Organizational structure

Pre-bureaucratic

Pre-bureaucratic (entrepreneurial) structures lack standardization of tasks. This structure is most common in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all key decisions and most communication is done by one on one conversations. It is particularly useful for new (Entrepreneurial) business as it enables the founder to control growth and development.

They are usually based on traditional domination or charismatic domination in the sense of Max Weber's tripartite classification of authority.

Bureaucratic

Bureaucratic structures have a certain degree of standardization. They are better suited for more complex or larger scale organizations. Then tension between bureaucratic structures and non-bureaucratic is echoed in Burns and Stalker's (1961) distinction between mechanistic and organic structures.

Functional Structure

The organization is structured according to functional areas instead of product lines. The functional structure groups specialize in similar skills in separate units. This structure is best used when creating specific, uniform products. A functional structure is well suited to organizations which have a single or dominant core product because each subunit becomes extremely adept at performing its particular portion of the process. They are economically efficient, but lack flexibility. Communication between functional areas can be difficult.

Matrix Structure

WASSSSSSSSSSSSSSSSSSSSSSUP A matrix structure overlays two organizational forms in order to leverage the benefits of both. Some global corporations adopt a matrix structure that combines geographical with product divisions. The product-based structure allows the company to exploit global economies of scale, whereas the geographic structure keeps knowledge close to the needs of individual countries. Many organizations also have degrees of matrix structure, meaning that each divisional group has specific responsibilities, but some issues must be decided jointly across all of these groups. Instead of combining two divisional structures, some matrix structures overlap a functional structure with project teams. Employees are assigned to a cross-functional project team, yet they also belong to a permanent functional unit (e.g., engineering, marketing) to which they return when a project is completed.

Matrix structures create the unusual situation where employees have two bosses. A project team member would report to the project leader on a daily basis, but also reports to the functional leader (engineering, marketing, etc.). Some companies give these managers equal power; more often, each has authority over different elements of the employee’s or work unit’s tasks. Matrix structures that combine two divisionalized forms also have a dual-boss reporting system, but only for some employees.

Divisional Structure

Divisional structure is formed when an organization is split up into a number of self-managed units, each of which operates as a profit center. Such a division may occur on the basis of product or market or a combination of the two with each unit tending to operate along functional or product lines, but with certain key function (e.g., finance, personnel, corporate planning) provided centrally, usually at a company headquarters.

Post-Bureaucratic

The term of post bureaucratic is used in two senses in the organizational literature: one generic and one much more specific (see Grey & Garsten, 2001). In the generic sense the term post bureaucratic is often used to describe a range of ideas developed since the 1980's that specifically contrast themselves with Weber's ideal type Bureaucracy. This may include Total Quality Management, Culture Management and the Matrix Organization amongst others. None of these however has left behind the core tenets of Bureaucracy. Hierarchies still exist, authority is still Weber's rational, legal type, and the organisation is still rule bound. Heckshcer, arguing along these lines, describes them as cleaned up bureaucracies (Hecksher & Donellson, 1994), rather than a fundamental shift away from bureaucracy. Gideon Kunda, in his classic study of culture management at 'Tech' argued that 'the essence of bureaucratic control - the formalisation, codification and enforcement of rules and regulations - does not change in principle.....it shifts focus from organizational structure to the organization's culture'.

Another smaller group of theorists have developed the theory of the Post-Bureaucratic Organization. Heckscher and Donnellson [1994], provide a detailed discussion which attempts to describe an organization that is fundamentally not bureaucratic. Heckscher has developed an ideal type Post-Bureaucratic Organization in which decisions are based on dialogue and consensus rather than authority and command, the organisation is a network rather than a hierarchy, open at the boundaries (in direct contrast to culture management); there is an emphasis on meta-decision making rules rather than decision making rules. This sort of horizontal decision making by consensus model is often used in Housing cooperatives, other Cooperatives and when running a non-profit or Community organization. It is used in order to encourage participation and help to empower people who normally experience Oppression in groups.

Still other theorists are developing a resurgence of interest in Complexity Theory and Organizations, and have focused on how simple structures can be used to engender organizational adaptations. For instance, Miner and colleagues (2000) studied how simple structures could be used to generate improvisational outcomes in product development. Their study makes links to simple structures and improviseal learning. Other scholars such as Jan Rivkin, Kathleen Eisenhardt Nicolaj Sigglekow, and Nelson Repenning revive an older interest in how structure and strategy relate in dynamic environments.

See also: Management cybernetics

Five Phases of The Organizational Life Cycle

Organizations go through different phases of growth. The first challenge for executives who wish to grow their organizations is to understand what phase of the organizational life cycle one is in. Many organizations will enter the decline phase unless there is in place a rigorous program of transformational leadership development. Different experts will argue on how many phases there are, but there is elegance in using something easy to remember. We divide the organizational life cycle into the following phases:

• Startup. (or Birth) • Growth. This is sometimes divided into an early growth phase (fast growth) and maturity phase (slow growth or no growth). However, maturity often leads to • Decline. When in decline, an organization will either undergo • Renewal or • Death and bankruptcy

Each of these phases present different management and leadership challenges that one must deal with.

The Start-Up Phase : Getting ready is the secret of success.

In this phase, we see the entrepreneur thinking about the business, a management group formed, a business plan written. For entrepreneurs needing money to kick start the business, the company goes into the growth phase once the investor writes the check. For those that don't need outside funds, start-up ends when you declare yourself open for business.

The Growth Phase : It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness, it was the spring of hope, it was the winter of despair.

In the growth phase, one expects to see revenues climb, new services and products developed, more employees hired and so on. The management textbooks love to assume that sales grow each year. The reality is much different since a company can have both good and bad years depending on market conditions. In organizations that have been around for a few years, a very interesting thing happens—dry rot sets in. There are many symptoms, some of which we have presented below: That's why many companies have different types of programs relating to organizational development in place.

The Decline Phase : Corporate Insanity is doing the same thing, the same way, but expecting different results.

Using the above definition, one finds a tremendous amount of corporate insanity out there. Management expects next year to be better, but doesn't know, or is unwilling to change to get better results. If one can detect the symptoms of decline early, one can more easily deal with it. Some of the more obvious signs being: declining sales, relative to competitors; disappearing profit margins; and debt loads, which continue to grow year after year. However, by the time the accountants figure out that the organization is in trouble, it's often too late.

The Renewal Phase : It is not death that a man should fear, but he should fear never beginning to live.

Decline doesn't have to continue, however. External experts have focused on the importance of organizational development as a way of preventing decline or reducing its affects. A story from Aesop's Fables might help here. A horse rider took the utmost pains with his charger. As long as the war lasted, he looked upon him as his fellow-helper in all emergencies, and fed him carefully with hay and corn. But when the war was over, he only allowed him chaff to eat and made him carry heavy loads of wood, subjecting him to much slavish drudgery and ill-treatment. War was again proclaimed, however, and when the trumpet summoned him to his standard, the Soldier put on his charger its military trappings, and mounted, being clad in his heavy coat of mail. The Horse fell down straightway under the weight, no longer equal to the burden, and said to his master, “You must now go to the war on foot, for you have transformed me from a Horse into an Ass; and how can you expect that I can again turn in a moment from an Ass to a Horse?" One way to reverse dry rot is through the use of training as a way of injecting new knowledge and skills. One can also put in place a rigorous program to change and transform the organization's culture. This assumes, though, that one has enough transformational leaders to challenge the status quo. Without the right type of leadership, the organization will likely spiral down to bankruptcy.

Failure : Advice after injury is like medicine after death.

As many as 80% of business failures occur due to factors within the executive's control. Even firms close to bankruptcy can overcome tremendous adversity to nurse themselves back to financial health. Lee Iacocca’s turnaround of the Chrysler Corporation is one shining example. In some cases, failure means being acquired and merged into a larger organization. In other cases, it occurs when an organization elects or is forced into bankruptcy. This does not signify the organization ceases to exist since it can limp along for many years by going in and out of bankruptcy court