Some companies have such complex organizational structures that you wish you had a decoder ring handy when you first look at their organizational charts. At the other extreme is the simple structure -- a flat structure dominated by employees with their leader at the top. It’s a structure only a small business can use because a single person who manages all of a company’s employees can only go it alone up to a certain point.
Entrepreneurs begin with the simple structure, which arises and functions naturally. In the prebureaucratic stage, employees follow no written rules and perform no specialized tasks. Employees and owner pitch in according to need. Each one is a jack-of-all-trades. As the business moves into its youth stage, it retains a simple structure. Employees observe some rules, along with some agreed-upon procedures.
The simple organizational structure is minimalistic. Employees sit at the bottom of the organizational chart, forming a wide row. In the simplest organizations, there is only one other row, which the owner -- as manager -- occupies. As the company grows, it may add one or two more rows of managers to its organizational chart between the owner and the employees. The simple structure starts with no departments. Employees’ duties overlap and the owner deploys whoever is available to tasks.
In a simple structure, power is centralized and everyone reports to the owner. Controlling many employees -- which is known as a wide span of control -- means the owner not only makes all the decisions about employee activities, but also spends lot of time communicating those decisions. As long as the business stays small, the owner can shoulder the demands. Depending on the complexity of jobs, though, by the time the business hires 50 to 100 employees, the owner cannot effectively run the business and manage the employees at the same time.
The simple structure works for small businesses because it grows naturally, taking whatever shape the owner needs it to be for the demands of the time. It’s flexible; employees move where they’re needed. Because there are no formal roles, the employees are versatile and tuned in to the company’s bigger picture -- a picture the owner alone paints. There is no confusion about goals; they are what the owner says they are. When the company’s environment is stable, the company can move forward.
In an unstable environment, the simple structure doesn't function well. Although the structure is flexible enough for employees to react quickly, the owner’s centralized control prevents employees from contributing the knowledge and creativity needed in dynamic situations. The owner as sole decision-maker also ties the company’s health to his. Meanwhile, the simple structure cannot grow beyond a certain size. After the business adds enough employees or expands, it must choose a more formal structure to organize operations.
What do a small retail store, an electronics firms run by a hard driving entrepreneur and an airline in the midst of a company wide pilot’s troika have in common? They probably all use the simple structure. The simple structure is said to be characterized most by what it is no rather than by what it is. The simple structure is not elaborate. It has a low degree of departmentalization wide spans of control authority centralized in a single person and little formalization. The simple structure is a ‘flat’ organization it usually has only two or three vertical a loose body of employees, and one individual in whom the decision authority is centralized. The simple structure is most widely practiced in small business in which the manager and the owner are one and the same. This, for example is illustrated, an organizations chart for a retail men’s store. Jack Gold owns and manages this store. Although he employees five full time salesperson a cashier and extra personnel for weekend and holidays, he runs the show. But large companies, in times of crises can become simple structures for short periods. IBM for instance became structure for more than a year back to the early 1990s. When Louis Gerstner was hired as CEO in 1993 he immediately put the company into what he called survival mode. He had cut $9 billion a year in expenses and had to bring the company back literally from the brink of death. So Gerstner implemented a highly centralized, personalized leadership and organizational style. Gerstner said it was benevolent dictatorship with me as the dictator helped the company. The strength of the simple structure lies in its simplicity. It’s fast, flexible, and inexpensive to maintain and accountability is clear. One major weakness is that it is difficult to maintain in anything other than small organizations. It becomes increasingly inadequate as an organization grows because its low formalization and high centralization tend to create information overload at the top. As size increases, decision making typically becomes slower and can eventually. As size increases decisions making typically becomes slower and can eventually come to a standstill as the executive tries to continue making all the decisions. This often proves to be the undoing of many small businesses. When an organization begins to employ 50 or 100 people, it’s very difficult for the owner-manager to make all the choices. If the structure isn’t changed and made more elaborate, the firm often loses momentum and can eventually fail. The simple structure’s other weaknesses is that it is risky – everything depends on one person. One heart attack can literally destroy the organization’s information and decision making centers. The Bureaucracy: Standardization! That’s the key concept that underlines all bureaucracies. Take a look at the bank where you keep checking your account, the department store where you buy your clothes or the government offices that collect your taxes, enforce health regulations or provide locals for protection. They all rely on standardization work processes for coordination and control. The bureaucracy is characterized by highly routine operating tasks achieved through specialization very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority narrow spans of control and decision making that follows the chain of command. Bureaucracy is a dirty word in many people’s minds. However it does have its advantages. The primary strength of the bureaucracy lies in its ability to perform standardized activities in a highly efficient manner. Putting specialties together in functional departments results in economies of scale, minimum duplication of personnel and equipment and employees who have the opportunity to talk the same language among their peers. Furthermore, bureaucracies can get by nicely with less talented and hence less costly – middle and lower level managers. The pervasiveness of rules and regulations substitute for managerial discretion, Standardization operations, coupled with high formalization allow decision making to be centralized. There is little need, therefore for innovative and experienced decisions makers below the level of senior executives.
A functional structure is one of the most common organizational structures. Under this structure, the organization groups employees according to a specialized or similar set of roles or tasks. While functional structures operate well in stable environments where business strategies are less inclined to changes or dynamism, the level of bureaucracy makes it difficult for organizations to respond to changes in the market quickly.
When companies use a functional organizational structure, people with similar knowledge and skills are grouped together. This makes it possible for employees to become specialists in their field. It requires a performance management system that allows for the promotion, development and visibility of individual skills within their functional area. The specialization that functional structures hone helps to bring about in-depth knowledge and skill development among the employees, and this can help you achieve your company's functional goals.
Specialization leads to operational efficiencies and enhances productivity levels. Because of their expertise, workers with specialized skills can perform tasks quickly, efficiently and with more confidence, thus reducing the occurrence of work-related mistakes. In addition, the clear nature of the career path within the functional unit makes it possible for employees to be highly motivated to advance their careers as they move up within the hierarchy.
The main goal of functional structures in organizations is to bring the entire human and informational resources together to meet the organization’s goals. This can be an ideal structure for small businesses that focus on one product or service because you can maximize performance by encouraging peer cooperation among different units at various levels of management through supervision and coordination.
Communication in organizations with functional organizational structures can be rigid because of the standardized ways of operation and the high degree of formalization. This can further make the decision-making process slow and inflexible. Since it is more bureaucratic, functional units are often not accountable to each other, and poor horizontal coordination within the departments can occur.
Lack of innovation and restricted views of organizational goals, along with too much focus, can affect employees' motivation. As your company grow and you create more functional units, the level of autonomy within units might increase, making it difficult for you to coordinate all the units efficiently.
Even though functional units often perform with a high level of efficiency, their level of cooperation with each other is sometimes compromised. Such groups may have difficulty working well with each other as they may be territorial and unwilling to cooperate. The occurrence of infighting among units may cause delays, reduced commitment due to competing interests, and wasted time, making projects fall behind schedule. This ultimately can bring down production levels overall, and the company-wide employee commitment toward meeting organizational goals. |
What is the one strength of a simple structure group of answer choices?
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