What are the main motivation factors and tools at work?

 The organizational structure is the basic framework of a company or organization. It describes the basic hierarchical order within the organization, including the flow of information and instructions and the associated powers, learn more about Pure project organization

In this section you will learn what the organizational structure is, when it plays a role and what forms it can have. We also compare the advantages and disadvantages and help you with our exercises to prepare for your next exam

Why is organizational structure important?

In order to be successful and to be able to grow, every company needs a clear structure. This is where the organizational structure comes into play. It regulates competencies and responsibilities and thus forms the basis for a smooth entrepreneurial workflow. This avoids unnecessary stress and conflict situations and improves internal coordination.

With a well thought-out organizational structure, a company forms the stable foundation for achieving its own corporate goals . The individual characteristics of the organizational structure serve to increase economic efficiency and reduce unnecessary costs. In addition, it gives everyone involved in the company a high degree of security through the clear assignment of individual tasks and responsibilities. This sense of security has a positive effect on job satisfaction and employee motivation.

What is the organizational structure?

In organizational theory, one can distinguish between two types of corporate organization :

• the organizational structure
• the process organization

The organizational structure

The organizational structure defines what the basic hierarchical structure of a company or organization looks like . It describes the division of labor within the organization . The company is structured according to the respective goals in order to support the achievement of these.

The focus is on the following questions :

• What departments and positions exist in the company?
• Which office or department is responsible for what?
• Who has what authority and authority?
• What is the flow of commands and information among the individual positions?

In this sense, the organizational structure provides the rough organizational framework for the fulfillment of entrepreneurial tasks . It thus forms the basis for the further design of internal work processes and the coordination of everyday work.

The organizational structure is presented in an organizational chart :

The organizational structure consists of the following elements :

Structural elements :These include the individual units that take on certain functions in the company. Thes

are in particular: 

• Ajob (single job)
• an instance (a body with the appropriate authority to issue instructions)
• a department (several positions under the direction of one authority)

Structural Relationships :These represent the mutual relationships and interactions among the individual structural elements.

Management systems :Prformance systems clarify the internal order and represent the flow of information and instructions within the company. They show which positions and authorities have powers and how the reporting system is structured.

The process organization

To create an organizational structure, the following steps are taken :

1. The task analysis : The main goals of the organization are identified. The main goals are translated into corresponding main tasks.The main tasks are divided into subtasks.
2. Thee task synthesis : The sub-tasks are combined into organizationally meaningful task complexes. The determined task complexes are assigned to the individual positions. The best possible use of the available resources is achieved on the basis of the relationships between the positions that are to be defined accordingly.

Individual forms of organizational structure in companies can be differentiated based on six criteria :

1. Short or long chain of command , ie how long is the line between top management and the lowest level?
2. Wide or narrow span of control , ie the more employees a manager manages, the wider the span of control of the organizational structure.
3. Centralized or decentralized decision-making , ie is the decision made centrally or is the decision-making process decentralized within the framework of democratic processes?
4. Specialized or differentiated division of labor , ie to what extent are the overall tasks broken down into individual subtasks and assigned to the individual positions?
5. Formal or informal organizational structures , ie can the processes and positions be carried out independently of the person, ie are they strictly regulated, or are the individual persons given greater freedom in the organization of work?
6. Rigid or loose departmental structure, ie are several jobs grouped together in order to advance projects, or do the individual departments act largely independently of one another?

Based on these criteria, individual forms of the organizational structure can not only be distinguished. The combination of individual factors also leads to very different forms of organizational structure.

Basically, you can differentiate between :

mechanistic organizational structures :

• follow traditional approaches in business organization
• Characteristics: short chains of command, narrow spans of control, high degree of centralization, strong specialization, formal structure, rigid divisions

organic organizational structures :

• open to innovative and experimental approaches in corporate organization, often known under the keyword "flat hierarchies"
• Characteristics: less strict chain of command, wide spans of control, less specialization, decentralized organization, informal structures, loose divisions

The functional organizational structure

The most common is the functional organizational structure. It is characterized above all by the fact that the individual positions are organized according to their respective function in strictly separate departments.

Example: Functional organizational structure

Example: Functional organizational structure

The advantages of the functional organizational structure are :

Easy scalability

Specialized and therefore more efficient work

Clear demarcation of competencies

Direct assignment of responsibilities

Prevention of duplicate structures

Fast decision-making processes

However, the functional organization can also result in the following disadvantages :

Any “barriers” between the individual departments due to a lack of mutual understanding.

Poor communication between departments.

"Area selfishness" and the resulting conflicts among the departments.

Restriction of own innovation potential.

Low orientation towards target group and market needs.

The divisional organizational structure

The divisional organizational structure is less based on rigid departments than on a subdivision according to the respective work areas.

This can be :

The individual products or services.

Individual market segments or specific target groups.

Specific regions or geographic markets.

Due to this organizational form, the divisional organizational structure is also referred to as "divisional" or "divisional organization" . The individual divisions each have their own functional areas, which can, however, lead to duplication.

example :

Divisional organizational structure

Divisional organizational structure

high adaptability

differentiated strategies adapted to the divisions are possible

high orientation to the market and the target groups

Increased motivation thanks to greater independence

high degree of transparency

high coordination effort

poor communication between the individual divisions

possible duplication of tasks and responsibilities

possible competition between the division's own goals and the goals of the company as a whole.

The matrix organization

In the matrix organization , an attempt is made to combine the advantages of the functional and the divisional organizational structure. For this purpose, the positions are assigned to the individual functions and organized downstream in specific divisions. This creates two equal and independent instruction dimensions for each position.

example :

matrix organization

matrix organization

Advantages of the divisional and functional organizational structure are combined.

High flexibility

Fluctuations in utilization can be better cushioned

Fast communication channels

Democratic processes in decision-making

Disadvantages :

High effort in planning and implementation

In particular, new employees and externals could become confused due to the complexity.

Possible emergence of conflicts in competences and responsibilities

High communication effort required

Poor evaluation of successes and missed goals

exercises

#1. What is meant by the term "structural organization"?

The organizational structure is the basic hierarchical structure of a company or organization, including the flow of information and instructions and the associated powers.

The organizational structure describes how a newly founded company can best be set up.

The organizational structure only describes the basic structure of a company, whereby individual directives and powers are not taken into account.

#2. Why is a good organizational structure important?

The organizational structure is merely a theoretical representation of a company and has no meaning for business practice.

The organizational structure forms the basis for the responsibilities and the associated daily work processes in the company.

The organizational structure gives young company founders helpful tips on how to set up their company.

#3. What are the three most typical forms of organizational structure?

the functioning, the divisional and the matrix organization

the functional, the multiple and the matrix organization

the functional, the divisional and the matrix organization

#4. On the basis of which criteria can the organizational structures of companies be distinguished?

Chain of command, span of control, decision making, division of labor, organizational structure

Chain of command, span of control, decision-making, division of labor, organizational structure, departmental formation

Chain of command, span of control, division of labor, organizational structure, departmental formation.