Organizational structure determines organizational flexibility.
An organizational structure is the way in which a business organizes employees, departments, divisions and senior management. A large organization might have one or more structures within its various operating units, while a small business usually functions effectively with just one. Interconnectivity and globalization have caused business business structures to evolve from simple to matrix to virtual organizations connecting employees worldwide.
Simple
Typical of small businesses, a simple organization usually has one person in charge, and most decisions run through him. There are very few formal processes and minimal division of labor. This works well in an environment with a finite number of decisions. When the operating environment becomes more complex, such as when the business grows, this structure no longer works.
Bureaucratic
The bureaucratic structure is found in stable environments with well-defined and routine tasks. McGill University Professor Henry Mintzberg distinguishes between machine bureaucracies such as a government agency with formalized reporting procedures and routine tasks, and professional bureaucracies such as a university or a medical center with significant delegated responsibilities to specialists performing complex but routine tasks.
Divisionalized
Found in organizations with multiple product and service lines, the divisionalized structure groups together multiple departments, divisions and business units under a common administrative and executive umbrella. Common administrative functions might include human resources, accounting and investor relations. The executive function usually includes top-tier management such as the president, and it might include one or more tiers of vice presidents and general managers.
Matrix
The matrix structure is common in organizations specializing in project-based work, such as an engineering consulting firm. Specialists from different areas of the company assemble to work on one project, usually for one client, and then return to their respective functional units.
Adhocracy
Derived from "ad hoc," an adhocracy structure is the opposite of a bureaucracy. It's found in technology and other rapidly growing companies where flexibility and adaptability are keys to survival. There are few routine tasks because of the rapidly changing operating environment. There is no time, and often no need, for formal processes and reporting structures.
Other Structures
Other structures include network and virtual structures. A network structure links together multiple organizations to work on one or more complex projects. A joint venture between two or more companies bidding on a large military procurement system would be an example of a network structure. A virtual structure holds together far-flung operating units of global organizations. Managers and employees often work in different time zones, and the entire reporting-and-control mechanism might be through Internet-based tools such as instant messaging, web-based training and virtual meeting rooms.
Tags: routine tasks, bureaucracies such, departments divisions, formal processes, might include, more complex