CHAPTER 3: STRUCTURE

Defines the rules for the division of tasks, authority, responsibility and
information.

The structure is composed of organizational units made up of teams of members or

employees, based on their role in the organization. The teams report to one
manager. Line units, for example, production units, fulfill the mission and goals
of the organization. Staff units perform an analytical and advisory function.
Support units enable the functioning of both the line and the staff units by
guaranteeing that they have the staff, supplies, energy, and logistical support that
they need.

A hallmark of structure is hierarchy the division of authority, which

determines the number of ranks within an organization and the accompanying
privileges.

The number of people who directly report to one superior is determined by

that superior's span of control. How many people are responsible to a superior?

Multi-level structures are tall and structures with fewer levels and a
larger span of control are flat.

We use the term range of control to describe the

number of subordinates who report to one superior.

The structure of an organization is usually documented; for that reason it is

often termed formal. The formal structure is often presented in an organizational
chart that depicts the most important units (their dependencies, collaboration,
and information flow.)
Often formal solutions turn out to be impractical, slow, and rigid.

Every org has an informal structure, consisting of the relationships between superiors
and subordinates, dependencies, division of tasks, collaboration, information exchange, and
responsibility. Exploring the organizational determinants and consequently the informal
structure is crucial for understanding an organization's functioning and development.

Types of organizational structures.

1. Functional structures (created from separate organizational
departments.)
The functional departments are research and development, supplies, production, transport
and logistics, sales, and after-sale service. (usually supported by the administration
department.)
The advantage of functional structures is the
concentration of specialist knowledge and a professional realization fo
functions. However, disadvantage is the obstructed
interdepartmental communication and the consequent lack of operational
alignment and harmonization. As a consequence, some functions are
realized at the cost of others, as when inferior supplies are produced instead
of better-quality ones.

2. Process/task structures (are usually flat and one level.)

are designed to compensate for the lack of interaction between the functional departments and
their specialist.

3. Matrix structures (connect the functional structure with the process/task

structure.)

4. Dispersed or network structures

Network structures adapt more quickly
and better to the changing environment and they are more innovative than
monoliths
Despite the basic principle of collaboration among units, these structures can be
either centralized or decentralized.

When decision-making privileges are assigned to the lower

levels, an organization is decentralized.

Centralization is effective only fi its information system is efficient. . Centralization does not
work well in multi-level hierarchical organizations, where information flows are horizontal and
vertical, and can be distorted or manipulated.
Effective centralization streamlines the decision-making process, enabling the full use of the
highest
qualifications on the highest levels and compensates for a lack of qualifications
on the lower levels
The dangers of centralization are
he distortion of information, delays in decision-making, and decisions that do
not take account of the changing situation.

Decentralization required qualified people on the lower levels and a strong

commitment to the organizational mission, goals, and tasks.

. Dispersed structures contain changeable organic authority structures, where the roles
of leaders and directors are temporarily fulfilled by competent people or units
and who acquire the privileges and authority to complete an assignment or
solve a problem.

Theory
Based on what principles do effective structures develop?

Effective structures support the realization of the mission and goals of an organization.

The organizational structure is ingrained ni the culture of the organization.

This means that the values, norms and behavioral patterns that people follow are a
reflection of the structure and somewhat automatically lead to actions and
behaviors that are ni accordance with the structure.

in order for formal Structural

changes to be accompanied by a change ni the organizational culture ti si necessary
ot replace a part of the personnel (especially middle management) with new young
people who have not been "contaminated" with the old habits

An important factor ni organizational structures is the law

The structures of the organizational world are determined by technologies

and by the rules ofthe game.

We see, therefore
that organizational structures within a certain industry or area of activity become
similar, because the technological requirements and rules are comparable.

Structures have to accommodate the scale (such indicators as

the size of production, the number of customers, and the amount of turnover.), range (the
geographical area in which the organization
operates) and diversity of an organization's activities (entails diversity in products,
technology and markets.).

Organizational strategy a long-term program for achieving and

maintaining clients, material and human resources.

If we compete using our brand, then special attention needs to be

pald to promotions, markeling and public relations and to their collaboration
with al the other departments.

Al organizations that operate in a diversified and dynamic environment are

exposed ot external pressures These pressures can be economic, social
or political.

A very powertul structure-forming lactor in every orgamzacon as the

internal play for power, influence and resources.

These interests are varied, but there are some noteworthy categories of
interests that are realizedwithin organizational structures.
Managers strive to gather as many valuablehuman resourcesas possible
under their authority. This leads ot the creation ofnew units (especially
staff units) and to the expansion of existing ones.
Limiting access to information by making it "classified" or "exclusive"
makes itpossible to hide and evade responsibility for mistakes, and to
use classified information as a bargaining chip.
Individuals and coalitions that have the greatest influence strive to
control scarce but critical resources. Besides information, such resources
could consist of business contacts, technology, or a valued brand or
people with the highest qualifications and unique experience.

Practical tips
We can therefore conclude that organizational structure changes need to take
place in agreement with social system of the organization. nI order for hte
changes ot endure, they needto be functional, and promote the competitiveness,
mission and goals of the organization. Thus, designing the changes requires
socio-technical, technical and economic skills.

interdisciplinary knowledge, experience, and talent.

 We suggest four directives for the development of organizational structures:
1
The simplicity directive concerns the number of levels and their span
as well as the official channels.
Complicated, wide-ranging and multi-
level structures are slow and their effects are hard to foresee. Therefore,
if a structure can de simplined, it should be.
2
The low-cost directive reduces the operating costs of the organization.
The administrative and staff superstructure of an organization very often
costs much more than its operating costs.
3
The transparency directive refers to the circulation of information. (computer database)
Transparency and accessibility of information are the basis for timely responses to
environmental challenges and for a stronger identification of the
members of the organization with its mission and goals.
4
The harmonization directive concerns authority, information and
responsibility. Al decision-making privileges should be located
wherever the information for making decisions can be obtained as
quickly and affordably as possible. Additionally, responsibility needs to
reflect decision-making privileges. Every person needs to be fully
responsible for his or her area of authority.
An organization must have clear areas of decision-making privileges;
information and responsibility need to be clearly related to a certain
effect, which can be defined and preferably measured.

A selection of theories and beliefs

Structure as a tool for strategy

even tough structure has an enormous

tendency to be static and constant, truly effective companies are able to break
with routine and see their structure as one step in the realization of a greater
goal.
The structure has to be subordinated to plan, not the plan to the structure.

Structure sa a result of power play

Henry Mintzberg (1983) identified five types of organizational structures,

The
priority of the strategic apex is centralization. Centralization creates a simple
structure in which most of the decisions are made by the top director and the
procedural abstraction in the decision-making process is minimal. Small family-
owned businesses are often constructed this way.
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Fayol's bridge
So in order for Manager A to contact Manager B ,he or she would have to
receive permission from a Superior Manager.
This is obviously impractical.

A subordinate was allowed to contact another employee from a different department without
the need for permission each time, as long as he and the employee in question had
both received general approval for this type of contact from their superiors.