Forms of Organizational Structure Bureaucratic structure A management system based on a formal framework of authority that is carefully outlined and precisely followed Characteristics A high level of job specialization Departmentalization by function Formal patterns of delegation A high degree of centralization Narrow spans of management, resulting in a tall organization Clearly defined line and staff positions Advantages Inflexibility helps ensure fair and equitable treatment Disadvantages Inflexibility creates problems in adapting to dynamic business environments Copyright © Cengage Learning. All rights reserved.

Forms of Organizational Structure (cont’d) Matrix structure A structure that combines vertical and horizontal lines of authority, usually by superimposing product departmentalization on functional departmentalization Authority flows both down and across Employees on cross-functional teams report to both the project manager in charge of the team and to their superiors in their home-base functional department Copyright © Cengage Learning. All rights reserved.

A Matrix Structure Source: Ricky W. Griffin, Management, 9th ed. Copyright © 2008 by Houghton Mifflin Company. Adapted with permission. Copyright © Cengage Learning. All rights reserved.

The Matrix Structure (cont’d) Advantages Added flexibility Increased productivity Higher morale Increases in creativity and innovation Personal development of team members Disadvantages Chain of command conflicts May take longer to resolve problems and reach solutions Personality clashes Poor communications Undefined individual roles Unclear responsibilities Difficulty in determining how to reward individual and team performance Copyright © Cengage Learning. All rights reserved.

Forms of Organizational Structure (cont’d) Cluster structure An organization that consists primarily of teams with no or very few underlying departments Also called “team” or “collaborative” structures Teams may move on to other projects or individual members may be reassigned to different teams and projects Strengths Small teams allows for flexibility to change direction quickly and try new things Weaknesses Employees may be concerned about job security Increased stress due to rapid changes Copyright © Cengage Learning. All rights reserved.

Forms of Organizational Structure (cont’d) Network structure (virtual organization) An organization in which administration is the primary function performed and most other functions such as engineering, production, and marketing are contracted out to other firms Strength Flexibility allows the organization to adjust quickly to changes Weaknesses Difficulty controlling the quality of work by other organizations Low morale and high turnover of hourly workers Vulnerability of relying on outside contractors Copyright © Cengage Learning. All rights reserved.