Organizational structure forms through departmentalization. Separate positions are united into a department, and the departments become vital elements that create an organization. Naturally, there are several ways one can approach departmentalization. Managers decide how departments are interrelated, what major focuses and goals are set before each department, and how the chain of command and hierarchy will establish communication systems and reporting principles. Because different companies operate in highly distinct industries, there are different types of organizational structures developed to meet business-specific goals in a maximally effective and efficient way. There are three traditional organizational structures that are used by the majority of businesses on a global scale: functional, divisional, and matrix (Daft, 2014).
Functional structure, also referred to as a U-form (unitary), all departments of an organization are group on the basis of the core functions that they perform (Draft, 2013). The chain of command is relatively strict, and the decisions-making process is executed from top to bottom. Within the functional structure, all the skills and abilities of the workforce are consolidated in terms of specific activities. Consequently, such approach is most useful in companies where effective development of in-depth knowledge is crucial to organizational success, where coordination and control must be executed through the vertical hierarchy, and where efficiency is a major focus. Maximum effectiveness of this structure is possible in organizations where horizontal coordination is not vital, and where there is only one or few products. CMA, for instance, represents a company with a classical functional structure, as its departments are grouped based on their functional belonging, including research and development (R&D), production, marketing, and finance. Naturally, several organizational benefits are clearly associated with the functional structure. They include economies of scale within functional departments, development of in-depth skills and knowledge, and increased effectiveness of accomplishment of functional goals of an organization (Daft, 2013). However, functional structure has a number of serious disadvantages as well. Among them are slow responsiveness to external changes, low potential for innovation, and lack of horizontal coordination between functional departments. Additionally, within the context of a functional structure, employees are likely to prioritize their departmental goals over organizational, which is rarely beneficial for business. Finally, conflict resolution in a functional structure usually lies on the CEO, as departmental heads can hog the blanket and defend their functional departments rather than considering a wider perspective and focusing on the company’s well-being.
Divisional structure groups departments in terms of their organizational output. As a result, a company is divided into nearly autonomous strategic business units that focus on a single product, a single group of customers, or a single geography (Plunkett, Allen, & Attner, 2013). Therefore, product, customer, and geography structures are the common sub-types of the divisional one. Core functional departments such as marketing, finance, production, and R&D are present in each division to ensure successful accomplishment of divisional goals. Compared to the functional structure, divisional one is much more flexible and better responses to environmental changes, because each self-contained business unit possesses full functional capabilities while focusing on a single product or project, customer segment, or geography. It is also easier to track accountability and responsibility for performance within the divisional structure. Finally, this structure provides extremely favorable conditions for leadership development. Heads of self-contained divisions receive extensive experience that in its nature is considerably similar to the experience of managing a small company (Plunkett, Allen, & Attner, 2013). Of course, divisional structure is not perfect either, and has some major flaws. First of all, company with a divisional structure loses heavily in efficiency and economies of scale, because resources and activities are duplicated. Each division has its own production or marketing department, instead of maintaining a single one within the company. Additional potential negative implication of this fact lies in lack of expertise, technical specialization, and training. A rather controversial aspect of the divisional structure is the competition between the divisions. While it may be beneficial for the company in terms of enhancing employee motivation through constructive rivalry, it also harms cross-divisional teamwork and makes it hard for the organization to operate as a single well-balanced mechanism.
The third type of organizational structure is the one I consider to be best suited for CMA. It is called the matrix structure, and combines both horizontal and vertical lines of authority (Pride, Hughes, & Kapoor, 2012). As a result, employees report to more than one superior simultaneously, and the authority goes both down and across the company. Within the context of a matrix structure, departmentalization that is based on products is superimposed on a company that is departmentalized functionally. Cross-functional teams are a vital element of this structure. They may be temporary or constant, and comprise of people with different specialties, skills, and expertise that are gathered to achieve a common goal. Therefore, a manager that supervises a certain project can assemble the most appropriate team for this specific project. After the project is finished, the team can be disbanded, and its members will engage in other organizational projects. This structure offers a number of substantial advantages. The matrix structure is the most flexible among the three types (Pride, Hughes, & Kapoor, 2012). Also, it fosters innovation and creativity, enhances morale, and can lead to great productivity levels. For a high-tech company such as CMA, these aspects are vital. Additionally, this structure will enable keeping R&D, production, marketing, and finance functional departments. The same departmental heads will remain, which will make the transformational process less painful. Still, major changes will be required to develop a structure that will effectively combine functional departments and newly created divisions. In addition, obviously, it is important to list the disadvantages and risks associated with the matrix structure. The main problem with this structure is that it requires a large amount of resources to operate successfully. Ill-conceived implementation of the matrix structure can result in hampered communication, confusion regarding authority, supervision, and reporting, and establishment of unclear responsibilities. However, when designed properly, the matrix structure creates the exact types of organizational opportunities and capabilities that CMA needs so desperately. Moreover, I am positive that with the level of support, dedication, and determination demonstrated by the CEO, Dr. Jared Smith, and the departmental heads, Mr. Adams, Ms. Simons, Mr. Stevens, and Ms. Johns, the transformational process will be carried out successfully.
References
Daft, R. L. (2013). Organization Theory and Design (11th ed.). Mason, OH: Cengage Learning
Daft, R. L. (2014). Management (11th ed.). Mason, OH: Cengage Learning
Plunkett, W. R., Allen, G. S., & Attner, R. F. (2013). Management: Meeting and Exceeding Customer Expectations (10th ed.). Mason, OH: Cengage Learning
Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2012). Business (11th ed.). Mason, OH: Cengage Learning
