Structure of Organisation

An organisational structure is a platform that settles your direction towards certain activities to ensure that you achieve the goals set by your organisation. The organisational structure also helps determine the flow of information at different levels in a company. The above statement can be further explained with an example of a centralised structure. A centralised structure carries the decision flow from the top to the bottom. In contrast, in a decentralised structure, the decision-making power is evenly distributed among different levels of the organisation.

All you need to know about the structure of the organisation

Organisational structure also explains and simplifies the job for each employee and the way that employee fits in the overall system. There are four main types of organisational structures: functional, futarchy, matrix, and divisional structures. Businesses with varieties of sizes have one thing in common. This standard utility used by every business nowadays is organisational structure. The organisational structure in a company specifies the organisation’s hierarchy by defining the job for each employee. A successful organisational structure helps clarify employees’ jobs to meet the objectives fruitfully. 

This structuring property helps a company by improving the visual representation of its shape and the best possible way of moving forward to achieve the organisational goals.

When an organisation fails to form a structure, it results in situations when employers have difficulty knowing to whom they should report. Organisational structures are generally be divided into two types:

1. Centralised
2. Decentralised 

Centralised Organisational Structure

Traditionally organisations used to practise centralised leadership that comes with a defined chain of command. An example of a centralised structure is the military, which is famous for its highly centralised structure with a well-defined long and specific hierarchy of subordinates and superiors. In a centralised organisational system, the responsibilities of each individual are apparent, and the subordinate roles default to the guidance of their superior officials.

Decentralised Organisational Structure

The decentralised organisational structure is practised nowadays in startups; this decentralised structure allows the companies to adapt to a fast, agile, and adaptable employee environment. However, there is no best organisational structure, as it ultimately depends on the nature of your company and the industry you are serving. This is because the consumer and producer are held into a relationship where nature affects one another. So, the best organisational structure can only be determined by researching your industry and the nature of your company or organisation.

Types of organisational structures

There are four types of organisational structures practised and implemented globally. These four types of organisational structures are:

1. Functional organisational Structure

This is the most common organisational structure implemented in the real world. The other name given to this organisational structure is bureaucratic organisational structure. It is known as it breaks off a company according to the specialisation of its workforce. It is practised in several small- to medium-sized organisations. Functional structure divides the company into several departments with unique work like marketing, sales, and operations, where each department has its function using a bureaucratic organisational structure.

2. Divisional organisational Structure

The second most common type of organisational structure practised among large companies with several business units is the divisional Concept of organisational structure. It is also known as a multi-division structure, as its structure is based on the leadership team for products or projects that they operate. A perfect example of this structure is the famous multinational company Johnson and Johnson, which follows the divisional structure, allowing each business unit to operate independently like a different company with a different president.

3. Flatarchy Structure 

This is the newest structure that is used by startups mainly. As the name suggests, it includes flattening hierarchy and providing autonomous access to its employees. This brings in fast implementation of decisions, as the subordinate is not bound to ask the superior for every decision.

4. Matrix Structure

This is the fourth organisational structure, and it is the least used nowadays due to its confusing nature. The matrix structure is implemented across several superiors from different divisions of all departments. In a nutshell, a person working in a matrix structure can have duties in one or more departments.

Advantages and disadvantages of structures of the organisation

The organisational structure brings in a constant and straightforward information flow at different levels in an organisation. The structure of an organisation provides several advantages like-

It defines the hierarchy of the company

The simplified pay structure for employees

Efficient and effective operations

Provides the ability to perform different functions seamlessly and simultaneously

Better and informative structure for employees about their jobs

Advantages of functional organisational structure 

• High Productivity level 
• Skill Growth 
• Clarity 
• Decreased Operational Cost 

Disadvantages of functional organisational structure 

• Slow Decision-making 
• Narrow Scope 
• Inter-Department Competition

Advantages of divisional organisational structure

• Accountability 
• Competition
• Culture 
• Local Decisions
• Multiple Offerings
• Speed

Disadvantages of divisional organisational structure 

• Cost 
• Scale economies 
• Inefficiencies 
• Silos

Conclusion

The organisational structure is the method that defines the workflow in an organisation. It groups individuals according to their tasks to function as a team, allowing several groups to work together and manage tasks. There are four types of organisational structure. A functional organisational structure is the most suitable nowadays, as it signifies the workflow according to the organisation’s hierarchy. An organised structure of a company serves excellent value in terms of fast and quick processing with effective and impactful results.