Types of Organizational Structures

Summary

The video script discusses various organizational structures and how they impact organizational behavior. It explains the importance of grouping employees based on knowledge, skills, functions, outputs, clients, or locations to achieve organizational goals. The script outlines different structures such as functional, divisional, matrix, team-based, lattice, and network organizations, each having unique characteristics and applications. These structures influence how tasks are allocated, coordinated, and supervised, ultimately shaping the effectiveness and performance of employees, teams, and the organization as a whole.

Takeaways

• 🏢 An organizational structure is crucial for defining how activities are directed towards achieving organizational goals.
• 👥 Employees can be grouped based on their knowledge and skills, which is common in specialized industries like pharmaceuticals.
• 🔧 Grouping by business function, such as HR, marketing, and R&D, is a typical way to organize departments in many organizations.
• 🛠️ Activities-based grouping allows for the creation of departments that focus on specific processes, like different sales channels in real estate.
• 📈 Output-based grouping organizes employees around the products or services they work on, streamlining production and service delivery.
• 👩‍💼 Client-based grouping structures departments around the types of clients they serve, ensuring specialized attention to different customer segments.
• 🌍 Geographical grouping arranges employees based on the areas they serve, which is beneficial for organizations with widespread operations.
• 🔄 A functional structure groups employees with similar skills or tools into departments, promoting efficiency within specialized areas.
• 🌐 Geographic, product, and market structures are types of divisional structures that help manage large, diverse organizations.
• 📊 Matrix structures involve employees reporting to both a project/team and a functional manager, blending multiple skillsets for project success.
• 💬 Team-based structures permanently assign members from different functions to a team, focusing on long-term projects or products.
• 🔗 Lattice structures form and dissolve cross-functional teams as needed for specific tasks, common in consulting and project-based work.
• 🌐 Network organizations consist of autonomous units that coordinate and control activities as a single entity, often outsourcing non-core functions.

Q & A

What is an organizational structure?

An organizational structure is a framework that defines how activities such as task allocation, coordination, and supervision are directed towards achieving organizational aims.

Why is it important to group employees in an organization?

Grouping employees is significant as it impacts organizational behavior and efficiency by aligning individuals based on their skills, tasks, or other relevant factors, which can enhance productivity and goal achievement.

What are the six common bases for grouping employees?

The six common bases for grouping employees are by employee knowledge and skills, business function, activities, output, client, and location.

How does an organization with a functional structure group its employees?

In a functional structure, employees are grouped into departments based on their skills or the tools and work processes they use, such as a marketing department for marketing professionals.

What is a divisional structure and how does it differ from a functional structure?

A divisional structure is a collection of functions organized around a specific geographic area, product or service, or market. It differs from a functional structure by organizing departments around broader categories like geographic regions or product lines rather than specific skills or functions.

Can you explain the concept of a matrix structure in an organization?

A matrix structure is one where employees report to both a project or product team and a functional manager. It allows for the integration of skills and expertise from different functional areas into project teams.

What is a team-based structure and how does it operate?

In a team-based structure, performance teams are created with members from different functions who are permanently assigned to a project or product team and do not report to a second functional manager.

How does a lattice structure facilitate organizational tasks?

A lattice structure involves the formation and dissolution of cross-functional and cross-level sub-teams as needed to complete specific projects or tasks, which is common in consulting organizations.

What is a network organization and how does it coordinate activities?

A network organization is a collection of autonomous units or firms that act as a single larger entity, using social mechanisms for coordination and control. It contracts out functions that can be done better or more cheaply by outside firms.

Why is the organizational structure important for employees, teams, and the organization as a whole?

Organizational structure provides the context in which employees, teams, and the organization perform. It influences how tasks are allocated, coordinated, and supervised, which in turn affects overall performance and goal achievement.