Organizational Structures: Types and Characteristics
Types of Organizational Structures
A) Linear or Military Structure
This is the simplest and oldest type of management structure, where the main leader assumes all management functions.
Advantages:
- Simple and easy to understand
- Maintains maximum control
Disadvantages:
- Due to the complexity of current management functions, it is only used at lower management levels
B) Functional Structure
Maximizes departmentalization by function within an organization. It involves grouping activities according to the similarity of functions that are normally within an organizational area.
Advantages:
- Reflects logical functions
- Maintains power and prestige of major functional areas
- Follows the principle of specialization in the development of functions
Disadvantages:
- Reduces the importance of the overall objectives of the entity
- Exaggerates specialization and narrows the viewpoints of key personnel
- Reduces cross-functional coordination
C) Territorial Structure
Used mainly in large organizations. Territorial or geographical departmentalization is often used in sales and production, but never in finance.
Advantages:
- Places responsibility at a lower level, implying a certain degree of decentralization
- Is projected to local markets and problems
- Improves coordination in a region
Disadvantages:
- Requires more people with general management skills
- Tends to inhibit central economic activity and may require services such as personnel or regional purchases
- Increases the problem of control for top management
D) Client or Product Structure
This form of activity clustering reflects the organization’s particular interest in the customer to meet their needs.
Advantages:
- Stimulates concentration on customer needs
- Focuses attention and effort on the production line
- Allows for growth and variety of products and services
Disadvantages:
- Difficult to coordinate operations between consumer demands
- Requires managers and staff who are experts on client issues
E) Process Structure
In this type of departmentalization, the structure is primarily based on the different processes that are executed and/or the equipment that is available.
Advantages:
- Use of specialized technologies
- Significant work content and training
- High motivation for the job
Disadvantages:
- Complex departmental coordination
G) Joint Structure
This type of structure is used in businesses. It combines some of the types of structures presented above (functional, product, process, territorial).
H) Matrix Structure
A combination of the functional structure with the product or project structure, but in parallel and superimposed. It is used frequently in construction and research activities. It creates groups depending on the needs of ongoing projects, where the main factors are time and resource control.
Benefits:
- Greater flexibility in staff grouping
- Maximum use of specialization
- Personnel are oriented towards final results
Disadvantages:
- There is conflict in the central authority of the organization
- Requires significant coordination between functional areas and support for project activities
- There is the possibility of a lack of unity of command