Types of Organizational Structure

-Sandeep Kumar
 What is Organizational Structure

• Plan
• Involves how a business organizes, categorizes,
and delegates tasks to achieve a specific goal
 Importance of Organizational Structure

 Organizational Chart
 Chain of Command
 Distribution of Authority
 Departmentalization
 Span of Control
Types of Organizational Structure
Traditional Structure

Divisional Structure

Matrix Structure
Traditional Structure

Line Structure

Line and Staff Structure

Functional Structure
 Line Structure

 Authority originates at the top and moves downward

 Common among small companies

Line Functions
Functions that contribute directly to company profits
Production managers, sales reps, and marketing managers
Example:
Production Managers
Hire and fire all of the assembly-line workers in their departments
Order all supplies for their department
 CFO

Senior
Managers

Mid-level
Managers

Lower-level
Managers

Non-Management
Employees
 Line and Staff Structure
 Mid-sized and large companies

 Other employees hired to help line managers perform activities they cannot

Staff Functions

Advise and support line functions

Staff departments include: legal, human resources, and public relations

Help line departments do their jobs

Authority is limited to making recommendations to line managers

 Functional Structure

 Classifies people according to there function

 Grouped on the basis of common expertise

For Example : A division of ISP

Vice President
- Sales Department (sales function)
-Customer Service Department (customer service function)
- Engineering Department (engineering function)
- Accounting Department (accounting function)
- Administration Department (administration function)
 Advantages of Functional Structure

 People can learn a lot from each other

 Problem solving becomes easier
 Skilled employees of the same group can find more skilled employees for the
company.
 Control in functional structure is increased because people will try to supervise
each other work.
 Team Work

Disadvantages of Functional Structure

 Skills and abilities of employees are narrowed.
 Communication problems can increase because the interaction between various
departments is decreased.
 Difficult to analyze which person is more efficient and which is not.
 Top management is always busy in finding the solutions of coordination
problems.
 Divisional Structure
Based on different divisions in the organizations

 Product Structure

 Market Structure

 Geographic Structure
 Matrix Structure
Combination of both function and product structure

FM and PM both are involved to complete the task

Advantages

 Better coordination on shared technologies across the organization (such as IT)

 Faster decentralized decisions
 Improved access to a diverse range of skills and perspectives
 Broader and more multiskilled people development
 Increased communication and coordination across the business
 There is a better balance between time, cost and performance
 Stress is distributed among the team
Thank You