In business, the organization structure means the relationship between positions and people, who hold these positions; it shows who reports to whom

The organization structure is often too broadened; it is difficult to understand the subordination. While growing up, there is a tendency to increase the number of levels of management, to ensure the effective supervision in the organization. However, in recent years many organizations have adopted ‘flatter’ organization structure reducing the number of management levels.

The organization structure is always of multiple levels. Generally, a company is made up of three groups of people: shareholders; management; workforce.

In any case, it is useful for top managers to answer the key questions from time to time:

- Is our organization structure clear and understandable?

- Does it correspond to our business strategy?

- Is our subordination clear and if so, to what level?

- Are the sphere and span of control rational enough?

- Do our managers’ responsibility levels correspond to their power and competence?

 

The simplest and the oldest form of organization, line organization, represent a clear line of responsibility and authority of each level and above and below each level, it works only for small firms.

The next form is a functional organization with various departments: finance, marketing, production, etc. It is common for rather small firms, as well.

The best-known form is the mixed one : the line-functional form. The major advantage of a line-functional structure is that it is simple with different chain of command and easy to control; the functional specialists are not involved in routine running of an organization, this is the responsibility of line management. The most known disadvantage constitute its unclear lines of authority: many superiors over the workers and difficulties in speedy decision-making. Moreover, the staff functional officers may try to seize the whole power. This form works for large companies.  

Some large-scaled companies use departmentalization by territory, product or customer.

For example, the product lines organization structure is effective in terms of a changing market. It is focused on the efficient decision making inside and outside the organization.

Today the main types of structure used by most organizations are the project and matrix ones.  The project structure is temporally organized for a concrete problem solving. The matrix structure does not have a traditional hierarchy. The authorities move vertically from top to bottom, and there is more freedom for the staff to innovate and carry out competitive objectives. (Схема). The matrix structure organizes the business into project groups lead by project leaders, and ensures sufficient and strategic adaptability.

As for the styles,it is usual to consider three main styles of organization: 

Bureaucratic organization is the concept where formal procedures are strongly prescribed.

Contingency organization is aimed at ‘the law of situation’, its structure is fluid and strongly influenced by the environment; its response to change is opposite to the first organizational style.

Just-in-Time organization (JIT) requires staff to take a high responsibility for their work; it is focused on tight relation with suppliers, on the high standard of a product quality and on the interaction between supply and demand. This style includes a process, through which products are delivered to customers; they are precisely timed to meet demand. There are many points of interaction between all these links.

Organization as the management object

An organization and its personnel constitute the main objects of management. There are two basic models of organization as management objects:

Organization as the close system:

Organization as the mechanic structure   Organization as the   working team

Operational management                                         Personnel management                 

                       

Organization as the open system

Organization as the complex hierarchy Organization as the public organization

Strategic management                     Employees’ involvement in activities

It is worth summing up: any organization is a corporate enterprise that has a legal identity; it operates as one single unit, and all members take part in its activities and management; additionally any organization should be established on the basis of the expected work-load. It is interesting to note that, according to Philip Kotler, there are three types of organizations:

- organizations, which make things happen;

- organizations, which watch things happen;

- organizations, which wonder things happen.