Basic Organizational Structures


Although there is an almost infinite variety of structural forms, certain basic types predominate in modern complex organizations. There are three basic organizational structures. The conglomerate structure is a variant of divisional structure and is thus not depicted as a fourth structure. Generally speaking, each structure tends to support some corporate strategies over others.

  • Simple Structure has no functional or product categories and is appropriate for a small, entrepreneur-dominated company with one or two product lines that operates in a reasonably small, easily identifiable market niche. Employees tend to be generalists and jacks of all trades.
  • Functional structure is appropriate for a medium-sized firm with several related product lines in one industry. Employees tend to be specialists in the business functions important to that industry, such as manufacturing, marketing, finance, and human resources.
  • Divisional structure is appropriate for a large corporation with many product lines in several related industries. Employees tend to be functional specialists organized.
  • Strategic business units (SBU)are a recent modification to the divisional structure. Strategic business units are divisions or groups of divisions composed of independent product-market segments that are given primary responsibility and authority for the management of their own functional areas. An SBU may be of any size or level, but it must have 1) a unique mission, 2) identifiable competitors, 3)an external market focus, and 4) control of its business functions. The idea is to decentralize on the basis of strategic elements rather than on the basis of size, product characteristics, or span of control and to create horizontal linkages among units previously kept separate.
  • Conglomerate structure is appropriate for a large corporation with many product lines in several unrelated industries. A variant of the divisional structure, the conglomerate structure (sometimes called a holding company) is typically an assemblage of legally independent firms (subsidiaries) operating under one corporate umbrella but controlled through the subsidiaries’ boards of directors. The unrelated nature of the subsidiaries prevents any attempt at gaining synergy among them.

If the current basic structure of corporation does not easily support a strategy under consideration, top management must decide if the proposed strategy is feasible or if the structure should be changed to a more advanced structure.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Empowering People


Empowerment gives people more control over – and responsibility for – their work. It is based on the idea that those most closely involved with operations are in the best position to make decisions about them. So it delegates responsibility as far as possible, with people using their knowledge and abilities to manage the details of their own job, free from the instructions and control of a more remote supervisor.

 

You can see the difference when you go into a shop to exchange some garment. Marks and Spencer has empowered employees, and the first person you meet will happily refund your money or change the garment as you prefer.

 

There are five main types of management style:

  1. I decide and you do – which is the traditional authoritarian approach;
  2. We discuss and I decide – which involves some discussion but responsibility remains at the higher level;
  3. We discuss and we decide – which is more collaborative and has some real delegation of control, but ultimately authority and responsibility remains with the senior manager;
  4. We discuss and you decide – which delegates most control of the decision;
  5. You decide and I’ll help if needed – where the senior manager hands over control, and acts as a coach and consultant if needed.

 The last level is closest to empowerment and is the approach that is becoming more widely accepted. As Bill Gates says, ‘Empowering leadership means bringing out the energies and capabilities people have and getting them to work together in a way they wouldn’t do otherwise.’

 

Empowerment gives more authority to people lower down the organization, and it also puts more demand on them. They must be willing to accept this responsibility, be able to make good decisions, work without supervision and probably form part of a team which completes in identifiable part of the whole process.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight