminates the shortcomings of the linear structure - the distortion (loss) of information and lack of flexibility. However, there is a high risk of a conflict of interest in its implementation. When the principle of unity of command is violated, it is sometimes difficult to figure out whose task to do first and what to do if several tasks contradict each other.

Conclusion

As you can see, each type of management is good in its own way. There is no ideal universal option, and when choosing an organizational structure, one must be guided by those factors that directly affect the activities of each particular enterprise.