Formal and Informal Organizational Structures: Types and Charts
Formal and Informal Organizational Structures
Organizations can be classified as formal or informal.
Formal Organization
A formal organization has an intentional structure that is defined and identified. The company strategically places each of its elements in the most convenient location. It’s a structure to which people must conform, with each part of the company cooperating to achieve predetermined objectives.
Organizational Structure
The structure for the organization of the company must consider the division of labor, so you can create a structure according to the tasks that are carried out, forming departments. Classification:
- Division into departments by function
- Division into departments by geographic area
- Division into departments by product
- Division into departments by process
Regarding communication between elements of the company, it establishes ways of relating:
- Linear relationships: Occur when there is a link between orders (i.e., a person in charge and another subordinate).
- Staff or consultant relationships: Aim to provide advice by specialists.
- Functional relations: Specialists have the authority and responsibility for everything that refers to their specialty.
Models of Organizational Structure
- Linear or Hierarchical Model: Based on the principle of command (i.e., the members of the company depend on a superior).
- Advantages: Simplicity, well-defined areas of authority and accountability, speed in decision-making.
- Disadvantages: Lack of expertise of managers, excessive concentration of authority.
- Functional Model: The existence of specialists who dedicate all their effort to a particular task.
- Advantages: Employees can dedicate themselves exclusively to their specialty, no middlemen.
- Disadvantages: Conflicts are created due to coexistence because they can receive different orders from different managers.
- Staff Model: Characterized by a central hierarchical structure, supported by counseling departments, which serve to assist and advise but do not have any authority without consent.
- Advantages: Intervention of specialist advice, employees only receive orders from one boss.
- Disadvantages: Slower decisions, additional cost for the company.
- Committee Model: There is cooperation among several people to assume authority and responsibility (i.e., decisions are shared).
- Advantages: There are various views, and decisions are made at the discretion of each individual, and thus there is better integration.
- Disadvantages: It takes a long time to make decisions.
- Matrix Model: In this model, there is dual authority. Each person receives, on the one hand, instructions from the Project Director (horizontal) and, on the other, from the Director of their functional department (vertical). Nevertheless, one of the two authorities is often more important than the other; in this case, the Project Director.
- Advantages: It is a flexible organization.
- Disadvantages: Conflicts can arise between the various directors.
The Organizational Chart
Organizational charts are the graphical representation of the structure of a business organization in a synthetic and simplified form, highlighting the main characteristics of the structure. They must fulfill the following requirements:
- Differentiate the elements that make up the company.
- Differentiate the levels and positions of authority.
- Be easily understood and straightforward.
Types of Organizational Charts:
- Vertical
- Horizontal
- Radial