Organizational Structures & its Benefits Free Essay Samples & Outline
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Sample Essay On Organizational Structures & its Benefits
Over the years, the business world has regarded organizational structures and teams as a source of competitive advantage that leverages an organization against changes in its environment and ultimately improve its performance.
This essay will explore the three main organizational structures expounding on the matrix structure and its benefits. The paper further delves into general systems theory and elaborates on the concept of systems thinking and how they can be beneficial to an organization. Moreover, virtual teams and traditional teams will be compared and contrasted and explained. Finally, the essay will define shareholders and stakeholders and pointing out their differences.
As (Galbraith, Downey, & Kates, 2001) elaborate, an organization’s structure refers to how formal power and authority is centralized and how organizational components, their relationships and their hierarchy are determined. It entails grouping together people in an organization around functions, defining their responsibilities and configuring these functions for managerial and decision making purposes.
The Functional Structure
It entails coordination, supervision and task allocation within a business environment through the principle of employee specialization centered on function or role. Traditionally, such functions may include production, marketing, human resources and accounting. A centralized managerial model enables the coordination and specialization of tasks thereby making production efficient and predictable. This structure adopts the silo concept where communication chain between functions happens vertically (Miles & Snow, 1992).
A functional structure is applicable for mass producers of standardized, low-cost goods and services since coordination and specialization of tasks tend to be centralized. The structure maximizes on efficiency by integrating activities vertically. However, the high level of efficiency and centralization undermines cooperation among business units/functions. Moreover, the communication in a functional structure can be rigid making organizational processes slow and inflexible (Jacobides, 2007).
Here, the organization has few to no levels of middle management leading to a large number of people under each manager. Therefore, duties and responsibilities of a manager in a flat organization are much higher and they rely less on guidance from supervisors (Ghiselli & Siegel, 1972).
This structure works best for small firms and technology organizations that are highly specialized. It grants autonomy and self-realization to managers and workers will be included in the decision making process consequently impacting productivity positively. The elimination of middle management expedites customer feedback and decisions can be made more quickly.
However, this self-managing structure may deter valuable employees whose career expectations include promotions. Moreover, the bossless structure may be a problem when handling grievances, ensuring workplace diversity and biased decision making. (Klint , 2014)
The Matrix Structure
As organizations endeavor to achieve multiple objectives with minimal resources, the matrix structure is adopted to link disparate parts of the organization and encourage collaboration among teams. It can combine the best practices of separate organizational structures and it is regarded as one of the most effective ways to force interaction among strategic business units and integrate diverse departments (Kates, & Galbraith, 2007).
This structure is best suited for organizations that already established cohesive teamwork, joint liability and a collaborative managerial process. Ideally, the structure groups employees by function and product. People with the same skills are grouped together to execute work assignments.
Unlike the functional structure, the matrix dynamic approach enables seamless sharing of information among team members across task boundaries. Also, it improves upon the silo concept of functional structure by diminishing vertical communication opting for a more efficient horizontal structure. The structure also allows for employee specialization thus increasing their depth of knowledge with regard to project needs (Hall, 2013).
However, the structure is not without setbacks. Although the matrix is intended to foster cooperation across teams, it tends to increase bureaucracy, more stake holder meetings and ultimately slowing down the decision making process. Moreover, centralizing the management in a matrix leads to high levels of escalation making it slow and expensive to run. Complexity of the chain in command also rises and leads higher manager to worker ratio which may create reporting confusion and conflicting employee loyalties (Galbraith J. R., 1971).
Boundary-Less Organizations and General Systems Thinking
General Systems Thinking
General Systems Thinking is one of several methodologies which use systems approach to understand complex phenomena and problems. It seeks to identify the general relationships of the empirical world by observing patterns in our systems to find an optimum degree of generality. Discovering patterns and discerning them leads to a revelations of principles that can be applied in various research fields. (Johnson, Kast, & Rosenzweig , 1964).
In a managerial sense, GST is a framework for visualizing an organization’s internal and external environments as a whole and recognizing the appropriate place and functions of subsystems. As stipulated by (Smith J. , 2010) we should look at an organization like a living system in continuous exchange with its environment. Moreover, just like a living organism, the system usually operates at an optimum state called homeostasis which self-corrects by relying on feedback. The primary goal of a system therefore is balance by operating at a steady state that is purposeful and self-controlling (Aronson, 1998).
Furthermore, a systems components and attributes are confined within boundaries. In management for instance, organizations have specialized functions different from other system parts but can be integrated with others to perform a complex task. System thinking therefore breaks down a system to its strategic parts, discerns their mutual interdependency and aims to facilitate their compatibility to achieve specific organizational goals (Smith J. , 2010).
This is a contemporary organization design that is highly engaged with its environments. This concept remove bureaucratic divisions that separate the organization and its stakeholders. This is achieved by thriving in change by developing characteristics and adopting new practices that better position the organization against threats and changes in its environments. Boundaryless organizations are of four types: network organization, virtual organization modular organization and strategic alliance (Griffin, 2014).
Apart from traditional face-to-face communication, boundaryless organizations embrace virtual methods like email and video conferencing. This freedom to teamwork international employees improves productivity and allows for flexibility in operations. Such organizations have a free-form workplace that encourages employees to manage and coordinate their own projects thereby fostering strong work ethic.
Virtual Teams Vs Traditional Teams
Today’s reliance on technology by businesses worldwide for communication and administration have led to virtual work arrangements that greatly rely on web-based communication to connect globally diverse teams.
For businesses that have a global presence, or outsource their operations, using virtual organizations cuts on costs and enables teamwork situations in diverse settings. Virtual teams, unlike traditional teams, have overcome geospatial separations while cutting down on office space, travel and time-related expenses. Moreover, virtual teams aid in unifying functions across business units.
On the flip side, the cost of the technology infrastructure, its installation and maintenance is pricier for small and mid-size organizations. Furthermore, the lack of physical interaction among team members leads to social isolation and in turn affects productivity (Bergiel, Bergiel, & Balsmeier, 2008).
Also known as the intact team, this team is functionally oriented and composed of specialists who work together and share the same project goals. The leadership in traditional teams is dependent on the organization’s hierarchical structure and new team members are recruited based on their technical skills. Also, they adopt a top-down communication chain
The traditional structure tends to be stable for many years since team members are replaced as required based on their specialization. The centralized nature of management in traditional teams facilitates faster decision making by top management. Moreover, the focus on specialization identifies individual effort of employees which in turn motivates their performance.
Unlike virtual teams, traditional teams need central office space for the employees which comes at a cost. For virtual teams on the other hand, the cost of office space can be diverted to more profitable ventures. Also, bureaucracy of decision making is a deterrent to creativity and innovation since it is done without the consultation of subordinates (Duggan, 2017).
Shareholders and Stakeholders
These are owners of a company’s stock and they stand to gain directly if the company is profitable Managers are obligated to increase the company profits through open and non-deceptive ways. However, they are not personally liable for the company’s debts even if it goes bankrupt. Shareholders play a minimal role in the day-to-day running of the organization and leadership relies on a board of directors or an executive management.
Stakeholders are individuals or groups who benefit from and are harmed by the actions of a corporation. They include employees, customers and suppliers. Modern corporate social responsibility has seen companies incorporating the general public by making corporate choices that protect social welfare regardless of legal and regulatory requirements.
Ideally shareholders are owners of the company through owning shares/stocks, whereas a stakeholder is interested in the company for reasons other than just its profitability. On the other hand, shareholders advance capital to a company which in turn engages in activities to generate profits. Moreover, the company has a duty to both the stock holders and individuals or groups that directly or indirectly contribute to the company’s activities and profitability and are the company’s beneficiaries and risk bearers. (Freeman, 2010).
As an organization’s external environments become broader and global, there is need for more inclusive and continuous engagement with its stakeholders to identify new groups of people potentially impacted by their activities. Stakeholder analysis is usually conducted to start communication engagements with potential stakeholders. The purpose of these engagements is to build mutually benefiting relationships within the societies the business operates and ultimately improve planning and performance.
In conclusion, the dynamic and ever changing business world requires organizations to be versatile and adaptive to increasing globalization. An array of organizational structures are available to leverage a company within the markets. There is also a choice of the type of teams to adopt and the need to incorporate systems thinking in an organizations continuous improvement strategy.
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