Strategic Organizational Structure is an Essential Business Element

Organizational structure will make or break a business. The lack of structure demonstrates a lack of direction, leadership, and haphazard decision-making. The primary function of strategically organizing is to: identify tasks, allocate responsibilities, and represent the delegation of authority. As a business grows from infancy to a self-sustaining profitable business it is often necessary for its structure to take on a new form. Currently there are primarily four organizational structures that are recognized as standard structures: Line, Functional, Line and Staff, and Matrix.

Line Organization

The Line Organization is typically utilized in small or startup companies. It operates from a context of superior and subordinate roles. The flow of authority runs downward while the flow of responsibility is elevated upward. The Line Organization can be illustrated best by the structure of the Military. There is a specific well-defined hierarchy within the military and even though the military employs multiple thousands of employees, it defines the truest example of Line Organizational Structure.

Line organizations should be implemented when business entails the following:

• Small scale business

• Routine business (daily or weekly)

• Industrial in nature

• Labor and management issues are not complex

• Automated

• Disciplined employees

The advantage of the Line Organization is its simplicity.

The disadvantages are that the Line Organization can: overload an executive, lack the ability of specializing in a role, can encourage favoritism/nepotism, and discourages communication and initiative from employees. A level of middle management is added and subordinates collaborate as a team to perform their function or contribution to the companies’ success.

Functional Organization

The structure of the Functional organization takes the structure of the Line organization and divides it into supervision by the various functions performed. The management of the functional departments will have cross-functional responsibilities and are responsibility for the development of their specific department or functional area.

The advantages of the Functional organization are:

• The ability to specialize

• Efficiency is increased

• Duties are limited to specific tasks elevating focus and quality

• Adaption to expansion is fluid

Disadvantages of the Functional Organization include:

• Conflicts with authority can arise

• Shirking of responsibility can occur

• Employees of often less disciplines

• Added expense

Line and Staff Organization

The Line Organization by its nature is often to strict, whereas the Functional Organization may not be strict enough. That is where the Line and Staff Organization ensures a balance between the two. The line and staff approach take more of a team approach to the role of the department.

Advantages of the Line and Staff include:

• Role specialization

• In-depth decision making

• Added support for line officers

• Training support is elevated

The disadvantages of the Line and Staff Organization are:

• Conflict within the department

• Accountability can be diminished

• Added expense

• Elevated reliance on staff performance

Matrix Organization

The Matrix Organization is generally speaking for the seasoned business that encompasses multiple projects and multiple functional responsibilities occur within the projects. Employees must be competent to respond to multiple supervisors and disciplined enough o communicate task conflicts effectively with supervisors.

The advantages of the Matrix Organization are:

• Coordination of resources between departments

• Opportunity of excessive specialization

• Skill development opportunities are prevalent

• Collaboration is encouraged

• Flexibility to share employees or resources

The Disadvantages of the Matrix Organization include:

• Initial formation of a Matrix Organization can be conceptually difficult to grasp

• An imbalance of power or responsibility can generate opposition

• Dissention from a conflict of sharing employees or resources for functional tasks

• Cross functional meetings are necessary to generate successful project progression

• Added expense

If you would like support in developing your Organizational Structure we are we are eager to team together with you to get the results you desire.

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