ORGANIZATIONAL STRUCTURE

Organizational structure

Organizational structure

Introduction

Vertical and horizontal organizational structure refers to the way in which power is distributed within a system. A business with a vertical organizational structure is one in which there are levels of power and command. A horizontal organizational structure is a structure founded on collaboration between individuals and the equal distribution of power. Structural overlays complement rather than displace the power of the organization's vertical authority structure.

Their purpose is to reduce the number of decisions being referred up the organization's hierarchy. They accomplish this purpose by increasing discretion at lower levels of the organization and allowing decision making at the point where information relevant to the problem originates. Although organizing into self-contained units (such as large and small divisions or permanent workgroups) also brings decision-making authority down the chain of command, this strategy applies only when work performed by the subunit is not interdependent with the work of other subunits. When work is interdependent, establishing lateral decision-making processes allows for horizontal communication and information sharing as well as more efficient decision making (Simons, 2005).

Structural overlays can arise spontaneously. However, when the participants differ in their orientations to tasks for such reasons as occupation, cultural background, and the like or are separated geographically, effective use of group decision making requires formally designed processes.

Vertical

Vertical organizational structures are prevalent in many societies. Educational systems and governmental systems are built upon the concept that authority belongs to few and obedience to many. These structures are hierarchical, with graduating levels of responsibility and power in one direction and diminishing levels of autonomy and authority in the other.

Advantages & Disadvantages of the Vertical Functional Organizational Structure

Communication

Grouping employees by skills creates efficiency. Specialists are clustered together, which promotes collaboration and the opportunity for the further development of professional expertise. Employees who work under a vertical functional structure tend to exhibit poor communication skills; team members most often talk among themselves, within their job function. Communicating with employees outside of their team proves difficult. Managers need to focus on cultivating good interpersonal skills and extensive training.

Functional Goals

A vertical functional structure provides employees with a path for growth within the organization. Employees capitalize on their specialized skills as a means to move up the ladder in a given department. They may also move sideways to acquire additional skills. Organizations that implement a vertical functional structure often become distracted from pursuing financial goals. Departments develop a narrow view of the organization, mistaking their singular goals as more important than the organization's goals (Starbuck, 2006).

Hierarchy

The vertical functional structure is transparent and predictable. Employees and management recognize the chain of command; they understand the hierarchy and reporting relationships in the company. Vertical functional structures require considerable effort to maintain power and balance. The more levels in the hierarchy, the less decision-making power rests at the top of the organization. The flatter an organization, the more managers participate in the decision-making process.

Training And Information

Functional team managers refine their human resource ...