CSR REPORT

5 TYPES OF ORGANIZATIONAL STRUCTURE

Businesses need structure in order to function and grow. Without it, there would be very little
clarity and focus; nobody knows whom to report to. Having a structure there’s an organized flow
of leadership and authority, in which every individual is supposed to have a clear idea of what
they do, whom they supervise, and whom they ultimately report to.

1. FUNCTIONAL

People who do similar tasks, have similar skills and jobs in an organization are grouped into a
functional structure.

Advantages

a. Include quick decision making because the group members are able to communicate easily
with each other.

b. People can learn from each other easier because they already possess similar skills and
interests.

c. Individuals are dedicated to a single function. These clearly defined roles and expectations
limit confusion.

Disadvantage
It’s challenging to facilitate strong communication among different departments.
2. PRODUCT OR SERVICE

This structure is to be organized by a specific product type. Each product group falls within the
reporting structure of an executive and that person oversees everything related to that particular
product line.

For example an executive over Kraft products would be responsible for every product under that
label – dressings, meats, sauces, etc.

Advantage

It organizes products by category but can create completely separate processes from other
product lines within the organization.

3. GEOGRAPHICAL

Geographic structure is used for organizations that have offices or business units in different
geographic locations. It defines reporting and functional system across multiple locations. This
allows organization's offices to operate individually while adhering to company policies and
values. Office locations can be local, national or international.

4. DIVISIONAL

It is defined by the grouping of departments and is particular to larger companies. It follows a

functional model within each division. Specialized departments help managers keep track of the
products and activities the company develops. Your departments might distinguish between
customer service, production and geographic location. Managers can focus resources and
outcomes on their specific departments.

5. MATRIX

Matrix structures are more complex in that they group people in two different ways: by the
function they perform and by the product team they are working with. Here, the team members
are given more autonomy and expected to take more responsibility for their work.

Advantages

a. Employees have responsibility not only for their department but for organizational projects.

b. This increases the productivity of the team,

c. Fosters greater innovation and creativity,

d. Allows managers to cooperatively solve decision-making problems through group interaction.

Disadvantage

It presents itself when employees are given direction from two different managers and they need
to prioritize their work responsibilities.

A matrix structure provides for reporting levels both horizontally as well as vertically.
Employees may be part of a functional group (i.e. engineer) but may serve on a team that
supports new product development (i.e. new album). This kind of structure may have members
of different groups working together to develop a new product line.

For example, a recording engineer who works for a music publisher, may have engineers who
report to him but may also use his expertise and work with teams to develop new music albums.

CENTRALIZATION VS DECENTRALIZATION
Centralization and Decentralization are the two types of structures, that can be found in the
organization, government, management and even in purchasing.

CENTRALIZATION
It refers to the concentration of all the powers at the apex level.

In earlier times, centralization policy was the most commonly practiced in every organization to
retain all the powers in the central location. However, due to the concentration of authority and
responsibility, the subordinate employee’s role in the organization is diminished because of all
the right vests with the head office.

DECENTRALIZATION

It is the delegation of authority, at all the levels of management. At present, due to the increase in
competition, managers take the decision regarding for the delegation of authority to the
subordinates. Due to which the functional level managers get a chance to perform better, as well
as freedom of work, is also there.

Key Differences Between Centralization and Decentralization

Centralization is the systematic and consistent concentration of authority at central points.

Unlike, decentralization is the systematic delegation of authority in an organization.

Centralization is best for a small sized organization, but the large sized organization should
practice decentralization.

Formal communication exists in the centralized organization. Conversely, in decentralization,

communication stretches in all directions.

In centralization due to the concentration of powers in the hands of a single person, the decision
takes time. On the contrary, decentralization proves better regarding decision making as the
decisions are taken much closer to the actions.

There are full leadership and coordination in Centralization. Decentralization shares the burden
of the top level managers.

3 LEVELS OF ORGANIZATION

1. TECHNICAL LEVEL

The organizations involve multiple people working together for a certain purpose, following
specific processes and performing specific functions or stated objectives, which includes small
groups with an entrepreneurial idea to large corporations with many more layers of operation and
communication.

2. MANAGERIAL LEVEL

a. TOP MANAGEMENT

The top level management determines the objectives, policies and plans of the organisation.
They spend more time in planning and organising.

They prepare long-term plans of the organisation which are generally made for 5 to 20 years.

They are directly responsible to the Shareholders, Government and the General Public.

They require more conceptual skills and less technical Skills.

b. MIDDLE MANAGEMENT

It executes (implements) the policies and plans which are made by the top level management.

They spend more time in co-ordinating and communicating.

They prepare short-term plans of their departments which are generally made for 1 to 5 years.

They are directly responsible to the chief executive officer and board of directors.

They require more managerial and technical skills and less conceptual skills.

c. LOWER MANAGEMENT

They develop morale in the workers and direct the workers / employees.

They spend more time in directing and controlling.

The lower level managers make daily, weekly and monthly plans.

They regularly report and are directly responsible to the middle level management.

Along with the experience and basic management skills, they also require more technical and
communication skills.

3. COMMUNITY LEVEL

It develops integration within the community and helps the people to cooperate each other. It is a
democratic method which belief is the equality of all men and women and dignity provide to
individuals. It works in the community to develop the living standard of people through their
own resources and activities. They motivate the people and inculcate the idea of promotion and
progress is community.

MINTZBERG’S 9 DESIGN PARAMETERS

Designing an organizational structure requires consideration of an organization's values, financial

and business goals. It should allow for growth for the organization and the ability to add
additional jobs or departments.
A. DESIGN OF POSITIONS
1. JOB SPECIALIZATION
It reflects the division of labor and the worker’s control over the assigned tasks.
2. FORMALIZATION OF BEHAVIOR
Behavior is regulated by the standardization of work content. This regulation will result in job
formalization, work flow formalization or rules and regulation formalization.
3. TRAINING AND INDOCTRINATION
Training occurs when job related skills and knowledge are taught. Indoctrination or socialization
is the process of acquiring organizational norms.
B. DESIGN OF SUPERSTRUCTURE – fashion the organization’s structure
4. UNIT GROUPING
Unit grouping by product is more flexible, less bureaucratic, has fewer economies of scale, and is
less efficient.
5. UNIT SIZE
The no. of positions contained in a single unit. Generally, the larger the unit size, the greater the
use of standardization and coordination.
C. DESIGN OF LATERAL LINKAGES
6. PLANNING AND CONTORL SYSTEM
Action planning specifies the desired results of specific activities. Performance control systems
regulate the overall results of a given unit.
7. LIAISON DEVICES
Encourage informality and more organic structures. Generally, the more these devices, the
smaller the unit.
D. DESIGN OF DECISION MAKING PROCESS
8. VERTICAL DECENTRALIZATION
Delegation of decision making down the chain of authority.
9. HORIZONTAL DECENTRALIZATION
When decision making power shifts laterally to nonmanager. It may shift the decision making
authority to a single person in a particular organization position, to analysts to expert.

ORGANIZATIONAL CULTURE
Organizational culture is an important factor for an organization and it is a significant key to
success in the workplace.

Attitude?

A company culture can and should tremendously affect the attitudes of managers; management is
driven by the culture. A company culture can alter a manager’s attitude toward leadership.

Performance?

A strong organizational culture helps an organization attract and retain top talent. Professionals
who want to achieve personal and organizational goals will be attracted to an organization that
offers them opportunities to do so and that rewards them for doing so. A strong culture also helps
motivate employees to achieve results, and employees will be motivated to come to work
because they will feel that they fit into the culture and that it is consistent with their beliefs and
goals.

Behavior?

The dangers of having a weak organizational culture include low employee motivation,
employee fraud, and generally “bad” behaviors in the workplace. Organizational culture is
defined as “the underlying values and beliefs that exist continuously and drive behavior in the
organization”.

HOFSTEDE’S 6 CULTURAL DIMENSIONS

1. INDIVIDUALISM VS. COLLECTIVISM

Individualism is the extent to which people feel independent, as opposed to being interdependent
as members of larger wholes.

Individualism does not mean egoism. It means that individual choices and decisions are
expected. Collectivism does not mean closeness. It means that one "knows one's place" in life,
which is determined socially.

2. POWER DISTANCE INDEX (HIGH VS. LOW)

In high power distance country like Malaysia, people generally accept power as an integral part
of the society. Hierarchy and power inequality are considered appropriate and beneficial. The
superiors are expected to take care of the subordinates, and in exchange for that, the subordinates
owe obedience, loyalty, and deference to them.

In low power distance ccountry like Ysrael, people value equality and seek to minimize or
eliminate various kinds of social and class inequalities. They value democracy, and juniors and
subordinates are free to question or challenge authority.

3. MASCULINITY VS. FEMININITY

In masculine culture like Mexico, tough values – such as achievements, ambition, power, and
assertiveness – are preferred over tender values – such as quality of life and compassion for the
weak. Additionally, gender roles are generally distinct and complementary, which means that
men and women place separate roles in the society and are expected to differ in embracing these
values.

In feminine cultures Japan, genders roles are fluid and flexible: Men and women do not
necessarily have separate roles, and they can switch their jobs while taking care of the family.

4. UNCERTAINTY AVOIDANCE (HIGH VS. LOW)

People from high uncertainty avoidance culture, such as Germany tend to have greater need for
formal rules, standards, and structures. Deviation from these rules and standards is considered
disruptive and undesirable. They also tend to avoid conflict, seek consensus, and take fewer
risks.

In low uncertainty avoidance culture like United Kingdom, people are more comfortable with
unstructured situations. Uncertainty and ambiguity are considered natural and necessary. They
value creativity and individual choice, and are free to take risks

5. LONG-TERM VS. SHORT-TERM ORIENTATION

Societies with a long-term orientation, such as most East Asian societies, embrace future-
oriented virtues such as thrift, persistence, and perseverance, ordering relationships by status, and
cultivating a sense of shame for falling short of collective expectations.

Society with a short-term orientation like Norway, foster more present- or past-oriented virtues
such as personal steadiness and stability, respect for tradition, and reciprocation of greetings,
favors, and gifts.

6. INDULGENCE VS. RESTRAINT

Indulgence is about the good things in life.

In an indulgent culture it is good to be free. Doing what your impulses want you to do, is good.
Friends are important and life makes sense. In a restrained culture, the feeling is that life is hard,
and duty, not freedom, is the normal state of being.