The Meaning of Organizational Structure in Management

The management structure has a massive effect on the company’s performance. It influences all aspects of management because it is related to the key concepts of management - goals, functions, process, mechanism, functioning, and powers of people.

Therefore, managers of all levels pay great attention to the principles and methods of forming structures, choosing the type or combinations of structures, studying the trends in their construction, assessing their agreement with the objectives and tasks.

It is aimed at establishing clear relationships between individual units, the distribution of rights and responsibilities between them.

What is Organizational Structure?

So, let's figure out what is the organizational structure and its significance for the company. It is the composition, interconnection, and subordination of independent management units and individual posts.

It is within the framework of the structure that a managerial process takes place, between the participants of which functions and tasks of management are distributed. From this position, it is a form of separation and management cooperation, within which there is a management process intended at achieving the mission of the organization. It includes all objectives, distributed among the various links, the links between which provide the coordination on their implementation.

  • The organizational structure is moving the actions of the company and its employees.
  • The structure ensures the direction of all management functions;
  • It outlines rights and responsibilities at all levels of government;
  • It determines the organizational behavior of the organization's employees (leadership style, quality of work);
  • It has an impact on the company’s survival in a rapidly changing market.

Types of Structures

Let’s consider the certain organizational structures: pyramid, flat, functional, divisional, matrix and leadership organizational structures.

  • Pyramid Organizational Structure (Hierarchy).

This is a fairly traditional structure of relations, which is called the first form of management in the organization: it is separated into single blocks, and managerial powers are transferred vertically.

Further development of production activities, the emergence of effective methods for solving managerial tasks and the growth of management specialization led to the emersion of a new class of structures.

  • Flat Organizational Structure.

It is frequently applicable by small companies because there are few levels of management. Often this structure is proper for companies with a staff of at least 20 people, especially if there are up to two people per department. However, such a type lacks bureaucracy with many levels of management. The key advantage of a flat organizational structure is the speed of decision making.

  • Functional Organizational Structure.

It is the one of the oldest and most usually used. It is also called traditional, or classical. This structure is the result division of management into elements (departments), each of which has its own specific task in management, that is, it performs a certain function. In this case, such a specific task is subordinated to the purpose of the whole organization. In the functional structure, each management body is specialized in performing separate functions for all levels of management.

  • Divisional Organizational Structure.

It is a set of independent subdivisions (enterprises) that are members of the organization, separated from each other and having their own sphere of action, independently solving current production and economic issues.

  • The Matrix Organizational Structure.

It was created in the interests of effectual use of specialists, engineers and scientists when adapting an extensive range of new products to the needs of the market. The circumstances for applying the matrix structure are: the impossibility or unwillingness of an organization to confine itself to only one principle of grouping, the labor process is complex and cannot be standardized, the innovative nature of activity dominates, the external environment is dynamic and unpredictable.

  • The Leadership Structure

In this type, all the operations of the company employees and business leaders must meet and satisfy the company’s goals. A group of leaders is created, each member has a function both inside and outside the company. It depends on the current needs of the company.

Picking The Best Leadership Structure

As practice shows, the organizational structure is not chosen but selected. The optimal organizational structure is spotted by the external environment-consumers and competitors, and manufactured products. You should clearly define the purpose and mission of the company. Take into consideration the corporate culture, technology and innovation, business processes and so on. Relying on all these nuances, it is essential to create and pick the right kind of structure through the specific company playing in a certain market.

The organizational structure obtained at the exit will hinge on the particular team involved in the scan of the company, and on the fullness and precise of the company’s documents submitted to it. For example, each organizational structure can bring both an advantage and drawbacks in a certain period of time.