Entrepreneurial Blog

1) Functional (formal, authority and organizational structures)

The functional organizational design structure is formal with an authority and organizational structure.  The department relationships are defined with clear lines of authority.  The organization structure is designed vertically with direct lines of authority.  This organizational structure is designed with every position being able to be traced to the top position; the chief executive.  This type of organizational structure is similar to a tree with branches.  In the functional organization the line of authority gives supervisors the “right to direct others and to require them to conform to decisions, policies, rules, and objectives.”  This type of structure show clear lines of command.  The line positions have direct dealing with the mission of the organization; the final product, service, or customer result.  The staff positions do not have direct dealings with the end result of the organization but assist the line positions.

The advantage of the functional organizational design structure is that everyone can look at the organizational chart and knows who their direct supervisor is and follow the chain command up the line.  The weakness of this type organizational design is there may be too many branches and the top chief executive might not be able to effectively follow all of the organizational processes.  The chief financial officer might not be aware of problems at the lowest level.

The functional organizational design works well for supervisors.  Supervisors can specifically show employees by use of the organizational chart where that employee falls in the flow of things.  That employee can know their specific job functions and what is expected of them and by looking at the organizational chart know what is expected of the other employees around them.  Within this organization design every position should have a detailed job description with expectations listed.  McGregor’s Theory Y can work very well in the functional organizational design.  Supervisors can assume that most employees will perform their job functions well, enjoy their work, be able to self direct, and seek responsibility.  The Appreciative Inquiry approach to management is also an excellent technique in this structure type.  Supervisors could seek a cooperative search for the best in everything; the best in their employees, the best in their organization, and the best in the world.  My using McGregor’s Theory Y and the Appreciative Inquiry supervisors can expect and receive the best performance from their employees.

The supervisors in the functional organizational design structure would probably have many programmed decision and use the decision-making process for the nonprogrammed decisions.  Supervisors and employees would be better able to work together to follow the decision-making process.

2) Horizontal (flat)

The horizontal organization design is where the company has been redesigned and a flat organization structure has been created with minimal managerial authority relationships.  In the redesign key processes are evaluated and supervisors are given management these key processes.  Supervision may cross departments and lines to follow the steps in completing the key processes.  These key processes not defined as per departments but by objectives such as meeting customer orders and requirements.  This organizational design structure requires a focus on customers’ needs rather than on the employee’s jobs, functions, or specialties.

The strength in the horizontal organizational design is that the customers’ needs take precedence.  The main objective of organizations is to best service the customer.  This organizational design will strengthen the organization to provide for the customer better.  The firm could be more efficient and more competitive in the market.  The weakness is that the line and staff position could not be readily defined.  Employees might not know if their position in to have a direct effect on the final product for the customer or if they are supporting other positions who have a direct effect on the final product.

The supervisors in a horizontal organizational design structure would be using Herzberg’s Theory to manage their employees.  These supervisors would reward the employees for getting it right and fulfilling customers’ expectations.  When employees are rewarded for focusing on the customer and other employees see the importance of focusing on the customer then the organizations goals can be met.

With the reorganization of the company and the change to the horizontal organizational structure there would not be as many programmed decisions.  There would be many more non programmed decisions for the supervisor to follow thru with the decision-making process.

3) Informal (virtual)

The informal or virtual organizational design structure is when companies are temporarily linked together in a collaborative effort to maximize profits in the market.  Companies could join together to share resources; employees, skills, products, and access to each other’s markets.  The weakness in this type of organizational design is no direct line of authority.  The employees of the different firms may have supervisors that are located in a firm that is not their own.  Employees may have a difficult time discerning their job duties.  The strength in this type of organizational design is that the market can be utilized to the advantages of these collaborative companies.

In the Herzberg’s Motivation –Hygiene Theory the dissatisfiers are the hygiene factors.  In the virtual organization design structure the employees would have many hygiene factors.  There could be difficult working conditions, different interpersonal relationships between companies, different supervision, and different policies and administration between the companies.

In the virtual organization design there would be no programmed decisions.  All of the decisions would be nonprogrammed with the supervisors trying to follow thru on the decision-making process.  Many of the steps would probably be skipped due to the numerous decisions needed to be made.

4) Matrix (project management-type)

The project management type or matrix organizational design structure is where activities are coordinated across departments.  This organizational design structure combines line-staff design with horizontal design.  The line-staff and teams-projects work together across the department lines.  The employees report directly to their own supervisor but they also work for the project manager when they are assigned to the special projects.

The strength is that this type of organizational design structure is best for focusing the different departments’ special talents on specific projects for specific periods of time.  Several projects can be performed at the same time efficiently under the matrix organizational design structure.  The weakness is that this structure violates the direct line of command when some employees are accountable to project managers or supervisors in other departments during the periods of special projects.  Scheduling employees can also be a problem and a weakness.

The supervisors in the project management type or matrix organizational structure would probably broaden the scope and importance of the employee’s jobs.  The supervisors would provide job rotation, multi-tasking, and job enrichment for their employees.  These supervisors would use participative management so that their employees are given the opportunity to succeed.  Empowering employees would work well in that the employees would have the confidence and skill to work with different supervisors and project managers knowing that they will be heard on any issues, their fellow employees are also committed to quality, and they can make a direct connection between their projects and the organization’s mission statement.

Supervisors would also have many more nonprogrammed decisions and follow the decision-making process.  With supervisors and project managers working with the employees all of the steps in the decision-making process would be more easily followed.  Since all are from the same organization, all know the organization’s mission statement, and all would be more willing to make decision in keeping with following the mission statement.