Organizational theory© 2006 Jørgen Lægaard, Mille Bindslev & Ventus Publishing ApSISBN 87-7681-169-7

Structures and CultureEsatblishing Structures and Culture in the organisational environment

Organizational structure

Simple structure Hierarchical system Functional organization Product organization Matrix organization

Simple structure

The simplest type of hierarchy is found in small companies where the owner participates in the work.

Coordination takes place spontaneously; there are no levels between the owners and the employee(s).

Many employers want top managers who are assigned certain contact and supervision tasks and serve as substitutes for their employers.

Hierarchical system

When the organization grows bigger, a hierarchical system will develop.

The hierarchy may serve as authority and the right to make certain types of decisions.

Inspiration was derived from military systems, hence the concepts of line and staff. Line is referred to as a chain of command in military terminology.

Hierarchical system

Functional organization

The expertise in the functional organization is centralized and enabled to develop further.

This will also involve a kind of cultural homogeneity: People have the same academic background, they use the same technical models, and they perform tasks within the same function.

Functional organization

All these factors are seemingly fine, but the problem is that the different professional groups distinguish themselves, distance themselves from each other, do not understand each other and easily come into conflicts with each other.

Functional organization

Product organization

Product organization is a significant form of organization today.

It is particularly useful in organizations with clearly separated product groups or services.

Quick changes in competitive conditions and technology cause great advantages for this organizational form.

Product organization

The advantages of product organization are that the specialists in the organization are able to focus on one specific product group and make quick decisions.

The final result will also be much clearer than in functional organization where responsibilities are often volatilized.

Product organization

Matrix organization

The matrix principle or matrix organization may be referred to as a theoretical model which can be realized in different ways.

Matrix organization

The principles of the matrix organization are; Logistics Production Sale

products 1 products 2 products 3

Only functions that directly influence logistics, production and sale are included. Other functions such as accounting are not included.

Matrix organization

Matrix organization

Four challenges It is not easy to make a matrix organization.

The greatest challenges in this type of matrix organization are assessed to be: Shared starting point Shared image of the task Progress Communication and involvement

Matrix organization

Ensuring a shared starting point and shared understanding and responsibility - Hold a number of meetings for the entire team.

Different academic backgrounds and subcultures make it necessary to devote great efforts to teambuilding.

The group must become good at brainstorming and at locating significant problem areas.

Also, the group must learn to transform this into concrete projects and ensure that someone heads the project.

Advantages and disadvantages of different organizational forms

Advantages and disadvantages of different organizational forms

Advantages and disadvantages of different organizational forms

Differences between hierarchical and flat structure

Attention is also focused on the employees under the individual manager; often referred to as “span of control” or a manager’s control area.

Several employees under one manager may contribute to a flatter structure and thereby fewer middle managers.

Differences between hierarchical and flat structure

In the example, the number of middle managers is reduced from 1.364 to 584.