Exploring the Various Types of Organizational Design

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Types of Organizational Design

Organizational designs fall into two categories, traditional and contemporary, which are explained below

Types of Organizational Design

1) Traditional Designs

Traditional designs include:

i) Simple Structure: It 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 do not 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.

(ii) Functional Structure: It 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.

iii) Divisional Structure: It is made up of separate, semi-autonomous 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.

2) Contemporary Designs

Contemporary designs include:

i) Team Structure: It 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.

ii) Matrix Structure: It 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.

iii) Project Structure: It is an organizational structure in which employees continuously work on projects. This is like the matrix structure; however, when the project ends the employees do not go back to 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.

iv) Autonomous Internal Units: Some large organizations have adopted this type of structure. That is, the organization is comprised of independent decentralized business units, each with its own products, clients, competitors, and profit goals. There is no centralized control or resource allocation.

v) Borderless Organization: A bounder-less organization is one in which its design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a pre-defined structure. In other words, it is an unstructured design. This structure is much more flexible because there are boundaries to deal with such as chain of command. and 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. 

For example, sub-contractors 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.

vi) Learning Organization: It 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 can share their knowledge with others and 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.

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