Fundamental types of organizational structure

Organizations can be described in terms of how their parts are put together and operate.

Researchers who study the concepts of organizational structure and function frequently describe organizations in terms of several important dimensions: decentralization versus centralization, tall versus flat structure, unity of command and chain of command.

·         Decentralization versus centralization

o   Centralization:

A structure depends on the organization's objectives and strategy. In a centralized structure, the top layer of management has most of the decision making power and has tight control over departments and divisions. There is relatively less participation by employees in a variety of decisions.

§ Advantages of Centralization:

1. Closer control of operations

2. Uniformity of policies, practices, and procedures

3. Better use of centralized, specialized experts

o   Decentralization:

Decentralization is the degree to which decision making occurs at the lower level of an institution. In decentralized structure, the decision making power is distributed and the departments and divisions may have different degrees of independence,

Example;

A company such as Proctor & Gamble that sells multiple products may organize their structure. So that groups are divided according to each product and depending on geographical area as well.

Decentralized organizations are characterized by less monitoring or checking on decisions made by employees.

§ Advantages of decentralization:

1 . Faster decision-making without resort to higher level consultation

2. Excellent training experience for promotion to higher level management

3. Decisions better adapted to local conditions

·         Tall versus flat (i.e. Horizontal and vertical) structures

o   Tall Organizational Structure

Large, complex organizations often require a taller hierarchy. In its simplest form, a tall structure results in one long chain of command. Similar to the military. As an organization grows, the number of management levels increases and the structure grows taller. In a tall structure, managers form many ranks and each has a small area of control. Although tall structures have more management levels than flat structures, there is no definitive number that draws a line between the two.

o   Flat Organizational Structure

Flat structures have fewer management levels, with each level controlling a broad area or group. Flat organizations focus on empowering employees rather than adhering to the chain of command. By encouraging autonomy and self-direction, flat structures attempt to tap into employees' creative talents and to solve problems by collaboration.