Types of Organizational Structures

GreggU

14 Jan 201903:59

Summary

TLDRThe 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.

Outlines

00:00

🏢 Organizational Structures and Their Impact

This paragraph introduces the concept of organizational structures and their significance in directing activities such as task allocation, coordination, and supervision towards achieving organizational goals. It explains that as organizations grow, they must decide how to group employees into sub-units based on various criteria. Six common bases for grouping employees are mentioned: employee knowledge and skills, business function, activities, output, client, and location. These groupings lead to different organizational structures such as functional, geographic, product, market, matrix, team-based, lattice, and network structures. Each structure is briefly described, highlighting how they group employees and their functions within the organization.

Mindmap

Keywords

💡Organizational structure

An organizational structure defines how activities like task allocation, coordination, and supervision are directed toward achieving organizational aims. It is a framework that helps in organizing a company by defining roles, responsibilities, and the flow of information. In the video, different types of organizational structures are discussed, showing how these frameworks influence the efficiency and effectiveness of an organization.

💡Functional structure

A functional structure groups people with similar skills or who use similar tools or work processes into departments. For example, a marketing department would be made up entirely of marketing professionals. This structure supports specialization, which can lead to greater efficiency and expertise within departments. In the video, the functional structure is highlighted as one common way of organizing a company based on employees' skills and tasks.

💡Divisional structure

A divisional structure organizes functions around a particular geographic area, product, service, or market. This means that each division operates semi-autonomously with its own resources. The video explains that this structure is common in organizations with a wide variety of products or services, different geographical markets, or diverse customer bases, allowing each division to focus on its specific area.

💡Matrix structure

A matrix structure is an organizational format where employees report to both a project or product team and a functional manager. This dual reporting structure allows teams to be more flexible and dynamic, integrating multiple functions to work on projects together. The video illustrates how matrix structures bring together diverse skills needed for specific projects, promoting collaboration and effective decision-making.

💡Team-based structure

In a team-based structure, employees are grouped into horizontal or vertical teams that can define part or all of the organization. Unlike matrix structures, team members are permanently assigned to a project or product team and do not report to a second functional manager. The video discusses how this structure fosters agility and responsiveness, as teams are dedicated solely to specific tasks or projects.

💡Lattice structure

A lattice structure features cross-functional and cross-level sub-teams that are formed and dissolved as needed to complete specific projects or tasks. This fluid structure is commonly found in consulting organizations and allows for a high degree of flexibility and adaptability. The video describes how this structure supports rapid reconfiguration to meet changing project demands or organizational goals.

💡Network organization

A network organization is a collection of autonomous units or firms that act as a single entity through social mechanisms for coordination and control. This structure relies heavily on outsourcing functions that can be performed more effectively or cheaply by external firms. The video highlights the role of managers in coordinating these networks and maintaining strategic alliances, emphasizing the decentralized and dynamic nature of this structure.

💡Task allocation

Task allocation involves distributing tasks among employees based on their roles, skills, and organizational needs. Effective task allocation is crucial in any organizational structure to ensure that the right people are assigned to the right tasks, enhancing productivity and achieving organizational goals. The video references task allocation as a key element in defining how an organization functions and achieves its objectives.

💡Coordination

Coordination in an organizational context refers to the alignment and harmonization of activities and efforts across different departments or units to achieve a common goal. It ensures that various parts of the organization work together effectively. The video emphasizes the importance of coordination in structures like the matrix and network organizations, where multiple functions and external partners must be aligned.

💡Employee grouping

Employee grouping is the method by which employees are organized into various units or departments based on specific criteria like skills, functions, tasks, output, client type, or location. This grouping is fundamental to defining an organization's structure and impacts how effectively an organization operates. The video explores several bases for grouping employees, such as knowledge, business function, or geographical location, illustrating the flexibility and strategic choices involved in structuring an organization.

Highlights

Grouping employees and tasks within an organization significantly impacts organizational behavior and employee performance.

Organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward achieving organizational goals.

As organizations grow, they must decide how to group employees into subunits based on tasks they perform.

Employee knowledge and skills can be a basis for grouping, as seen in pharmaceutical organizations with departments like oncology and genetics.

Business functions, such as human resources, marketing, and research and development, can serve as another basis for employee grouping.

Employees can also be grouped based on the activities they perform, such as in retail where separate teams may handle physical stores and online sales.

Grouping by output means organizing employees around the specific products or services they work on.

Client-based grouping involves organizing employees according to the types of clients they serve.

Location-based grouping organizes employees by the geographical areas they serve.

A functional structure groups employees with the same skills or work processes into departments, such as a marketing department.

A divisional structure is organized around geographic areas, products, or markets, and is common in organizations with diverse products or services.

In a matrix structure, employees report to both a project or product team and a functional manager, blending functional and project-based work.

Team-based structures involve horizontal or vertical teams that manage part or all of the organization, with members assigned permanently to projects.

In lattice structures, cross-functional and cross-level sub-teams form and dissolve as needed to complete specific projects or tasks, common in consulting firms.

Network organizations are a collection of autonomous units or firms that collaborate as a larger entity, often contracting out functions like marketing or payroll.