Types of organizations

Afodorcei Andreea
Contents
Introduction...............................................................................................................................3
The concept of organization.....................................................................................................4
Types of organization................................................................................................................4
Structures...................................................................................................................................4
Committees or juries.............................................................................................................5
Ecologies.................................................................................................................................5
Matrix organization..............................................................................................................5
Pyramids or hierarchical......................................................................................................6
Levels of Management in Organizational Hierarchy.....................................................7
How to Choose from Different Types of Organizations.........................................................8
The Importance of Adopting Proper Types of Organizations..............................................8
Conclusion.................................................................................................................................9
Introduction
Human beings cannot live in isolation. They are unable to fulfill their needs and
desires alone, because any one individual lacks the strength, ability, time and potential. He
has to get the cooperation of other persons in achieving his goals. In simple words,
organisation is viewed as a group of persons formed to seek certain goals. Organisation is not
a new and modern invention or phenomenon.
Ever since the dawn of civilization, people have always formed organisations to
combine their efforts for the accomplishments of their common goals. For example, the
Emperors of China used organisations a thousand years ago to construct great irrigation
systems. The first Pope created a universal church to serve a world religion. The greatest
example is the construction of great pyramids by the early Egyptians. The completion of one
pyramid required 1, 00,000 men working twenty years. To plan for and organize 1, 00,000
men over a period of twenty years in itself was a monumental task, keeping aside the complex
end products. Modern society however has more organisation than ever before.
It consists of large and complex organisations dominating every sphere of human
activity in almost all countries of the world, irrespective of cultural, racial, ideological and
other differences. Organisations affect the quality of human life in the modern society. The
study of organisations is, thus, very essential for understanding the behaviour of human
beings.
Organisations may be studied from two perspectives vizions: micro and macro. In
micro perspective, the focus of study is on the individual human being. It concerns itself with
each individual’s psychological makeup, his interaction with other individuals and groups,
variables that determine how a person is likely to react in a given situation etc.
The micro view also concerns itself with how an individual learns, what motivates
him, and what kind of leadership strategies might produce the behaviour the leader wants.
This micro view of individuals in organisations is recognized as a discipline called
Organisational Behaviour.
The macro view considers organisation as the unit of analysis in place of an individual.
It is concerned with organisational goals, organisational structure, technologies used in
organisation and how organisation interacts with the environment. The macro perspective is
recognized as a discipline called Organisational Theory. Both these aspects taken together
present a complete picture of organisational study. Organisation theorist studies collection of
people called organisation whereas organisation behaviorist studies people as members of an
organisation.
The concept of organization
An organization or organisation is an entity—such as a company, an institution, or an
association—comprising one or more people and having a particular purpose. The word is
derived from the Greek word organon, which means tool or instrument, musical instrument,
and organ.
It is very difficult to define the term organisation precisely because the use of the term
organisation is not standardized. It is not static. It is dynamic and ever changing as per the
needs of society, its members, business objectives and environmental changes. Organisation
has been defined in different ways by different theorists, because different theorists have
emphasized different characteristics of organisation.

Types of organization
There are a variety of legal types of organizations, including corporations,
governments, non-governmental organizations, political organizations, international
organizations, armed forces, charities, not-for-profit corporations, partnerships, cooperatives,
and educational institutions, etc.
A hybrid organization is a body that operates in both the public sector and the private
sector simultaneously, fulfilling public duties and developing commercial market activities.
A voluntary association is an organization consisting of volunteers. Such organizations
may be able to operate without legal formalities, depending on jurisdiction, including
informal clubs or coordinating bodies with a goal in mind which they may express in the form
of an manifesto, mission statement, or in an informal manner reflected in what they do
because remember every action done by an organization both legal and illegal reflects a goal
in mind.
Organizations may also operate secretly or illegally in the case of secret societies,
criminal organizations, and resistance movements. And in some cases may have obstacles
from other organizations (ex: MLK's organization).
What makes an organization recognized by the government is either filling out
Incorporation (business) or recognition in the form of either societal pressure (ex: Advocacy
group), causing concerns (ex: Resistance movement) or being considered the spokesperson of
a group of people subject to negotiation (ex: the Polisario Front being recognized as the sole
representative of the Sahrawi people and forming a partially recognized state.)
Compare the concept of social groups, which may include non-organizations.
Organizations and institutions can be synonymous, but Jack Knight writes that
organizations are a narrow version of institutions or represent a cluster of institutions; the two
are distinct in the sense that organizations contain internal institutions (that govern
interactions between the members of the organizations).

Structures
The study of organizations includes a focus on optimising organizational structure.
According to management science, most human organizations fall roughly into four types:

 Committees or juries
 Ecologies
 Matrix organizations
 Pyramids or hierarchies
Committees or juries
These consist of a group of peers who decide as a group, perhaps by voting. The
difference between a jury and a committee is that the members of the committee are usually
assigned to perform or lead further actions after the group comes to a decision, whereas
members of a jury come to a decision. In common law countries, legal juries render decisions
of guilt, liability, and quantify damages; juries are also used in athletic contests, book awards,
and similar activities. Sometimes a selection committee functions like a jury. In the Middle
Ages, juries in continental Europe were used to determine the law according to consensus
among local notables.
Committees are often the most reliable way to make decisions. Condorcet's jury
theorem proved that if the average member votes better than a roll of dice, then adding more
members increases the number of majorities that can come to a correct vote (however
correctness is defined). The problem is that if the average member is subsequently worse than
a roll of dice, the committee's decisions grow worse, not better; therefore, staffing is crucial.
Parliamentary procedure, such as Robert's Rules of Order, helps prevent committees
from engaging in lengthy discussions without reaching decisions.

Ecologies
This organizational structure promotes internal competition. Inefficient components of
the organization starve, while effective ones get more work. Everybody is paid for what they
actually do, and so runs a tiny business that has to show a profit, or they are fired.
Companies that utilize this organization type reflect a rather one-sided view of what
goes on in ecology. It is also the case that a natural ecosystem has a natural border –
ecoregions do not, in general, compete with one another in any way, but are very autonomous.
The pharmaceutical company GlaxoSmithKline talks about functioning as this type of
organization in this external article from The Guardian. By:Bastian Batac De Leon.

Matrix organization
This organizational type assigns each worker two bosses in two different hierarchies.
One hierarchy is "functional" and assures that each type of expert in the organization is well-
trained, and measured by a boss who is a super-expert in the same field. The other direction is
"executive" and tries to get projects completed using the experts. Projects might be organized
by products, regions, customer types, or some other schemes.
As an example, a company might have an individual with overall responsibility for
products X and Y, and another individual with overall responsibility for engineering, quality
control, etc. Therefore, subordinates responsible for quality control of project X will have two
reporting lines. The United States aerospace industries were the first to officially use this
organizational structure after it emerged in the early 1960s.
The matrix organizational structure resembles a grid in which employees with similar
skills are grouped and report to more than one manager. This often includes a functional
manager who oversees projects and their progress and a product manager who is responsible
for the company's strategy and success regarding product offerings. The matrix structure is
typically used by large, multinational organizations and promotes sharing skills and
knowledge across departments to complete goals.
Benefits of this type of structure include:

 Enabling a flexible work environment

 Fostering a balanced decision-making process
  Promoting open communication and shared resources across the business

Potential disadvantages include:

 Creating confusion about authority

 Tracking budgets and resources can be difficult
 Limiting efficiency of key performance indicators (KPIs)

Pyramids or hierarchical
A hierarchy exemplifies an arrangement with a leader who leads other individual
members of the organization. This arrangement is often associated with the basis that there are
enough to imagine a real pyramid, if there are not enough stone blocks to hold up the higher
ones, gravity would irrevocably bring down the monumental structure. So one can imagine
that if the leader does not have the support of his subordinates, the entire structure will
collapse. Hierarchies were satirized in The Peter Principle (1969), a book that introduced
hierarchiology and the saying that "in a hierarchy, every employee tends to rise to his level of
incompetence."
In a hierarchical organizational structure, employees are grouped and assigned a
supervisor. It is the most common type of organizational structure. Employees may be
grouped by their role or function, geography or type of products or services they provide. This
structure is often depicted as a pyramid because there are multiple levels or authority with the
highest level of leadership at the top, their direct employees below them and so forth.
Benefits of this type of structure include:

 Establishing clearly defined levels of authority

 Promoting teamwork and department loyalty
 Fostering employee development and promotion opportunities
Potential disadvantages include:

 Limiting collaboration
 Restricting innovation
  Creating bureaucracy that must be managed

Levels of Management in Organizational Hierarchy

The job of a manager is practically the same. But there is a difference in a manager’s role
depending on the skills, ability, strength, experience, intellectual ability, etc. So, in the
organizational hierarchy, we see three levels of management. Each level has a different set of
jobs and responsibilities, but all are toward fulfilling a goal.
1. Top-Level Management
Top-level managers, or top managers, are also called senior management or
executives. Leaders of the organization are setting in top-level management.
These individuals are at the top one or two levels in an organization and hold titles such as
Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer
(COO), Chief Information Officer (CIO), Chairperson of the Board, President, Vice president,
Corporate head.
 Top-level managers make decisions affecting the entirety of the firm.
 Top managers do not direct the firm’s day-to-day activities; instead, they set goals for
the organization and direct the company to achieve them.
 Top managers are ultimately responsible for the organization’s performance, and often,
these managers have obvious jobs.
Top-level managers require having excellent conceptual and decision-making skills.
2. Middle-Level Management
Middle-level managers, or middle managers, are those in the levels below top
managers.
Middle managers’ job titles include General Manager, Plant Manager, Regional Manager, and
Divisional manager.
 Middle-level managers are responsible for carrying out the goals set by top
management. They do so by setting goals for their departments and other business
units.
 Middle managers control, motivate and assist first-line managers in achieving business
objectives.
 Middle managers also communicate upward by offering suggestions and feedback to
top managers. In addition, because middle managers are more involved in the day-to-
day workings of a company, they may provide valuable information to top managers
to help improve the organization’s bottom line.
Middle-level managers’ job perfection depends very much on these communication and
interpersonal skills.
3. Lower-Level Management
First-level managers are also called first-line managers, shop-level managers, or
supervisors.
These managers have job titles such as office manager, Shift Supervisor, Department
Manager, Foreperson, Crew leader, and Store manager.
 First-line managers are responsible for the daily management of line workers—the
employees who produce the product or offer the service.
 There are first-line managers in every work unit in the organization. These are the
managers that most employees interact with daily, and if the managers perform poorly,
employees may also perform poorly, may lack motivation, or may leave the company.
Although first-level managers typically do not set goals for the organization, they have
a powerful influence on the company.
 A First-level manager requires technical skills and knowledge for the particular work he
supervises.

How to Choose from Different Types of Organizations

A type of organization serves as a framework that a firm can use to establish
communication structures and authority among employees. However, it is crucial that a
company chooses a type that suits its needs best.
1. Size
Size is a major determining factor when deciding which type of organization to adopt.
A small to medium-sized business does not require a vast and highly-detailed organizational
structure. On the other hand, larger companies require more intense frameworks to ensure that
operations run smoothly. Such firms employ more staff and, therefore, require more
managers. For such companies, a matrix organization is the most suitable.
2. Life Cycle
A firm’s life cycle is another essential factor to consider when setting up a company’s
organization. Business owners who are trying to grow and expand their operations should
choose a structure that allows for flexibility and smooth expansion.
3. Business Environment
Another factor that comes into play when determining the type of organization is the
external business environment. A dynamic business setting where the consumers’ needs
change constantly requires a stable and sound organizational structure that can weather the
storm of a rapidly-changing marketplace.
The Importance of Adopting Proper Types of Organizations
1. Better Communication
Keeping open channels of communication is crucial to the success of every
organization. As such, an organization needs to be designed in such a way that individuals and
departments are able to coordinate their efforts.
2. Set Organizational Priorities
A sound organizational structure is essential for setting priorities. In a tall hierarchical
structure, the managers and executives determine the most crucial objectives that need to be
met first. The heads of departments can then determine how to allocate different resources and
the specific tasks to designate first.
3. Better Employee Performance
If a company isn’t well organized, the employees won’t know which tasks to perform
or who to report to. Defining the organizational structure makes the company objectives clear
to every stakeholder. In such a way, every employee knows what he or she needs to do.
Depending on the type of organization, senior managers and executives are also able
to establish their roles. They can determine whether they need to actively support their
employees or simply assign tasks and await results.

Conclusion
Choosing a type of organizational structure is important to a company’s management.
It’s therefore crucial that business owners pick the right organizational type to help operations
run more smoothly. There are different types of organizations that a company can adopt, such
as functional, flat, matrix, and divisional organizations.
When determining which type of organization to take on, there are several factors that
should be taken into account. They include the size of the company, the business
environment, and the life cycle that the company or its products are in.
Although it sounds like a daunting task, establishing an organizational structure is
worthwhile and brings many benefits. For one, it improves communication among a
company’s stakeholders. It also helps managers set priorities right. This way, managers know
what resources to allocate to different departments. Finally, it helps ensure better employee
performance.

Bibliography
https://en.wikipedia.org/wiki/Organization
https://www.yourarticlelibrary.com/organization/organisation-meaning-concept-
features-and-advantages/63768
https://corporatefinanceinstitute.com/resources/management/types-of-organizations/
https://www.iedunote.com/3-levels-of-management-organizational-hierarchy