companies are established through number of people for the purpose of gaining those outcomes which cannot be achieved by one individual. The organization gains better results for gaining some goals set by management of organization (Zheng et al., 2010). With respect to the structure of organization, it can be found as successful or unsuccessful. For achieving these objectives, companies make internal order and relations with parts and departments of organizations. In order to have appropriate functioning of organization, it is very important to co-ordinate all different mechanisms of organization. There are various factors which can have an impact on organizations. If the structure of organization is static, then it would be unable to gain efficiency and adoptability. The researchers in the field of organization theory depict different schools of affecting aspects on organizational structure.
It has been found by Auh & Mengue (2007) that size, organizational environment and technology are some factors which affect organizational structure. They found that due to these factors organization has to face some economic or other hindrances which lead the organization in choosing one structure over others. The external environment of an organization also affects the organizational structure. It has been suggested by Argote & Greve (2007) that those organizations which focus on working in reliable and stable business market are not capable of dealing in a dynamic competive environment. If the environment is more definite, then the structure of organization would be more centralized and the organization has formal rules and policies. When there is high level of uncertanity in environment, then the structure of organization would be more decentralized.
There are various definitions of organizational structure. The structure of organization involves arrangements done in an organization in order to perform tasks. It includes the hierarchy which is presented by organizational chart (Santra & Giri, 2008). Otter (2014) recognized strcuture as the base of organizing, including hierarchical levels and span of control, roles and responsibilities and ways to integrate and issue resolution. Tsuruta et al., (2014) stated that organizational structure is the internal distinction and arrangement of relationships. He stated that organizational structure deals with the ways through which a company sets limits and borders for effective performance. It helps in seeting rules andregulations for its employees, controlling resources and other related matters.
Kortmann (2012) stated that structure of an organization includes linkes set of policies which are determined for completing and renewing a cycle of all activities done in an organization. Burkett (2007) defined structure as process of allocating work role and management processes which helps in creating a pattern of interlinked work activities and the makes the organization capable of conducting, coordinating and controlling its activities. When an organization makes appropriate structures then this helps in making the organization differentiated and coordinated. Differentiated is relevant to the techniques through which organizational performance is enhanced by offering innovative products and services, whereas integration deals with coordinating all the activities for achieving goals of organization.
Organizational structure refers to the method of organization of groups and individuals or division and coordination of tasks (Teixeira et al., 2012). In this altering world, organizations have to understand that how to formulate and to do the implementation of the techniques with the help of organizational structures and projects to successfully suffer from the chances and threats. Although to manage different projects is not as much easier because of its complexity. Structures of organization can promote or inhibit performance, based on how efficiently the workflow and supervisory links and workflow affect the productivity. These explain the reporting hierarchy and the departmental structure. Different structures of organization have different type of affect on performance of organization (Burkett, 2007). Organization design or organization structure is the major element for the achievement of the objectives of the organization with the help of tasks allocation, supervision and coordination. Organizational structure considers three of the major elements that are leadership, members’ selection and decision making. Organizations need to make a trade off among set of advantages while choosing a specific organizational structures. Along with it, structure is also essential for the performance of the organization because of the reason that it explain the operating procedures and daily routine and secondly it demonstrates the ones who would be involved in the process of decision making. Organizational structure helps the organization in the maintenance of order, solving the problems in between various departments and within every department and links the members of the organization with each other. The benefits of the organizational structures constitute smooth flow of communication, stable hierarchy and a well known cohesive organization message. Organizational structure might also suffer from some issues like delayed decision making, less productivity, high employee turnover and internal conflicts. So it is significant to do the identification of the problems of organization structures and to solve these issues as they happen just in order to ensure efficient and effective performance of organization (Santra & Giri, 2008). For the developing organization, its structure is significant to guide the problems of human resources. The organizations structures’ history date back to the tribal organizations which consists of clerical organizational structures and now its evolution is being done to the post industrial structures. Previously the histories of the organization are governed by the centralization and control which was prevalent after the revolution of industry in 19th and 20th century. After the decentralization of World War II, structure acquires way over different organizations. Therefore; smaller organization have decentralized structures in post industrial economy and they react to the alteration more rapidly in comparison with the larger organizations having more centralized structures. Argote & Greve (2007) explains the organizational structure as “the total sum in which the division of the labour is done into distinct tasks and then coordination is acquired among all of these tasks”. No organizational structure is best. One should carefully understand the cause for existence of organization and (Argote & Greve, 2007) implies that structure should be chosen in order to acquire an internal harmony, along with the alignment with the situation of the organization (Paulraj & Chen, 2007).
There are four main kinds of organizational structure which are commonly used by organizations. The four structures are entrepreneurial structure, function structure, matrix structure and divisional structure (Ottih, 2006). The entrepreneurial structure of an organization is an adapting structure in which all those activities are brought together which can help the organization in gaining more profitability and other particular opportunities. In this kind of organization strong process of management is held for gaining speed, innovation and creativity for utilizing opportunities. In this kind of structure, there exists a strong link between departments and sub-departments which help in enhancing the performance of organization through effective utilization of resources. The functional structure is that kind of structure in which the flow of work is based on level of integration that exists among different activities within an organization. In most of the organizations, basic approach is used for making structures of an organization. Functional approach is an effective approach and is appropriate for small and medium sized businesses also. In this kind of structure, there is lesser number of departments and there is not much difficulty in integrating the top level departments with lower level. Another type of organizational structure is matrix structure which is adopted by organizations for shorter period of time. This kind of structure helps in solving shorter problems or for completing a specific project. In this structure, there is more than one supervisor of employees. So, this helps them in effectively completing the project in shorter period of time. Some organizations also implement divisional structure. In this kind of structure, a large organization is divided into smaller divisions. This helps in facilitating large organization for doing their business in different markets or geographical areas (Zheng et al., 2010).
A pending question in many of the advanced organization is to what extent the decision making power in any organization should be centralized or decentralized. Argote & Greve (2007) explain centralization as “concentration of decision-making and authority towards the top of the organization”. The definition of the decentralization is the distribution of decision making and authority throughout an organization. Nevertheless, this is not even a new idea. (Zheng et al., 2010) talks about centralization as single dimension: the limit to which power is put on the organization’s top identifies how much bureaucratic an organization is. The findings of Clifford & Erik (2008) recommend that high specialization of personnel and large organization size enable less centralization. Although, (Kortmann, 2012) suggests that hierarchical structure like centralization, is here because of its effective ability to deal with complicated and big tasks.
The organizational structure is considered as a backbone of an organization. The structure of an organization helps in making different strategies and conditions which can have an impact on every stage of planning in case of hierarchical organization. The organizational structure must be effective and appropriate for enhancing the performance of employees. The performance of an organization is affected both in positive as well as negative way through organizational structure. The structure of an organization makes it able of getting distinction from other organizations and it identifies the limited roles and responsibilities of an organization. It helps in differentiating the organizations from one another. With the help of appropriate organizational structure, the employees are provided with sense of identity which helps employees working in an effective way. Through appropriate organizational structure, firm can increase the commitment level of employees. In this way, they work with more motivation (Tsuruta et al., 2014).
The organizations with strong culture own a good working environment in which various values and norms are shared by the employees. There will be a working environment in almost every organization which has a structure and culture strange. Every organization owns various regulations and policies for the communication with the employee. It can be developed by having an access` to the organizational culture and structure. Ottih (2006) performed the investigation of the influence of organizational structure on effectiveness of Organization in Texas Grand Prairie Fire Department. The findings have displayed that philosophy, culture, goals, strategy, size, technology, and environment influence on structure of organization and definite connection is made in between organizational structure and organizational effectiveness. Christensen & Knudsen (2010) studied about the link between organizational performance and organizational structure, especially with the help of organizational innovation and learning, dependent upon evidence from China and Austria. The results have shown that a knowledge intensive or hi-technology industry, organizational structures influence the performance of the organization mainly with the help of organizational learning and innovation.
Organizations with high external and internal integrations tend to do the examination of their performance on regular basis as compared to some of the other competitors that are not generally integrate because of the reason that they constantly receive and interact information from some of the external partners. Also such organization can tell about the needs of the customers more quickly because they tend to be exposed to the feedback. Along with it, integration with the suppliers assists in improving problem solving, cooperation and innovation permitting organizations to mobilize and gain essential knowledge resources (Koufteros et al., 2007). Actually, the decreased integration of internal and external supply chain has been determined by most of the authors as sources of some potential issues like delivery problems, quality issues and cost increments.
Internal integration decreases the uncertainty by doing the improvement of the communication between different departments. Cross functional teams are made up of expert employees with different knowledge and background, they improve the process of decision making and share the information they own. Because of the quick involvement of some of the participants, this decision making process assists to do the clarification of the needs of product before the investment of the money on some new product. Technology and information sharing assist different teams to make new features, better items, and in enhancement of the performance of product. For instance interactions between manufacturing and marketing are likely to have much stronger influences on the quality of designed product. Some other studies have identified the positive influence of internal integration on the performance of the delivery time (Motohashi, 2006).
Another type of organizational structure is specialization. According to this structure, the tasks of organization are divided into smaller tasks according to the skills and expertise of each employee. Everyone is given with a task according to his or her expertise. In order to increase the effectiveness of tasks performed by employees, it is very important to assign them those tasks which can easily be done by them. With the help of this, they can do their work with full efficiency and effectiveness. As a result of enhanced performance of each employee, the overall performance of organization is also enhanced. This makes an organization successful and profitable (Christensen & Knudsen, 2010).
A very important kind of organizational structure is centralization. Centralization is degree to which top management is responsible of making decisions (Ottih, 2006). In this kind of organizational structures, there is high level of hierarchy exists within an organization. The employees are not that much allowed to take part in decision making. This kind of structure was too much common in traditional businesses or organizations. But, in today’s business world, organizations have understood the importance of human resource and the importance of employees in decision making. There is a very significant role of environment in span of control since in case of uncertainty in environment; there is a need of delegating decisions to lower management or employees for quickly adjusting to changing demands and situations. A main reason of adapting to centralization as a structure of an organization is the integration benefits provided by it, through the increase of processing capabilities of managers or reducing costs of communication.
In accordance with Ottih (2006), organizations structures are helpful in performing some of the functions of organization and these functions help the organization in enhancing its performance. These functions are co-ordination, communication, benchmarking and integration. Co-ordination means the capability of management for directing work performance of employees towards set goals. With the help of appropriate organizational structures, management can enhance co-ordination among employees. Co-ordination helps in enhancing the effeciency as well as effectiveness of organization. The effectiveness of organization means the extent to which organization is able to achieve its goals.
Organizational structure contains functions, roles, responsibilities, links, authorities and commincations of employees with management and vise versa with in every department working in organization. The structure of organization is usually depicted through organizational chart. Daniel McCallum in 1854 formed formalized organizational chart in which he used structure of organiztaion for creating a sense of standardized flow of positions which are aligned with respective skills and expertise of people (Motohashi, 2006). As a result of this, a clear direction is made through organizational structure which helps in showing all the responsibilities of supervisors or leaders as well as it also helps in making a smoot communication flow between employees and their team leaders. This makes the communication smooth, through which employees become able of taking part in decision making and problem solving. In this way, they feel privileged and satisfied with their job. In an organization, it is very importan to make appropriate structure in order to make employees feel like working in an organized environment for achieving goals and aims through the use of available resources. In order to enhance the performance of organization, it is very important to use the resources of organization in an effective way and this can only be done by having appropriate structure of that organization. Organizational structure helps in making the whole organization managed and organized through which all the departments and employees can be integrated with each other in order to make a unified system. The structure of an organization is basically a design of organization (Burkett, 2007).
Another effective structure of an organization is flatness with respect to hierarchy of organization. It is termed as an extent to which a company has too many or just few departments. It has been argued by Koufteros et al., (2007) that an expanded hierarchy is responsible for traditional command and control and is explained through the need of controlling behavior of employees. In contrary to this, a model of commitment is identified by system of management which is flat and depends on shared goals and objectives for having control and integration among departments. This in return has a positive impact on skills and expertise and thus helps in enhancing the overall performance of employees (Teixeira et al., 2012). When an organization has a flat structure then it results in more effective communication and flow of information. Flat organizational structure also helps in reducing the issues of delays in information, distortion nd corrupion because information is effectively distributed from one department to another.
In the end, it can be concluded that in every organization there are different types of organizational structures. Organizational structure is a step by step process to delegate power and accountability among workers working in an organization. It also involves the ways through which a whole company is organized and managed. Organizational structure helps in achieving the goals of company. The structure of an organization involves the patterns of integration among different hierarchical levels of organization. It includes a framework through which responsibilities, roles and relationships are delegated through a proper channel of communication.
Through appropriate organizational structures, organizations can become able of enhancing their performance and profitability. The most effective organizational structure is decentralized organizational structure, as in today’s business world; there is a need of giving authority to employees in order to enhance their skills and expertise and to use those skills in decision making and problem solving.
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