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Session 2. Structure of an organization

Session guide: Structure of an organization
Reading note: Structure of an organization
Type of organizational structure
Choosing the organizational structure



FORMAT - Plenary participatory lecture



At the end of this session, participants should be able to understand and appreciate:

1. The concept of an organization.
2. Principles of organizational structuring.
3. Traditional and modern types of organizational structure.
4. Considerations in choosing an organizational structure.


Exhibit 1

The concept of an organization

Exhibit 2

Features of an organization

Exhibit 3

Structure of an organization

Exhibit 4

Considerations in designing organizational structure

Exhibit 5

Principles of organizational structure

Exhibit 6

Rationale for assembling institution units

Exhibit 7

Types of organizational structure

Exhibit 8

Line-discipline organization

Exhibit 9

Line-commodities and production areas

Exhibit 10

Rubber Research Institute of Malaysia

Exhibit 11

Matrix organization

Exhibit 12

Where matrix is best

Exhibit 13

Requirements for a matrix organization

Exhibit 14

Responsibilities and interest of matrix research organization

Exhibit 15

Questions concerning the management of a matrix research organization

Exhibit 16

Modified matrix organization

Exhibit 17

An integrated national research system (Chart 1)

Exhibit 18

An integrated national research system (Chart 2) (administration and support services)

Exhibit 19

Executive and other committees


Reading note: Structure of an organization.





Session guide: Structure of an organization

Exhibit 1: The concept of an organization
Exhibit 2: Features of an organization
Exhibit 3: Structure of an organization
Exhibit 4: Considerations in designing organizational structure
Exhibit 5: Principles of organizational structure
Exhibit 6: Rationale for assembling institutional units
Exhibit 7: Types of organizational structure
Exhibit 8: Line-discipline organization
Exhibit 9: Line-commodities and production areas organization
Exhibit 10: Hierarchical structure of the Rubber Research Institute of Malaysia
Exhibit 11: Matrix organization
Exhibit 12: Where the matrix approach is best
Exhibit 13: Requirements for a matrix organization
Exhibit 14: Responsibilities and interests of matrix research organisations
Exhibit 15: Questions concerning the management of a matrix research organization
Exhibit 16: Modified matrix organization
Exhibit 17: An integrated national research system - Chart 1
Exhibit 18: An integrated national research system - Chart 2
Exhibit 19: Executive and other committees

Initiate discussion by asking participants what is meant by an organization. Leavitt defined an organization as a particular pattern of structure, people, task and techniques. Show EXHIBIT 1 and discuss various definitions of an organization. Observe that there are common features in all these definitions (EXHIBIT 2).

The structure of an organization is the manner in which various sub-units are arranged and inter-related. Show EXHIBIT 3 and discuss the importance of structure in providing guidelines on hierarchy, authority of structure and relationships, linkage between different functions and coordination with environment. Structure is composed of three components: complexity, formalization and centralization. Discuss each of these components. Complexity is the degree to which activities within the organization are differentiated. Such differentiations may be horizontal, vertical or spatial.

What are the important considerations in designing an organization? Add your own observations to the responses of participants. As EXHIBIT 4 shows, in designing an organization due consideration has to be given to ensure clarity, understanding, de-centralization, stability and adaptability.

Now discuss the theoretical basis for organizational structuring. The basic principles are specialization, coordination, de-centralization and centralization, and line and staff relationships. Show EXHIBIT 5 and discuss each of these.

Specialization is division of work into components or units in which people specialize. It can be vertical (kinds of work at different levels in the organization) or horizontal (division into departments). Specialization facilitates application of special knowledge for achievement of goals. This increases the efficiency of the organization. Disadvantages of specialization would include adverse effects on fundamental work attitudes, relationships and communication.

Coordination is integration of activities of specialized units towards the common objective. This involves placement of different units in the organization together or separately and deciding on patterns of relationship and communication. Coordination is achieved through hierarchy of authority. This involves important principles of organization. Unity of command is being responsible to and receiving orders from only one superior. The scalar principle ensures a chain of command in a straight line from top to bottom. Since this is not always desirable or possible, employees could also relate with each other on a 'gang plank.' The responsibility and authority principle establishes the need for authority along with responsibility for accomplishing tasks. Span of control refers to the number of specialized units of persons under one management. Discuss the situational factors which affect the span of control. Departmentalization is the process of grouping different types of functions and activities of the organization. Departmentalization may be functional, by product, or by users, territory, process, equipment, etc.

Another important principle of organizational structuring is whether decision making is delegated to lower levels (de-centralized) or concentrated at the top (centralized). Observe that organizations have different blends of centralization and de-centralization.

Line authority refers to the superior-subordinate relationship through the hierarchy of authority. Line employees are directly responsible for achieving organizational goals. Staff employees aid and support line employees in their work. Thus, they have different functions and goals, which could lead to conflicts, but they should be avoidable. Ask participants about conflict between line and staff in their organizations. Issues in conflict resolution will be discussed in another module.

Ask participants whether the structure of an organization should remain stable throughout or change in response to environmental changes. Obviously, the organization has to respond to changes in the environment as they affect its working.

One of the principles of management discussed during the previous session was 'departmentalization.' This principle is concerned with sectioning an institute into administrative units to enhance the probability of the institute achieving its goals by implementing its plans within the limits of its capabilities. There are two rationales used for assembling, or sectioning, institutional units. These are concerned with (1) the grouping of the institute's staff into administrative units, and (2) the flow of authority and responsibility within an institute. Show EXHIBIT 6. Each of these rationales is to be discussed in conjunction with subsequent exhibits.

Now discuss different types of organizational structure. They could be classical or modern (EXHIBIT 7). The classical organizational structure includes simple centralized design, bureaucratic organization and divisionalized organization. The simple centralized design is suited for smaller organizations, where power, decision making authority and responsibility for goal setting are vested in one or two persons. The bureaucratic structure is suited where standard methods and procedures are employed for ensuring work performance. The divisionalized organization refers to a multiproduct or service design.

Show EXHIBIT 8. One of the first things that one notes about this exhibit is that it has been departmentalized by discipline. This is a comfortable grouping for scientists. It is the way universities are departmentalized and most of the early research institutes used a similar approach.

EXHIBIT 8 also demonstrates a line organization in which the line of authority flows in an unbroken chain from the chief executive to the lowest organizational level, with each subordinate having one person to report to. In the previous session, when we were discussing management principles, this was called the scalar principle.

Another way of departmentalizing an institute is by commodity and production areas. Show EXHIBIT 9 and discuss. Ask participants if they have examples from their institutes of departmentalization by discipline, as in EXHIBIT 8, or by commodity, as shown in EXHIBIT 9.

EXHIBIT 10 provides an example of an institute that has been departmentalized by several of the rationales that were shown in EXHIBIT 6. Briefly show EXHIBIT 6 again. Then go back to EXHIBIT 10 and ask the participants to group the Rubber Research Institute departments, divisions and groups under the rationales of EXHIBIT 1.

The departments can be grouped thus:




Extension and Development

Chemistry and Technology

Research Support and Services

The divisions and groups can be grouped thus:




Plant Protection and Microbiology

Plant Science

Product Development

Tapping and Exploitation Physiology

Soil Management

Engineering and Testing

Analytical Chemistry

Crop Management

Specification and Quality Control

Polymer Physics and Processing

Computer Unit

Extension and Development

Applied Economics and Statistics

Research Stations

In the Rubber Research Institute example, it is not clear exactly where some of the sections should be placed. Take for example, the Plant Protection and Microbiology groups. Microbiology clearly is a discipline, but what about plant protection? Does this include mechanical weed control during early stages of growth? Does it include irrigation practices? If plant protection includes many disciplinary approaches then it would be better placed under the commodities and production areas category.

Show EXHIBIT 11. This is a relatively new form of organization that involves two intersecting chains of command and two approaches to departmentalization. One way of departmentalization is almost always according to projects or programmes, the other usually being either disciplinary or functional. This form of management has evolved as clients or funding organizations have begun to place more emphasis on results - i.e., completed projects which have attained their technical, fiscal and schedule goals.

Exhibit 11 also shows a disciplinary organization which has been overlaid with a project organization to make a matrix organization. Both project directors and disciplinary department directors report to the institute director. As shown in the exhibit, Project A draws 4 staff members from the Plant Physiology Department. The check (Ö) indicates that the project manager for Project A was drawn from the Virology Department.

When Project A is completed or terminated, the staff members will return to their disciplinary departments. For the duration of the project, however, they will report to and receive direction from the project manager on project matters. The disciplinary department directors, however, normally maintain responsibility for personnel and administrative matters, such as salary reviews and personnel development activities.

Show EXHIBIT 12. Ask the participants for examples of situations where a matrix structure may be best. Now discuss the benefits of a matrix organization. A number of comments might be made regarding each of these benefits. For example, 'effective use of specialists' refers to an ability within an organization to use specialists across divisional lines. This means that a good chemist, for example, may have opportunities to work on other projects outside his or her department, and does not have to rely only on projects within his or her department. The environment is also important, especially when one considers disciplines to stimulate new research projects and ideas. Equipment and facilities considerations may be equally important. Not only is there a tendency for there to be more and better equipment and facilities within a matrix management system, the equipment and facilities tend to be utilized more, and are therefore more cost effective.

Next discuss the disadvantages of a matrix organization. Matrix management definitely requires teamwork, communication and certain types of personalities. Functional officers or divisions are often reluctant to release personnel and other resources to projects in other divisions. 'Empire building' is a problem in this context. Likewise, specialists feel comfortable working with their technical peers and colleagues within their own department, and might feel ill at ease being transferred - even temporarily - to another division.

Show EXHIBIT 13 and discuss each of the four points. It is useful to discuss at which level or office in the organization these requirements should be met. Show EXHIBIT 14 and discuss. The exhibit is self-explanatory, with the possible exception of the term 'efficiency' under disciplinary or functional management, and 'effectiveness' under project management. Efficiency in disciplinary or functional management refers to managerial efficiency in managing financial, equipment and other resources. Effectiveness in project management refers to the effectiveness of the project in achieving its goals and objectives. Managerial efficiency, of course, can greatly influence the effectiveness or lack of effectiveness of a project. It is possible, nonetheless, to have an effective project which was not efficiently managed. While discussing EXHIBIT 14, it might be useful to refer to EXHIBIT 15.

EXHIBIT 16 shows a modified matrix organizational structure. Here, as with the matrix structure, staff members are assembled from several divisions to carry out a project under the leadership of a project manager. In the modified matrix case, however, the project manager reports to his or her department head instead of to the institute director. A modified matrix structure is also used for complex activities in uncertain environments, as in the case with the matrix structure. However, when the project tends to be small, it is often more efficient to use the modified matrix approach. In EXHIBIT 16, the circle around the staff number for a project from a department indicates that the project manager is located in this department. For example, the project manager for Project B is in the Genetics Department.

EXHIBITS 17, 18 and 19 show how a national research system could be integrated by using a matrix organizational approach. EXHIBIT 17 shows how programmes and projects under the Senior Deputy Director for Commodities, Production Areas and Extension, draw on the staff and facilities of the disciplinary central and regional research institutes. In such an arrangement, the Senior Deputy Director focuses on programme productivity. The Deputy Directors for the Central and Regional Agricultural Research Institutes focus on the technical quality of the output of their institutes, in support of the national programmes.

In EXHIBIT 17, the circles at an intersection of the matrix indicates staff drawn from an institute's department to work on a project, the number denoting the number of people drawn from the department and the check (Ö) indicating from where the project manager was drawn. For example, in Project 'B' of the Fields Crops Programme, three people from Regional Research Institute 2 are conducting this project. Two staff members are from the Irrigation and Salinity Department and one person, who is also the project manager, is from the Soil Physics Department. For project matters, the project manager will report to the head of the Field Crops Programme for the duration of the project. As can be seen from this figure, some project managers may be drawn from institutes, as in the preceding example, or they may come from the programme staff, as is the case for Project 'A' under the Animal Husbandry Programme.

EXHIBIT 18 shows how support services and administration relate to the research institutes. The Deputy Directors for these two areas are responsible for organizing them for the national research system and ensuring that quality is maintained. The institute directors are concerned with the productivity of these services in assisting the institute to carry out its work. There are different ways by which administrative control and reporting requirements can be exercised in the organization, as shown in EXHIBIT 14. Ask the participants to make suggestions.

Communication is very important in an agricultural research organization. A common way of aiding the communications process is to establish committees to address important areas for the organization. EXHIBIT 19 shows an Executive Committee, together with committees for Quality Control, for Productivity, for Support Services and for Administration. Discuss with the participants the need for these committees, as well as their suggested composition and meeting schedule. Are other committees needed?

Exhibit 1: The concept of an organization

"...organization is a particular pattern of structure, people, tasks and techniques.. "

Source: Leavitt, H.J. 1962. Applied organization and readings. Changes in industry: structural, technical and human approach. in: Cooper, W.W., et al. New Perspectives in Organization Research. New York, NY: Wiley.

"... a system which is composed of a set of subsystems..."

Source: Katz, D., and Kahn, R.L. 1978. The Social Psychology of Organizations. New York, NY: Wiley

Exhibit 2: Features of an organization

Composed of individuals and groups of individuals
Oriented towards achievement of common goals
Differential functions
Intended rational coordination
Continuity through time

Exhibit 3: Structure of an organization


"... institutional arrangements and mechanisms for mobilizing human, physical, financial and information resources at all levels of the system..."


Division of work into activities
Linkage between different functions
Authority structure
Authority relationships
Coordination with the environment



Source: Sachdeva, P.S. 1990. Analytical framework for the organization and structure of NARS.
in: Organization and Structure of NARS: Selected Papers. The Hague: ISNAR.

Exhibit 4: Considerations in designing organizational structure


Exhibit 5: Principles of organizational structure




Unity of command
Scalar principle
Responsibility and authority principle
Span of control
- functional
- product
- users
- territory
- process or equipment

De-centralization and centralization

Line and staff relationships

Exhibit 6: Rationale for assembling institutional units

Grouping of staff

· Disciplinary
· Functional
· Commodity or production area
· Geographical
· Project

Flow of authority

· Line
· Matrix
· Modified matrix

Exhibit 7: Types of organizational structure

Classic organizational structure

Simple centralized design
Bureaucratic organization
Divisionalized organization

Modern organizational design

Project organization
Matrix organization

Adhocracy or Organic organizational structure

Exhibit 8: Line-discipline organization


Exhibit 9: Line-commodities and production areas organization


Exhibit 10: Hierarchical structure of the Rubber Research Institute of Malaysia


Exhibit 11: Matrix organization


Exhibit 12: Where the matrix approach is best

Matrix organizations have been found to be best for complex activities in uncertain environments


· Effective use of specialists
· Job security for specialists
· Friendly environment for specialists
· Equipment and facilities: more and better


· Stress
· Specialists with several bosses
· Project managers requiring several specialists or shared specialists
· Functional managers providing shared specialists
· Sacrifice of territorial incentive

Exhibit 13: Requirements for a matrix organization

- Well-defined charters
- Communication
- Planning
- Teamwork
- Willingness to compromise
- Good management skills

Exhibit 14: Responsibilities and interests of matrix research organisations


Exhibit 15: Questions concerning the management of a matrix research organization

· Which functions should be in the project office and which in should remain in the functional organization?

· What is the project manager's role in performance evaluation of functional specialists?

· Should the functional specialists be located with the functional manager or with the project manager?

· How are the functional managers accountable for the outputs of their subordinates?

· What is the functional manager's role in goal setting, progress monitoring and performance evaluation?

· How can functional managers' and project managers' pay be linked to performance, meeting objectives, or both?

· How can functional managers get more exposure to customers, and how can project managers become more inclined to fund the development of corporate resources?

· How can competition among functional organizations (or between functional and project organizations) be minimized when these organizations have similar capabilities and interests?

Exhibit 16: Modified matrix organization


Exhibit 17: An integrated national research system - Chart 1


Exhibit 18: An integrated national research system - Chart 2


Exhibit 19: Executive and other committees


Reading note: Structure of an organization

Designing organizational structures
Principles of organization structure

The term organization has been defined in several ways. Leavitt (1962) defines it as a specific configuration of structure, people, task and techniques. Structure describes the form of departments, hierarchy and committees. It influences the organization's efficiency and effectiveness. People refers to the skills, attitudes and social interaction of the members of the organization. Task refers to the goals of the individual and the organization. Techniques refers to the methodical approach used to perform tasks. Organizational structure thus refers to the institutional arrangements and mechanisms for mobilizing human, physical, financial and information resources at all levels of the system (Sachdeva, 1990).

Organization is also defined as a system incorporating a set of sub-systems (Katz and Kahn, 1978). These sub-systems are related group of activities which are performed to meet the objectives of the organization.

Organization has been viewed differently by numerous theorists. However, all definitions usually contain five common features:

· composed of individuals and groups of individuals;
· oriented towards achieving common goals;
· differential functions;
· intended rational coordination; and
· continuity through time.


Structure is thus an integral component of the organization. Nystrom and Starbuck (1981) have defined structure as the arrangement and interrelationship of component parts and positions in an organization. It provides guidelines on:

· division of work into activities;
· linkage between different functions;
· hierarchy;
· authority structure;
· authority relationships; and
· coordination with the environment.

Organizational structure may differ within the same organization according to the particular requirements.

Structure in an organization has three components (Robbins, 1989):

· Complexity, referring to the degree to which activities within the organization are differentiated. This differentiation has three dimensions:

- horizontal differentiation refers to the degree of differentiation between units based on the orientation of members, the nature of tasks they perform and their education and training,

- vertical differentiation is characterized by the number of hierarchical levels in the organization, and

- spatial differentiation is the degree to which the location of the organization's offices, facilities and personnel are geographically distributed;

· Formalization refers to the extent to which jobs within the organization are specialized. The degree of formalization can vary widely between and within organizations;

· Centralization refers to the degree to which decision making is concentrated at one point in the organization.

Designing organizational structures

Some important considerations in designing an effective organizational structure are:

· Clarity The structure of the organization should be such that there is no confusion about people's goals, tasks, style of functioning, reporting relationship and sources of information.

· Understanding The structure of an organization should provide people with a clear picture of how their work fits into the organization.

· De-centralization The design of an organization should compel discussions and decisions at the lowest possible level.

· Stability and adaptability While the organizational structure should be adaptable to environmental changes, it should remain steady during unfavourable conditions.

Principles of organization structure

Modern organizational structures have evolved from several organizational theories, which have identified certain principles as basic to any organization.


Specialization facilitates division of work into units for efficient performance. According to the classical approach, work can be performed much better if it is divided into components and people are encouraged to specialize by components. Work can be specialized both horizontally and vertically (Anderson, 1988). Vertical specialization in a research organization refers to different kinds of work at different levels, such as project leader, scientist, researcher, field staff, etc. Horizontally, work is divided into departments like genetics, plant pathology, administration, accounts, etc.

Specialization enables application of specialized knowledge which betters the quality of work and improves organizational efficiency. At the same time, it can also influence fundamental work attitudes, relationships and communication. This may make coordination difficult and obstruct the functioning of the organization. There are four main causal factors which could unfavourably affect attitudes and work styles. These are differences in:

· goal orientation;
· time orientation;
· inter-personal orientation; and
· the formality of structure (Lawrence and Lorsch, 1967).


Coordination refers to integrating the objectives and activities of specialized departments to realize broad strategic objectives of the organization. It includes two basic decisions pertaining to:

(i) which units or groups should be placed together; and

(ii) the patterns of relationships, information networks and communication (Anderson, 1988).

In agricultural research institutions, where most of the research is multidisciplinary but involves specialization, coordination of different activities is important to achieve strategic objectives. Efficient coordination can also help in resolving conflicts and disputes between scientists in a research organization.

Hierarchy facilitates vertical coordination of various departments and their activities. Organizational theorists have over the years developed several principles relating to the hierarchy of authority for coordinating various activities. Some of the important principles are discussed below.

Unity of Command Every person in an organization should be responsible to one superior and receive orders from that person only. Fayol (1949) considered this to be the most important principle for efficient working and increased productivity in an organization.

The Scalar Principle Decision making authority and the chain of command in an organization should flow in a straight line from the highest level to the lowest. The principle evolves from the principle of unity of command. However, this may not always be possible, particularly in large organizations or in research institutions. Therefore Fayol (1949) felt that members in such organizations could also communicate directly at the same level of hierarchy, with prior intimation to their superiors.

The Responsibility and Authority Principle For successfully performing certain tasks, responsibility must be accompanied by proper authority. Those responsible for performance of tasks should also have the appropriate level of influence on decision making.

Span of Control This refers to the number of specialized activities or individuals supervised by one person. Deciding the span of control is important for coordinating different types of activities effectively. According to Barkdull (1963), some of the important situational factors which affect the span of control of a manager are:

· similarity of functions;
· proximity of the functions to each other and to the supervisor;
· complexity of functions;
· direction and control needed by subordinates;
· coordination required within a unit and between units;
· extent of planning required; and
· organizational help available for making decisions.


Departmentalization is a process of horizontal clustering of different types of functions and activities on any one level of the hierarchy. It is closely related to the classical bureaucratic principle of specialization (Luthans, 1986). Departmentalization is conventionally based on purpose, product, process, function, personal things and place (Gullick and Urwick, 1937).

Functional Departmentalization is the basic form of departmentalization. It refers to the grouping of activities or jobs involving common functions. In a research organization the groupings could be research, production, agricultural engineering, extension, rural marketing and administration.

Product Departmentalization refers to the grouping of jobs and activities that are associated with a specific product. As organizations increase in size and diversify, functional departmentalization may not be very effective. The organization has to be further divided into separate units to limit the span of control of a manager to a manageable level (Luthans, 1986). In an agricultural research institution, functional departments can be further differentiated by products and purpose or type of research.

In contrast to functional departmentalization, product-based departmentalization has the advantage of:

· less conflict between major sub-units;
· easier communication between sub-units;
· less complex coordination mechanisms;
· providing a training ground for top management;
· more customer orientation; and
· greater concern for long-term issues.

In contrast, functional departmentalization has the strength of:

· easier communication with sub-units;
· application of higher technical knowledge for solving problems;
· greater group and professional identification;
· less duplication of staff activities;
· higher product quality; and
· increased organizational efficiency (Filley, 1978).

Departmentalization by Users is grouping of both activities and positions to make them compatible with the special needs of some specific groups of users.

Departmentalization by Territory or Geography involves grouping of activities and positions at a given location to take advantage of local participation in decision making. The territorial units are under the control of a manager who is responsible for operations of the organization at that location. In agricultural research institutions, regional research stations are set up to take advantage of specific agro-ecological environments. Such departmentalization usually offers economic advantage.

Departmentalization by Process or Equipment refers to jobs and activities which require a specific type of technology, machine or production process.

Other common bases for departmentalization can be time of duty, number of employees, market, distribution channel or services.

De-centralization and Centralization

De-centralization refers to decision making at lower levels in the hierarchy of authority. In contrast, decision making in a centralized type of organizational structure is at higher levels. The degree of centralization and de-centralization depends on the number of levels of hierarchy, degree of coordination, specialization and span of control. According to Luthens (1986), centralization and de-centralization could be according to:

· geographical or territorial concentration or dispersion of operations;
· functions; or
· extent of concentration or delegation of decision making powers.

Every organizational structure contains both centralization and de-centralization, but to varying degrees. The extent of this can be determined by identifying how much of the decision making is concentrated at the top and how much is delegated to lower levels. Modern organizational structures show a strong tendency towards de-centralization.

Line and Staff Relationships

Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend throughout the hierarchy (Koontz, O'Donnell and Weihrich, 1980). Line employees are responsible for achieving the basic or strategic objectives of the organization, while staff plays a supporting role to line employees and provides services. The relationship between line and staff is crucial in organizational structure, design and efficiency. It is also an important aid to information processing and coordination.

In an agricultural research organization, scientists and researchers form the line. Administrative employees are considered staff, and their main function is to support and provide help to scientists to achieve organizational goals

It is the responsibility of the manager to make proper and effective use of staff through their supportive functions. The staff may be specialized, general or organizational (Anderson, 1988). Specialized staff conduct technical work that is beyond the time or knowledge capacity of top management, such as conducting market research and forecasting. General staff consists of staff assistants to whom managers assign work. Organization staff (such as centralized personnel, accounting and public relations staff) provide services to the organization as a whole. Their role is to integrate different operations across departments.

Line and staff personnel have different functions, goals, cultures and backgrounds. Consequently, they could frequently face conflict situations. A manager has to use his skills in resolving such conflicts.

Type of organizational structure

Classical organizational structure
Modern organization designs

An important issue in organizational structuring is whether the structure of an organization should be dynamic and change according to changes in the environment or remain stable in the face of such changes. Since an organization exists in an external environment, it cannot remain indifferent to changes in its external milieu. However, the extent of changes would depend upon the degree of influence the changing environment exerts on the efficient functioning of the organization and sub-units.

Organizations can have simple to complex structures, depending upon organizational strategies, strategic decisions within the organization and environmental complexities. The structure of the organization can be traditional (bureaucratic) or modern (organic), according to needs.

The traditional organizational structure is mechanistic and characterized by high complexity, high formalization and centralization. The classical organization structure designs are simple, centralized, bureaucratic and divisionalized. Modern organizational designs include project organization, matrix design and adhocracy design.

Classical organizational structure

In a simple centralized organizational structure, power, decision making authority and responsibility for goal setting are vested in one person at the top. This structure is usually found in small and single-person-owned organizations. The basic requirement of a simple centralized structure is that it has only one or two functions, and a few people who are specialists in critical functions. The manager is generally an expert in all related areas of functions and is responsible for coordination. Thus, the organization has only two hierarchical levels. However, this structure has to become more complex for growth, diversification or other reasons.

The Bureaucratic Organization

In large organizations and under well defined conditions, organization structure may be bureaucratic. The essential elements of a bureaucratic organization are:

· the use of standard methods and procedures for performing work; and
· a high degree of control to ensure standard performance.

Figure 1 illustrates a bureaucratic organizational structure.

Figure 1. Bureaucratic organizational structure

Mintzberg (1981) has identified two types of bureaucracies. They are standard and professional bureaucracy. Standard bureaucracy is based on efficient performance of standardized routine work. Professional bureaucracy depends upon efficient performance of standardized but complex work. Thus, it requires a higher level of specialized skills. The structure of standard bureaucracy is based on functions, large technical staff and many mid-level managers. In contrast, professional bureaucracy has few mid-level managers.

The Divisionalized Organization

Divisionalized organizational design refers to a multiproduct or service design that separates different products or services to facilitate management planning and control. Different divisions in the organization can further have simple centralized or functional designs, depending upon their size and activities. This type of organizational design is favoured when different kinds of products or services require different kinds of management.

Modern organization designs

Modern approaches to organizational design include project, matrix and adhocracy types.

Project design

Project design is also called the team or task force type. It is used to coordinate across departments for temporary, specific and complex problems which cannot be handled by a single department. This design facilitates inputs from different areas. Members from different departments and functional areas constitute a team, in which every member provides expertise in their area of specialization. Such a structure generally coexists with the more traditional functional designs. An illustration of project type of the organizational structure is given in Figure 2.

Figure 2. A Project-type organization

Matrix Organization

The matrix design blends two different types of designs, namely project and functional organizational designs (Kolodny, 1979). Since the project type of organizational design is not considered stable, the matrix design attempts to provide permanent management structures by combining project and functional structures. The main advantage of this combination is that the matrix design balances both technical and project goals and allocates specific responsibilities to both. Technical goals refer to how well work is done, while project goals relate to issues such as type of work to be done and its costs. Figure 3 shows a very simplified matrix organization design in which department heads have line authority over specialists in their departments (vertical structure). Functional specialists are assigned to given projects (horizontal structure). These assignments are made at the beginning of each project through collaboration between appropriate functional and project managers.

Figure 3. Matrix organizational structure

Matrix organizations are not without their problems (Davis and Lawrence, 1978):

· Responsibility and jurisdiction are not clearly defined in matrix organizations. Bosses are also not clearly identified. Consequently, matrix organizations could lean towards chaos and disorder, and even lead to power struggles unless power between line and project manager is skilfully balanced.

· Within the organization, matrix organizations may encourage the formation of cliques since all decisions are made in a group. This could reinforce group loyalties and create inter-group conflicts.

· Matrix organizations need more human resources, particularly during initial periods. This means higher overheads and increased expenditure.

· Matrix organization forms are usually found at the lower level of the organization.


Adhocratic structures are also called 'free form' or organic organization structures. They stress managerial styles which do not depend upon formal structures. They are well suited for complex and non-standard work and rely on informal structures. An adhocratic structure is flexible, adaptive and organized around special problems to be solved by a group consisting of experts with diverse professional skills (Robbins, 1989). These experts have decision making authority and other powers. The adhocratic Structure is usually small, with an ill-defined hierarchy. Such a design is suitable for high technology and high growth organizations where an arranged and inflexible structure may be a handicap. Figure 4 illustrates an adhocratic type of organizational structure.

Figure 4. Adhocratic organizational structure

Choosing the organizational structure

Organization design is a continuous process. While a simple design is needed for simple strategies, complex designs are necessary when organizational strategies involve complex interactions.

The choice of any type of organizational design should be in consonance with the organizational requirements, strategy and environment. The simple centralized and bureaucratic organizational design based on functional departmentation focuses on work and is thus better suited for getting work done efficiently. The team or project type of organizational design is appropriate where inputs from several functional areas are required. The divisional structure is appropriate if performance and results are to be assessed. Matrix and adhocratic designs focus on coordination and relationship.


Anderson, C.R. 1988. Management: Skills, Functions and Organization Performance. USA: Allyn and Bacon.

Barkdull, C.W. 1963. Span of Control: A method of evaluation. Michigan Business Review, 15 (3):.

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