Organisational Structure

ACCA - F1   ACCOUNTANT  IN  BUSINESS

Once the type of organisation is defined, next step is to know the structure of the organisation. Structurally they can be as simple as single linear chain to a complex matrix structure. Knowing organisational structure helps stakeholders to define their channel to establish formal relationship with identified organisation. There are many more benefits, which we visit in later section of this script.

Owner managed organisation can have simple linear chain or simple wheel structure to multi-chain linear structure or multi wheel structure. In the linear chain owner/manager secures topmost position in the chain whereas in wheel the central position. Autocracy prevails in this type of organisations because manager/owner solely takes risks and benefit from rewards. Most of this type of structure is common in small and medium sized business organisations.

As organisation grows, a single manager cannot handle all necessary managerial tasks. To simplify this problematic situation organisation adopts a functional structure. Functional structure holds best to those organisation which have limited products/services and which operate in specified geography.

Organisations with diversified portfolio of products and services or operating in different geographical reasons may prefer to have a divisional structure by product or geography rather than the functional structure.

Even bigger organisations with diversified portfolio and operating in different reason (multinational) have matrix structure. In organisation the separation of ownership and control means the organisation chart may not include the members/shareholders whose position is at very top of the structure.

Virtual organization is defined as being closely coupled upstream with its suppliers and downstream with its customers such that where one begins and the other ends means little to those who manage the business processes within the entire organization. A special form of boundaryless organization is virtual. The virtual organization exists within a network of alliances, using the Internet. This means while the core of the organization can be small but still the company can operate globally be a market leader in its niche.

Bureaucracy structure is system of administration distinguished by its (1) clear hierarchy of authority, (2) rigid division of labor, (3) written and inflexible rules, regulations, and procedures, and (4) impersonal relationships. Once instituted, bureaucracies are difficult to dislodge or change. In every organisation, bureaucracy exists in some extent. Organisations with lesser degree of bureaucracy are supposed to have flat structure.

 A flowchart is used to describe organisational structure. Use of organisational chart can have various benefits. It defines rights and responsibilities of every employee. It acts as a motivational and control element. Employee can see their progress and position in overall structure. It also helps identify relationship and define powers. Finally, it helps align the interest of stakeholders and achieve its mission through goal congruence.

The bold characters are copied form Wikipedia.