Evaluate the advantages and disadvantages of two different types of organizational structure.
Title: Evaluate the advantages and disadvantages of two different types of organizational structure.
Whether small or large, formal or informal, each organization has a structure. Throughout history, the issue of how to establish an effective structure or whether the structure is good or not for an organization has been discussed and researched by managers and theorists in many fields. Organizational structure, defined by Mintzberg (1980) as an aggregation of ways that divide its labor into different tasks and achieve coordination in these tasks, determines the form and function of organizational activities (Moorhead & Griffin, 1995) and establishes a set of relationships among activities regularly (Ficham & Rhodes 2005). It has also been noted that traditional structures, like bureaucratic and divisionalized structure (Mintzberg, 1980), tend to be steady, while modern ones, such as matrix and network structure (Kates & Galbraith, 2007), tend to be flexible. However, no one has seemed to affirm one structure could totally exceed another, as it was stated by Donaldson (1985:155) that “no one best way”. On this basis, this essay is going to assess both merits and demerits of two most typical organizational structures selected from classical types and modern types, which is known as bureaucratic structure and matrix structure. After the part of literature review, the essay will first give definitions of two structures. Subsequently, advantages and disadvantages of bureaucratic structure and matrix structure will be discussed respectively with comparing and contrasting by different viewpoints and examples.
In order to evaluate the benefits and weaknesses of different types of organizational structures, it is first important to understand the general idea about the structure of an organization. Fincham and Rhodes (2005) pointed that the growing size and complexity of enterprises has resulted in the rising of managerial structures separately and distinctly and also stated that establishing an organization structure is constructing a set of relationships among different activities, which is regularly happening. In earlier period, managerial professor Mintzberg (1980:13) described organizational structure briefly as “the sum total of the ways in which its labor is divided into distinct tasks and then its coordination is achieved among these tasks”. After that, Moorhead and Griffin (2005) gave some more detailed definitions. They explained that organizational structure has not only defined the features and styles of the organizational events, but also the way of each unit configuring together in a chart which represents the position of each member, the relationships between staff and managers and the routes of command. At the same time, Ficham and Rhodes (2005:470) supplemented that the design of an organizational chart could be referred to as determining a “physical shape”, which might help an organization to improve work performance and contribute to task achievement. In addition, the structure also determines a position of control and authority (Kate & Galbraith, 2007). “It determines who comes in contact with whom”, stressed by Kate and Galbraith (2007:9-10). Thus, the structure of an organization is closely related to both people and activities in the organization in order to improve the performance and achieve the goals.
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There has been no specific and clear classification about organizational structures. New types of structures would always be created with the development of society and technology while some outdated styles might fade away. In the early twenties, German sociologist Max Weber, who had significant effects on the organizational theories, proposed a theory of bureaucracy structures (1947). According to Weber (1947:339), “bureaucratic administration means fundamentally the exercise of control on the basis of knowledge”. Meanwhile, Burns and Stalker (1961) stated that there are two types of organizational structures in the opposite direction, ranging between organic and mechanistic and suggested that the organic type is adapted to flexible conditions while mechanistic form is suitable for relatively stable organizations, whereas, Offe (1976:445) distinguished the organizational structures on a basis of “task continuous”’ and “task discontinuous”. Later on, Mintzberg (1980) demonstrated five fundamental configurations of structural elements according to different kind of coordinating mechanisms, named Simple Structure, Machine Bureaucracy, Professional Bureaucracy, Divisionalized Form and Adhocracy. In the twenty-first century, more sophisticated and highly evolved types of modern organization structures have been highlighted based on different functions, such as functional structure, product structure, geography structure, customer structure described by Kates and Galbraith (2007) as the four basic organizational structures, and also matrix structure and network structure as new kind of structures, because of the fast spread of informatization and globalization. However, “there is no single form which will be equally effective under all circumstances – no one best way”, stated by Donaldson (1985:155). What this means is that each type of structure would have both benefits and drawbacks.
As literatures have shown, the concept of “bureaucracy” was first recommended as a type of administrative organization structure by the German sociologist -- Max Weber. Later scholars Fincham and Rhodes (2005) both described bureaucracy model as a hierarchical organization, which designs vertical division of authority in a fixed position with specialized skills (Mintzberg, 1993), an example of which is shown in Appendix 1. On the contrary, matrix structure, usually defined as a combination of product based structure and functional structure, has dual chain of authority (Moorhead & Griffin, 1995). Each member can belong to two divisions and may have two supervisors in a matrix organization (Jones, 2001), which is represented in Appendix 2. In general, the matrix structure seems to be more complex compared to the bureaucratic structure.
Although bureaucratic structure appears to be much older and rigid than Matrix structure according to the definition of Weber (1947) and Mintzberg (1993), it still exists in a number of industrial companies in modern society (Fincham and Rhodes, 2005), because it has brought many benefits to business and employees. The most significant advantage is that tasks tend to be accomplished more efficiently and effectively in a bureaucratic structure. On the basis of highly developed division of labor and specialization of tasks, according to Mintzberg(1980), each member thus could know clearly what exactly they should do. Meanwhile, offering detailed and precise rules of the responsibility and duties of each position could also reduce the cost of transaction between staff and managers, mentioned by Jones (2001). This is because ways of rewarding, punishing or how they work are all regulated in the rules (ibid), which means that employees just need to follow the direction set by the authority and are unnecessary to further question about the work or identify their roles repeatedly. Furthermore, bureaucratic organizational structure could also provide a stable environment for staff. In a description of Mintzberg (1993), all functions are defined in a settled place of activity. Thus, roles in bureaucratic organization are less likely to move, which could ensure the stability of organization and might also help the staff improve a skill and be competitive in the area in which they have expertise on a long-term basis.
However, the criticisms of bureaucracy emerge all the way with praises, because it is impossible to meet all the requirement of bureaucracy all along (Fincham & Rhodes, 2005). One of the biggest problems that have been criticized is that it depends too much on regulations and neglects human performance, so that the innovation of employees is largely restricted (Jones, 2001). Fincham and Rhodes (2005) also implied that it erodes individual democratic freedom, since staff has to accept the prescription instead of negotiating with directors. Another considerable problem is a lack of flexibility in bureaucratic organizations, resulting from a strict hierarchy (Mintzberg, 1993), which could thus lead to the problem of communication and coordination between different divisions and reduce the organizational effectiveness (Merton, 1940). According to Jones (2001), the tall and centralized structure of bureaucracy could also make the decision-making process much lengthy. Therefore, to this extent, the bureaucratic organizational structure seems to be less effective, especially when dealing with disagreements or differences in an organization.
In terms of matrix structure, it looks like the reverse. Due to the flat structure and decentralized authority (Moorhead & Griffin, 1995), members in matrix organization are quite free, giving responsibility without much authority (Jones, 2001). According to the description of Moorhead and Griffin (1995), employees can report to either functional managers or product team managers, or both, which would facilitate the communication between different functions and also provide channels for staff in one function to learn different skills from other groups. In addition, the flexible crisscross structure is also a way to reduce function barriers and make information easier to transfer transversely (Lawrence, Kolodny & Davis, 1977), thus task efficiency will be largely enhanced with the quicker response of cross-function (Jones, 2001). Jones (2001) also stated that, by owing this advantage, matrix system was first applied to Altas & Titan rockets by U.S. space program in 1960s, and then the benefits of matrix structure began to be recognized. Moreover, skilled professionals could be in full use in the matrix structure. For example, when a skilled engineer finished designing a product for project A, he could be moved to project B and help to do another task of design which he is skilled for (ibid). It seems like that people would be able to move from one place to another one, in which they will be most needed. This form of flexibility tends to maximize the value of human resources.
Similarly, matrix organizations are not without their problems as well. Davis and Lawrence (1978) both pointed out that matrix lacks the advantages of bureaucratic structure because lacking for precise hierarchy. Without clear defined task and bosses, employees may be confused due to the conflicts among different roles they should perform in the organization (Fincham & Rhodes, 2005), and even power struggles between line managers and project managers would occur (Moorhead & Griffin, 1995). Furthermore, too much flexibility in an organization would also cause a set of problems. Jones (2001) explained that in reality, many managers are likely to increase their own control and power, especially when employees could not achieve the target they expected. Thus, the structure settled as flexible and decentralized, tend to become centralized and inflexible, which seems like matrix structure has gradually transformed into bureaucratic structure. Once it does, all problems of bureaucracy raise.
In conclusion, two types of organizational structure discussed above are quite different and almost opposite, sine while the structure of bureaucracy is tall, centralized and stable, and the structure of matrix is flat, decentralized and flexible. Thus, some advantages of bureaucratic structure tend to be disadvantages of matrix one, while some disadvantages of bureaucracy in turn become advantages of matrix structure. However, there is no implication showing that which one could be better or not. Although the traditional bureaucratic structure seems to be criticized more seriously, however, it still works in many industrial corporations contemporarily. As is seen in above discussion, the bureaucratic organization focuses on tasks and achievement and might be more suitable for completing a task efficiently, while the Matrix organization focuses on coordination and personal performance and is thus better suited for technological or artistic processes. Therefore, what counts might be not whether the advantages of a structure overweigh its disadvantages, but whether this kind of structure is in accordance with the organization’s current situation.
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Appendix 1: Bureaucratic organizational structure
Appendix 2: Matrix organizational structure