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Organization charts An organizational structure has activities such as task allocation, coordination and supervision, which are directed

towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment An organizational chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs. The term is also used for similar diagrams, for example ones showing the different elements of a field of knowledge or a group of languages. The organizational structure is typically hierarchical arrangement of lines of authority, communications, rights and duties of an organization. Organizational structure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management. Reference 1 http://www.ils.unc.edu/daniel/405/Montana11.pdf Reference 2 http://www2.pathfinder.org/site/DocServer/Organizational_Structure.complete.pdf?docID=323 Reference 3 http://peoplelearn.homestead.com/MEdHOME/MANAGEMENT/Organz.Structure.pdf Example

http://www.loc.gov/about/lcorgchart.pdf The different types of organization charts include: Hierarchical Matrix Flat (also known as Horizontal)

Organizations can be defined as groups of people who must coordinate their activities in order to meet organizational objectives. The coordination function requires strong communications and a clear understanding of the relationships and interdependencies among people. Organizational structures are dictated by such factors as technology and its rate of change, complexity, resource availability, products and/or services, competition, and decision-making requirements. Authority is the power granted to individuals (possibly by their position) so that they can make final decisions. Responsibility is the obligation incurred by individuals in their roles in the formal organization to effectively perform assignments. Accountability is being answerable for the satisfactory completion of a specific assignment. Traditional (Classical) Organization

Advantages Easier budgeting and cost control are possible. Better technical control is possible. Specialists can be grouped to share knowledge and responsibility. Personnel can be used on many different projects. All projects will benefit from the most advanced technology (better utilization of scarce personnel). Flexibility in the use of manpower. A broad manpower base to work with. Continuity in the functional disciplines; policies, procedures, and lines of responsibility are easily defined and understandable. Admits mass production activities within established specifications. Good control over personnel, since each employee has one and only one person to report to. Communication channels are vertical and well established. Quick reaction capability exists, but may be dependent upon the priorities of the functional managers.

Disadvantages No one individual is directly responsible for the total project (i.e., no formal authority; committee solutions). Does not provide the project-oriented emphasis necessary to accomplish the project tasks. Coordination becomes complex, and additional lead time is required for approval of decisions. Decisions normally favor the strongest functional groups. No customer focal point. Response to customer needs is slow. Difficulty in pinpointing responsibility; this is the result of little or no direct project reporting, very little project-oriented planning, and no project authority. Motivation and innovation are decreased. Ideas tend to be functionally oriented with little regard for ongoing projects.

Formal Organization Structure

By looking at the chart in Figure one can see: 1. The range of activities in which the organization is involved and the major subdivisions of the organization (exploration, space operations, science, aeronautics research). 2. The management hierarchy and reporting relationships (under Mission, e.g., directors at Ames, Goddard and Jet Propulsion Laboratory all report to the associate administrator for Science). 3. The type of work and responsibility of each subdivision (e.g., projects at research centers focus on specific disciplines or goals such as space exploration, space operations, etc.). 4. The official lines of authority and communication (the administrator is the highest authority, the deputy administrator the next highest, and so on; communication moves formally along the lines from one box to the next, up or down). It does not show informal lines of communication and personal contacts.

Traditional Forms of Organization The six bases for differentiation are functional, geographic, product, customer, process, and project.

1. Functional Differentiation The functional form of organization is so-called because it is divided into functional sub-units such as marketing, finance, production, personnel, and research and development; the structure of the Iron Butterfly Company in Figure is an example. Most of the integration between subunits is handled by rules, procedures, coordinated plans, and budgets. When discrepancies occur that cannot be resolved by these measures, the managerial chain of command takes over. When a problem involves several subunits, it is collectively resolved by managers of all subunits affected. This form of organization works well in repetitive, stable environments because there is little change, and the rather low level of integration afforded by rules, procedures, and chain of command gets the job done. The functional form has a long history. The Roman army was an early organization that used

functional differentiation, rules and procedures, and chain of command. The functional form remains today as the most prevalent basis for organization differentiation. 2. Geographic Differentiation Most organizations have more than one basis for differentiation. The Roman army was also geographically differentiated; that is, structured according to region or location. Organizations subdivide according to region (e.g., Atlantic, Mid-Western, and Pacific states; European branch; Far East command; etc.) to tailor themselves to the unique requirements of local customers, markets, suppliers, enemies, and so on. Within each geographic subunit, functional differentiation is often retained. Regional subunits may operate relatively autonomously, and any necessary integration between them is usually achieved through standardized accounting and reporting procedures. 3. Product Differentiation Firms that produce a variety of products use product-based differentiation. Corporations such as General Motors, General Foods, and General Electric are split into major subdivisions wherein each

designs, manufactures, and markets its own product line. Within each subdivision is a functional, geographic, or other form of breakdown. As with geographically differentiated organizations, integration between product subdivisions tends to be limited to standardized financial and reporting rules and procedures. 4. Customer Differentiation Organizations may also differentiate by customer type. For example, companies with large military sales often establish a separate division because federal requirements for proposals, contracting, and product specifications differ substantially from those for commercial customers. The level of integration between customer divisions depends on the degree of interdependency between their product lines; typically, however, integration is low. 5. Process Differentiation In the process differentiated form, some logical process or sequence of steps (e.g., design, then development, then assembly, then inspection, etc.) is the basis for differentiation. This basis is used for the subunits in the fabrication department of Iron Butterfly (assembly, testing, then packaging), shown in Figure. A higher level of integration is required among process differentiated subunits because they are sequentially related and problems in one area directly impact the other areas. These subunits tend to rely on coordinated plans and schedules as the primary means of integration. Other means such as task forces and teams are necessary when unanticipated problems arise or as task uncertainty increases.

Matrix Organizations

The basis for the matrix approach is an attempt to create synergism through shared responsibility between project and functional management. Problem-solving in this environment is fragmented and diffused.


The project manager maintains maximum project control (through the line managers) over all resources, including cost and personnel. Policies and procedures can be set up independently for each project, provided that they do not contradict company policies and procedures. The project manager has the authority to commit company resources, provided that scheduling does not cause conflicts with other projects. Rapid responses are possible to changes, conflict resolution, and project needs (as technology or schedule). The functional organizations exist primarily as support for the project. Each person has a home after project completion. People are susceptible to motivation and enditem identification. Each person can be shown a career path. Because key people can be shared, the program cost is minimized. People can work on a variety of problems; that is, better people control is possible. A strong technical base can be developed, and much more time can be devoted to complex problem solving. Knowledge is available for all projects on an equal basis. Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved. There is a better balance among time, cost, and performance. Rapid development of specialists and generalists occurs. Authority and responsibility are shared. Stress is distributed among the team (and the functional managers)

DISADVANTAGES OF A PURE MATRIX ORGANIZATIONAL FORM Multidimensional information flow. Multidimensional work flow. Dual reporting. Continuously changing priorities. Management goals different from project goals. Potential for continuous conflict and conflict resolution.

Difficulty in monitoring and control. Company-wide, the organizational structure is not cost-effective because more people than necessary are required, primarily administrative. Each project organization operates independently. Care must be taken that duplication of efforts does not occur. More effort and time are needed initially to define policies and procedures, compared to traditional form. Functional managers may be biased according to their own set of priorities. Balance of power between functional and project organizations must be watched. Balance of time, cost, and performance must be monitored. Although rapid response time is possible for individual problem resolution, the reaction time can become quite slow. Employees and managers are more susceptible to role ambiguity than in traditional form. Conflicts and their resolution may be a continuous process (possibly requiring support of an organizational development specialist). People do not feel that they have any control over their own destiny when continuously reporting to multiple managers.