Types of
Organizational
Structures
Centralized vs. Decentralized Hierarchical vs. Circular Vertical vs. Flat
Many companies use the traditional Basically, the pyramid-shaped Vertical has the clear chain of
model of a centralized organizational organizational chart that many command with a small group of
structure. Whereas in decentralized people are used in seeing. Whereas in leaders at the top. Whereas in flat
organization, teams have more circular organization, the company organization, a person may report to
authority in making decisions. leadership is in the center circle. more than one person.
Benefits of Creating an Essential Elements of Clear
Organizational Structure Organizational Structure
• Provides accountability • Chain of command
• Clarifies expectations • Roles and responsibilities
• Documents criteria for promotion • Scope of control
• Designates decision-making • Decision-making authority
authority • Departments of teams within the
• Creates efficiency organziation
• Fosters collaboration
Three Types of Organizational Structure
1. Functional Organization
This is a form of departmentalization in which everyone is engaged in one functional activity such as engineering or
marketing. This is grouped in one unit.
Advantages Disadvantages
1.The grouping of employees who perform a common 1.Communication and coordination between the
task permit economies of scale and efficient departments are often poor.
resource use. 2.Decision involving more than one department pile
2.Since the chain of command converges at the top of up at the top management level and are often
the organization, decision-making is centralized, delayed.
providing a unified direction from the top. 3.Work specialization and division of labor, which are
3.Communication and coordination among employees stressed in a functional organization, produce
within each department are excellent. routine, nonmotivating employee tasks.
4.The structure promotes high-quality technical 4. It is difficult to identify which section or group is
problem solving. responsible for certain problems.
5.The organization is provided with in-depth skill 5.There is limited view of organizational goals by the
specialization and development. employees.
6.Employees are provided with career progress within 6.There is limited general management training for
functional departments. the employees.
Three Types of Organizational Structure
1. Functional Organization
This is a form of departmentalization in which everyone is engaged in one functional activity such as engineering or
marketing. This is grouped in one unit. This type of organization is very effective especially in smaller firms.
Example of a Functional Organization Structure: A Typical Functional Organization Chart of a Construction Company:
Three Types of Organizational Structure
1. Functional Organization
Another Example of a Functional Organization Structure:
Three Types of Organizational Structure
1. Functional Organization
Another Example of a Functional Organization Structure:
Three Types of Organizational Structure
2. Product or Market based Organizations
An organizational structure in which it does not evolve around typical roles and job functions. This type of organization is appropriate for a large
corporation.
Advantages Disadvantages
1.The organization is flexible and responsive to 1.There is high possibility of duplication of resources
change. across divisions.
2.The organization provides a high concern for 2.There is less technical depth and specialization in
customer’s needs. divisions.
3.The organization provides excellent coordination 3.There is poor coordination across divisions.
across functional departments. 4.There is less top management control.
4.There is easy pinpointing of responsibility for 5.There is competition for corporate resources.
product problems.
5.There is emphasis on overall product and division
goals.
6.The opportunity for the development of general
management skills is provided.
Three Types of Organizational Structure
2. Product or Market based Organization
Example of a Product or Market based Organizational Structure:
Three Types of Organizational Structure
2. Product or Market based Organization
Example of a Product or Market based Organizational Structure:
Three Types of Organizational Structure
2. Product or Market based Organization
Example of a Product or Market based Organizational Structure:
Three Types of Organizational Structure
3. Matrix Organization
An organizational structure In which employees report to both a functional or division manager and to a project or group manager. It is a structure
with two or more channels of command.
Advantages Disadvantages
1.There is more efficient use of resources than the 1.There is frustration and confusion from dual chain of
divisional structure. command.
2.There is flexibility and adaptability to changing 2.There is high conflict between divisional and
environment. functional interests.
3.The development of both general and functional 3.There are many meetings and more discussions
management skills are present. than actions.
4.There is interdisciplinary cooperation and any 4.There is a need for human relations training for key
expertise is available to all divisions. employees and managers.
5.There are enlarged tasks for employees which 5.There is a tendency for power dominance by one
motivate them better, side of the matrix.
Three Types of Organizational Structure
3. Matrix Organization
An organizational structure In which employees report to both a functional or division manager and to a project or group manager.
Example of a Matrix Organizational Structure:
Three Types of Organizational Structure
3. Matrix Organization
An organizational structure In which employees report to both a functional or division manager and to a project or group manager.
Example of a Matrix Organizational Structure:
Three Types of Organizational Structure
3. Matrix Organization
An organizational structure In which employees report to both a functional or division manager and to a project or group manager.
Another Example of a Matrix Organizational Structure:
Types of
Authority
Three Types of Authority
1. Line Authority
This permits the manager or gives the manager rights to tell subordinates what to do and then see that they do it.
2. Staff Authority
A staff specialist’s right to give advice to a superior
3. Functional Authority
A specialist’s right to oversee lower level personnel involved in that specialty, regardless of where the personnel are
in the organization.
Line Departments perform tasks that reflect the organization’s primary goal and mission. In a construction firm, the
department that negotiates and secures contracts for the firm is a line department. The construction division is also a line
department.
Staff Departments include all those that provide specialize skills in support of line departments. Examples of staff
departments iclude those of which perform strategic planning, labor relations, research, accounting, and personnel
A Line and Staff
Organization
The Purpose of Committee
A Committee is a formal group of persons formed for a specific purpose. Committees are very useful most especially
to engineering and manufacturing firms. When a certain concern, like product development, is under construction, a
committee is usually formed to provide the necessary line-up of expertise needed to achieve certain objectives.
Classification of Committees:
1. Ad hoc Committee - this type of committee is created for a short-term purpose and have a limited life.
2. Standing Committee - this type of committee is a relatively permanent committee that dals with issues on
an ongoing basis.
3. Select Committee - this type of committee is temporary committees created with a timeline to complete a
specific task, like investigating government activity.
4. Subcommittee - this type of committee usually are working groups that report to existing committees. They
are normally created by an order of reference adopted by the committee in question.
Thank you!
References
• https://www.studocu.com/ph/document/university-of-the-philippines-system/construction-engineering-and-
management-i/engineering-management-5/18065102
• https://www.studocu.com/ph/document/university-of-the-philippines-system/construction-engineering-and-
management-i/engineering-management-5/18065102
• https://penpoin.com/organizational-structure-by-product/
