Nov 2018 Q4.

The functional structure is centralised and produces a rigid framework for efficient management control. It is found in those private sector organisations that have outgrown the simple structure and in many parts of the public sector. This structure consists of a managing director (or equivalent title), very often in overall control, and a board of directors whose role is to oversee the organisation on behalf of the shareholders. The board makes the medium-term and long-term decisions for the organisation. Communication channels are short and vertical. Managers with specialist knowledge, such as accountancy, control specialist functional departments. The department is responsible for taking short-term operational decisions.

The rigidity of the functional structure means it can only function effectively where the organisation provides clearly-defined products or services to clearly-defined markets. This structure does not have the flexibility needed to deal with complexity. This is the weakness of the structure; it controls chaos which facilitates growth, but then finds diversity of product or service and market very difficult to cope with. With departments rigidly aligned, cross-functional team-working needed for diversification and innovation is very difficult.

The divisional structure deals with the complexity of different product or services and different markets. It is a decentralised structure. The various divisions are based on either product or geographical lines, which ever leads to greatest efficiency. Within the divisions there is a separate organisational structure. The simplified environment within the division usually means the functional structure is possible. The board of directors will only take the long-term strategic decisions. Divisional heads will be responsible for medium and short-term decisions. One of the consequences of the divisional structure is increased cost. This is partly alleviated through the sharing of central services such as human resource management, finance and legal services. This allows the organisation to operate centralised policies while maintaining the maximum amount of devolved activity.

The divisional structure can lead to some inefficiency, for example, divisions may find themselves in competition with each other. Each division will be able to account for its own income and expenditure. The head office will set targets and expect divisions to achieve these targets. Income from the divisions is usually aggregated to form the total income for the organisation. This means the divisions need to ask head office for funds and resources. The allocation of these funds can lead to interdivisional rivalry.

The matrix structure is a combination of two or more organisation structures. It is a hybrid structure because it combines functional organisation with project organisation. Therefore, it has the merits and demerits of these two structures. In s matrix organisation, the functional manager will have authority over the functional aspects of a job while the project manager will be responsible for the financial and physical resources which will be required to do the job.

Decisions in a matrix organisation are usually the best since they are made by experts. Again, the structure is very responsive to changes in the environment because it allows for quick decision making. A matrix structure deploys staff from different departments to work as a team and this serves as a source of belongingness and motivation.

On the other hand, the matrix structure requires a high degree of co-operation of employees who have been brought from different departments, without which performance may suffer. Another problem of the structure is that it increases management overhead costs. There is the potential for conflicting management directives which may be detrimental to organisational efficiency.