Elements of Organizational Structures

By: Brittany Ziegelbaur

When thinking about organizational structure, many people typically think of it is as being one idea or one technique that a business uses.  But, in actuality, organizational structures are formed through many different elements.  It is also important to keep in mind that there is not a right or wrong structure for a business.  Each business has different strengths and limitations in which they need to work with as a company (Hunter, 2002).  In an article written by Judy Hunter, from the Canadian School of Management, she stated that organizations typically have more than one organizational structure that work in sync with one another (Hunter, 2002).  There are challenges, however, to incorporating all of these elements into an effective organization structure.  Research has found a functional dependency between the mission work environment and the implemented organizational design (Levchuk, Levchuk, Jie Luo, Pattipati, & Kleinman, 2002).  It has been concluded that organizational design had a large dependency on the mission parameters of the business (Levchuk et al., 2002).  This is why it is so important to evaluate the many different elements of organizational structures before implementing one into the business.   

When designing an organizational structure for a business it is important to consider two important aspects: stability and complexity.  Stability, in this sense, is how the business reacts when unplanned events occur and how the business deals with the situation (Hunter, 2002).  Complexity on the other hand refers to the amount of knowledge that employees need to know about the business environment.  Some elements of knowledge include information on the market, competitors, and suppliers of the business.  If there is little knowledge to be known about the business, it is considered to be a simple environment.  Dynamic environments are a lot more complex in terms of the amount of knowledge that employees must deal with (Hunter, 2002). 

Once managers have discovered the levels of stability and complexity in the business, they have to look at the many different options for designing an organizational structure that will best suit the particular business.  One main element to consider is the level of differentiations of operational transformations.  To put this in a clearer term, this is referring to the “making”, “preparing”, and “supporting” of a product or service for a business (Achterbergh & Vriens, 2010).  The “making” section refers to the actual process of producing the product or service.  “Preparing” refers to the process of providing the necessary tools and steps for performing the task.  For example: scheduling work, ordering materials, etc. (Achterbergh & Vriens, 2010).  The last step, “supporting”, involves the tasks that are not specifically related to the production of a product.  Some of these tasks include maintenance, human resources planning, and technical support (Achterbergh & Vriens, 2010).  The decision for a business at this point is whether it will integrate all of these steps into one unit, or have independent departments working with each segment.  The level of differentiation of operational transformation is maximal if they business segments the tasks into their own groups, and is minimal if they integrate them all into one (Achterbergh & Vriens, 2010).

Another common element to distinguish for the business is the level of specialization.  When referring to specialization in the work place, we are discussing the act of splitting tasks into smaller sub-tasks.  Within the work place, specialization increases as operational transformations are split up into smaller, more separated tasks (Achterbergh & Vriens, 2010).  This also means that the more integrated the operational transformations become, the less specialized the tasks of the business are (Achterbergh & Vriens, 2010).  There are also several other key elements to consider when designing an organizational structure for a business.  These are examined in the research study below.

In 2001, Judy Hunter conducted a research study to examine the structural and contextual elements of six different businesses that were in different stages of their business life cycle.  The study first found four common determinants of contextual elements of organizational structure.  These four common elements were (Hunter, 2002):

• ·      All the firms had fluidity and flexibility in their structure.
• ·      The strategies that the companies used were largely emergent.
• ·      They had a high level of function and work specialization within the company.
• ·      They were able to adapt to the demand of the customers through the flexibility of the roles and tasks within the company.

After assessing the results of the structural elements, Judy found correlation with the strategies used by the businesses and the stage of that business in their business life cycle (Hunter, 2002).  The following elements were found common for businesses in the start up stage of the business life cycle (Hunter, 2002):

• ·      Decisions were made based off of standard operating procedures.
• ·      Reporting relationships involve a dual chain of command.
• ·      The businesses used informal, vertical, and horizontal forms of communication.
• ·      They coordinate work through teams in the work place.
• ·      Businesses are distinguished as a small and simple organization.

A few of the common elements found for businesses in the early growth stage were (Hunter, 2002):

• ·      They had centralized authority.
• ·      Decisions made by standard operating procedures.
• ·      Work was coordinated by direct supervision. 

The companies from the study that were in the mature stage had most of the same qualities as businesses in the early growth stage, in terms of reporting relationships, decision making, coordination of work, and communication.  They differ from businesses in the early growth stage in terms of complexity and distinguished characteristics (Hunter, 2002).  These are specifically listed below (Hunter, 2002).

• ·     They had decentralized reporting relationships.
• ·      Their communication was regulated along formal lines.
• ·      They coordinated work by standardized outputs.

All of the elements that have been discussed above are important to consider when designing an appropriate organizational structure for a business.  As I mentioned before, there is no certain way a business should go about creating a structure to fit their business, but it is important to know the key elements and goals that the business hopes to reach.  By evaluating the business properly, business professionals can create a functional organizational structure that implements the proper key elements to help the business succeed.

References

Achterbergh, J. and Vriens, D.  (2010).  Organizations: Social Systems Conducting Experiments.  Springer.

Hunter, J. (2002). Improving organizational performance through the            use of effective elements of organizational structure. International Journal of Health        Care Quality Assurance, 15(4), XII-XXI. Retrieved from     http://search.proquest.com/docview/229644561?accountid=129            24                  

Levchuk, G.M., Levchuk, Y.N., Jie Luo, Pattipati, K.R., Kleinman, D.L. (2002).       Normative design of organizations. II. Organizational structure.  IEEE    Transactions on Systems, Man and Cybernetics, Part A: Systems and Humans,     32(3). 360-375.             http://ieeexplore.ieee.org.huaryu.kl.oakland.edu/stamp/stamp.jsp?tp=&arn  umber=1046068