Organisational Structure

What organizational structure is most appropriate?

An organizational structure shows the different lines of authority and flows of communication within the organization. It also answers the following questions:

• Who is responsible for what task?

• Who is accountable to whom?

• How wide are the spans of control? (The number of subordinates directly reporting to a line manager).

• How long is the chain of command? (The flow of orders or authority from the top levels of hierarchy to the lower levels of hierarchy).

There are different types of organizational structures. Which structure a business chooses depends on the type of business or its product. For instance, for a business selling a standardized good or service in a rather stable environment, a functional organizational structure would be appropriate. However, for a new business that has greater uncertainty and a relatively higher risk level, should preferably adopt a divisional or matrix structure.

In a functional structure, the staff is divided into departments e.g. marketing, finance, research and development etc.The advantage of such a structure is that it makes the reporting lines very clear to everyone in the organization which reduces confusion in matters such as “Who is accountable to whom”. In contrast, the drawback of such a structure is that there is less opportunity for communication between members of different departments(less lateral communication). As a result, the members become more loyal to their department than to the organization as a whole. This makes the organization divided and thereby hinders it to reach its full potential.

A matrix organizational structure provides the opportunity for lateral communication. It is based on task role. All departments work together on a project in this type of organizational structure. This strengthens the ties between them and promotes a healthy work environment of mutual trust and cooperation. Also, this increases the chances of the...