They enable a more sustainable and healthier corporate environment. It accommodates new ideas in respect of organizational relationship while retaining its basic structure. Facilitates Effective Management: A properly-designed organization provides proper division of labor or departmentalization, consistent delegation ... 2. Organizational structure is extremely important during a business. It can easily be seen which department is successful in making profits while which are bearing losses. Privacy Policy 8. Because a functional structure groups people performing similar tasks that require certain skills, more experienced or talented group members serve as examples and mentors to individuals with less experience. More than one boss for project teams. All courses are 100% Online, Self-Paced and 30 Day Money Back Guaranteed. 1. They also create uncertainty within the workplace, as workers may not know who needs to receive information about the work they’ve done. It is designed in such a manner as to serve as an instrument to accomplish the social goal. 3. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. In a turbulent environment, such organization is preferable for planning, implementing and control of costs projects. This causes duplication of the same testing tool for the 2nd project and means additional cost for the organization. Organizational functions within an organization are Sales and Marketing, production, human resources, finance, Research & development, and Purchasing etc. 3. Last advantage is that a more effective communication is ensured in projectized organizations compared to other organizational structures. Below are some merits and advantages of line organization or vertical organization 1. The Matrix Organization Structure can deliver this, provided people have the skills to make the matrix work. Image Courtesy : images.flatworldknowledge.com/carpenter/carpenter-fig07_001.jpg. Because all resources of the project are dedicated to project tasks and assignments. The last advantage of this type of organizational structure is that team members maintain a home. It creates a defined structure for communication. Importance of Organizational Structure. This reduces the conflicts or contradictions of reporting to both project and functional manager. This structure strengthens the dissemination of information and better coordination of the staff. 3. 2. The extent to which an organisation is able to achieve its goal is, to a great extent, determined by its structure. Plagiarism Prevention 4. Structure of Organization; Advantages of Functional Organizational Structure. Naturally, this will also bring the need of additional administration. Unify Your Marketing Message. "@context":"http:\/\/schema.org\/", "aggregateRating":{"ratingValue":"4.7","reviewCount":"246","bestRating":5,"worstRating":1}}. This is a type of organizational structure which facilitates a horizontal flow of skills and informations. Because there will be two managers of a resource: functional manager and project manager. This kind of organizational structure give fair power balance to both functional manager and project manager, that’s why Matrix organizations are the most common organizational structure type in the industry. A sound organisational structure facilitates the optimum use of technological improvements such as automatic techniques of production, control devices, computer system etc. In this type of organizational structure, an extra administration is required. The advantage of this horizontal organizational structure is that it allows decisions to be made faster. There is more support from functional areas. Another disadvantage of the projectized organizations is the duplication of facilities and job functions. The main reason of this is, there will be lots of projects needing resources from a single functional department. In a turbulent environment, such organization is preferable for planning, implementing and control of costs projects. For instance, for a software developer working in software development department, developer, senior developer, expert developer, and architect can be a career path as long as he improves his skills and competence. Some of the beneficial outcomes of optimally designed organizational structures are: While there are many different structures that organizations can adopt, depending upon the type of organization including whether it is a service organization or a manufacturing organization, a well structured organization has many benefits. The following are some top benefits to use the organizational chart: The organizational chart helps build and design the organization structure to meet the business' objectives. Functional managers may have different priorities than project managers and this causes higher potential for conflict. Allows managers to tackle as to how employee treatment occurs in the organization. What needs to be achieved to complete a project successfully is clearly defined and understandable for the project team. Do you want to earn money just by sharing this article? Instead of the C-Suite needing their middle managers to collect information assets from the front-line staff and then reporting it to them, they can obtain the information directly. This means the power and the responsibilities of each department. Or when a new project is initiated, they can be re-assigned to new projects. List of the Disadvantages of a Hierarchical Organizational Structure. If these requirements are clearly established and the yearly increments or the cost of living increments for each type of job are properly and clearly understood, then compensation administration policies are easier to implement. This is mainly applied in large projects or product development processes, and hiring employees from different disciplines.. Advantage – Clear Chain of Command In an hierarchical structure, members know to whom they report and who reports to them. 1.4.4 Networked Organizational Structure Following are the advantages of Networked Organizational Structure: Rigid hierarchies are replaced by formal and informal communication networks that connect all parts of the company. In other words, an organizational structure is a framework that helps your employees achieve their goals and do their jobs in the most efficient and productive way. 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