Organizational Structure

 Structure

Organizations can be regarded as people management systems. They range from simple hierachies along traditional lines to complex networks dependent on computer systems and telecommunications. (...) Human resource managers can encourage organizations to adopt strategies (for their structures) which foster both cost-effectveness and employee commitment. (...) Organizational structures can be classified into a number of types, including functional, divisional, matrix, federations and networks.

  Implications of structure on organizational advance and change. Read 'Organization structure'

 Functional structures

Early organizational design divided enterprises into relatively simple parts, splitting them into defined activities such as production, marketing or personnel. (...) functional organizations have the advantage of being simple to understand with clear lines of command, specified tasks and responsibilities. Staff can specialize in a particular business area such as production or marketing and follow well-defined career paths. This is equally true of human resource specialists who can develop expertise in specific areas such as employee relations or reward management. (...)

There are also major disadvantages to functional structures. People managers have to tread carefully because this form of organization is prone to interdepartmental conflict, often degenerating into 'them and us' tribal warfare. Coherence and good communication are particularly hard to achieve between virtually independent functions.

Pages 184-187 (pages 104-107 in the first edition) of Human Resource Management in a Business Context includes more discussion, a table of typical HR roles in a functional organization and another table rating HRM in such organizations against the '10 C' checklist of HRM. There is also a case study to illustrate the consequences of 'delayering' on such an organization.

 Divisional organizations

Split into self-contained units, able to react to environmental changes as quickly as small companies, they are also described as multidivisional or 'M-form' organizations. (...) Divisions encourage team spirit and identification with a product or region. Managers can develop broad skills as they have control of all basic functions. (...) Each division is likely to have a devolved human resource function. But there is a risk of duplicating activities between head office and divisional human resource departments and of conflict between staff in successful and unsuccessful divisions. (...) The divisional function may play a coordinating role, reconciling decisions taken at the corporate and business unit levels. This results in a complex picture of people management.

Page 188 (page 108 in the first edition) of Human Resource Management in a Business Context includes a table to illustrate this complexity using the the '10 C' checklist of HRM. Page 189 (page 109 in the first edition) lists a number of ways in which HRM can be organized in divisional organizations.

 Federations

One variant of the divisional form which has a particular relevance because of its human resource implications is the 'federation', a loosely connected arrangement of businesses with a single holding company or separate firms in alliance. (...) This form of organization has attracted criticism from stock market analysts who find difficulty in comprehending its subtle informality.

 Matrix organizations

Matrix forms of management can be regarded (arguably) as an early form of 'network' structure. They focus on project teams, bringing skilled individuals together from different parts of the organization. Individuals were made responsible both to their line manager and the project manager involved. Before the advent of network technology, many matrix organizations were dogged by duplication and confusion: the 'matrix muddle'.

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