Organizational structures have changed over the years as people’s needs at work have developed and changed. Organizational structure is how a company aligns itself so that it can be at optimum performance. The structure that a company chooses to follow affects their success in carrying out strategy and objectives. Organizational structure is usually depicted through some form of organizational chart. (Gulati et al., 2017; Understanding Organizational Structures, 2021)
There are various types of organizational structures that a company can follow which cater to the needs of the organization. Several factors must be considered when choosing which type of structure works best for your company such as: revenues, number of employees, how many different products the company has, types of customers you cater to, and your geographical spread. Smaller companies tend to have a more informal structure where large companies are more formal and bureaucratic. The basic organizational structure can be divided into functional structure, divisional structure, and matrix structure. (Gulati et al., 2017; Woodruff, 2018)
In general, firms begin with a functional structure which is where a firm divides people into teams based on a certain function that needs to be performed, i.e. sales, accounting, marketing, etc. This works very well for small businesses or for businesses with a limited number of products or services. This type of structure supports an easy flow of communication and a straightforward way of management and supervision. If a person is looking for a stable, less complex environment to work in, a functional structure would work great for them. However, a big issue with this type of structure is that each functional group can become isolated from other groups which can cause coordination problems in the firm. (Gulati et al., 2017)
As firms grow and expand in their complexity, they may move into more of a divisional organizational structure. Instead of dividing people into groups as in a functional structure, this groups functions into separate divisions. A company would organize activities into geographical, products, markets or service groups. An example of this would be a company would have one department handle sales in the United State but a different department handle the sales for Europe. Each division runs as its own self-contained business that is monitored by its headquarters. An advantage of this type of organizational group is that accountability is clear. Everyone knows their responsibilities and is responsible for managing their division’s activities. A downfall of this type of structure is that it is expensive. The more divisions you have the more employees you will need to run that division. This type of structure is best suited for someone who thrives in an atmosphere with high degrees of uncertainty and where decisions need to be made quickly. (Gulati et al., 2017; Woodruff, 2018)
The third type of organizational structure is the matrix which is a blend of the functional and divisional structures. This is for organizations that face multiple pressures such as, creating and launching new products or initiating multiple marketing campaigns simultaneously. In the matrix form, a company decides to have multiple overlapping units running at the same time. As a result, employees often work for more than one manager at the same time. An example of this would be a research and development team that works on multiple projects so they would report to the leader in charge of each separate project. When matrix structures are created they have a clear objective. They are to introduce a new product or develop a new marketing campaign. Once the objectives are complete, the matrix can be dissolved. The major disadvantage of the matrix structure is the complexity. When employees have multiple managers to report to, they can easily be told conflicting directives. To be successful in this type of system, one must be good at resolving conflicts and willing to question uncertainties in their job. You must be able to compromise and negotiate. (Gulati et al., 2017; Woodruff, 2018)
I tend to be opposite or the kind of person that thrives in both opposite ends of the spectrum. I believe I would thrive in a functional organizational system. I do not need, nor do I desire to work in a firm where you don’t really have a chance to show your creativity. I enjoy having an easy flow of communication and tend to work well in a spot where I know what I am doing and function well in that spot. However, I believe the silo effect would be hard for me after a while. I enjoy knowing what is happening in the whole company, not just in one division. I also enjoy changing direction and trying new things and getting new projects. I know I do well with resolving conflict and have always been willing to question any uncertainty I might have about my job. I would succeed in a matrix structure as well.
I believe the hardest system for me to work in would be the divisional system. I feel this system stops employees from knowing what is happening in the whole company. Even though I would be part of a team in my own division, I feel like I would always want to know what was happening in other teams and how they were accomplishing objectives.
I would do well in a generalist career path because I like to be creative. I like to learn new skills and how to do new things. In a generalist career path I would have the opportunity to do this and to grow in my ability to multitask. I easily adapt to change and I believe I would thrive in cross-functional teams. (Gulati et al., 2017)
Gulati, R., Mayo, A., & Nohria, N. (2017). MindTap – Cengage Learning. Cengage.Com. https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=557615113112872025758405199&eISBN=9781305643673&nbId=2485825&snapshotId=2485825&dockAppUid=16&
Understanding Organizational Structures. (2021, August 31). SHRM. https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/understandingorganizationalstructures.aspx
Woodruff, J. (2018, December 14). Describe Each of the Three Major Types of Organizational Structure. Small Business – Chron.Com. https://smallbusiness.chron.com/describe-three-major-types-organizational-structure-10765.html