Conditions for adopting simple organizational structure

When an organization is small or in its formative stage of

development, if it has simple and dynamic environment, if the
organization faces high hostility or a crisis, if the senior manager is
also the owner, or if the senior executive either wants to hoard power
or has power thrust upon him by his or her subordinates
The simple structure also meets the needs of the organization when
they are in the formative years. “The new organization tends to adopt
the simple structure, no matter what its environment or technical
system, because it has not had the time to elaborate its administrative
structure”. Almost all organization pass through the simple structure
stage. It is seen that most senior decision makers would have a strong
preference for the simple structure because it is an excellent vehicle
for concentrating power in a single place.

The effectiveness of the simple structure

Complexity: “Size is the most important conditions affecting the

structure of the organization” by Peter Blau. The size affects
complexity. Therefore Small size usually means less repetitive work
in the operating core.
Formalization: less formalization with respect to the size of the
organization. In simple structure the degree to which the organization
is standardized is low. Therefore employees’ behaviour would be
relatively nonprogrammer & such jobs would offer employees a great
deal of freedom to exercise discretion in their work.
Centralization: In simple structure as the size is small, the “one –
person show” can effectively oversee all activities, be knowledgeable
about key problems. A simple environment is comprehended easily
by a single individual and, therefore enables the individual to control
decision making effectively. A dynamic environment requires an
organic structure so that it can react to unpredictable contingencies.
An effective organizational structure shall facilitate
The working relationships between various entities in the organization
and may improve the working efficiency within the organizational
units.
Organization shall retain a set order and control to enable monitoring
the processes.
Organization shall support command for coping with a mix of orders
and a change of conditions while performing work.
Organization shall allow for application of individual skills to enable
high flexibility and apply creativity.
When a business expands, the chain of command will lengthen and
the spans of control will widen.
When an organization comes to age, the flexibility will decrease and
the creativity will fatigue. Therefore organizational structures shall be
altered from time to time to enable recovery. If such alteration is
prevented internally, the final escape is to turn down the organization
to prepare for a re-launch in an entirely new set up.

Business experts cite a number of characteristics that separate

effective organizational structures from ineffective designs.
Recognition of these factors is especially important for entrepreneurs
and established small business owners, since these individuals play
such a pivotal role in determining the final organizational structure of
their enterprises.
As small business owners weigh their various options in this realm,
they should make sure that the following factors are taken into
consideration:
 Relative strengths and weaknesses of various organizational
forms.
 Legal advantages and disadvantages of organizational structure
options.
 Advantages and drawbacks of departmentalization options.
 Likely growth patterns of the company.
 Reporting relationships that are currently in place.
 Reporting and authority relationships that you hope will be
implemented in the future.
  Optimum ratios of supervisors/managers to subordinates.
 Suitable level of autonomy/empowerment to be granted to
employees at various levels of the organization (while still
recognizing individual capacities for independent work).
 Structures that will produce greatest worker satisfaction.
 Structures that will produce optimum operational efficiency.
Once all these factors have been objectively examined and blended
into an effective organizational structure, the small business owner
will then be in a position to pursue his/her business goals with a far
greater likelihood of success.

Advantages of simple Disadvantages of simple

Organisations
 More/Greater
communication between
management and workers.
 Better team spirit.
 Less bureaucracy and easier
decision making.
 Fewer levels of management
which includes benefits such
as lower costs as managers
are generally paid more than
worker.
Organisations
 Workers may have more
than one manager/boss.
 May limit/hinder the growth
of the organisation.
 Structure limited to small
organisations such as
partnerships, co-operatives
and some private limited
companies.
 Function of each
department/person could be
blurred and merge into the
job roles of

A Simple organisation structure diagram: