Organizational structure helps us to determine the authority relationships among the members of an organization, and hence it influences the behaviour of individuals, groups and divisions within the organizations. Among others, the structure of an organization affects the division of tasks, communication systems, decision-making patterns and finally the way how people relate to each other. Depending on the specific nature of the firm, organizational structures may be standardized or open.
Reviewing various components of organizational structure, Mintzberg has given us a potential classification of five different types of organizational structures. These are—(1) machine bureaucracy (standardized structure) (2) professional bureaucracy (3) adhocracy or innovative forms (4) simple or entrepreneurial forms (5) divisional forms. Each structural form indicates different pattern of behaviour of the firm.
Organizational structure that conforms to machine bureaucracy emphasizes the standardization of work and centralized decision making. Very large organizations like GM and Ford are examples of machine bureaucracies. This form of structure prescribes limits to behaviour and procedures for members. It makes status polarization by maintaining hierarchies and controls both their internal and external stakeholders by determining the rigid boundaries between themselves and their stakeholders.
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Such organizations tend to be secretive. Conservative attitude prevents internal cooperation and discourages learning for the people. Such organizations practise so much insularity that they even do not allow members of one department to enter another department. They promote competition and non-collaboration among employees.
In organizations that subscribe to the professional bureaucracy avoid excessive formalizations. Such organizations are managed by professional people and here the employees enjoy a high degree of functional autonomy and experience lesser control than in the organizations conforming to machine bureaucracy.
They feel empowered even to cope with the external eventualities that the organization faces. Being open and cooperative, this type of organizations promote learning environment, support competency development and truly transform the employees to good performers.
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The third form of organizational structure, known as innovative or adhocracy structure, relates organization to the culture. These organizations puts emphasis on developing their distinctive corporate culture. Characteristically, organizations with innovative or adhocracy structure decentralize their decision-making process and promote open communication, discussion, negotiation and interaction among people and divisions. According to Mintzberg, such firms demonstrate alliance- building behaviour.
The entrepreneurial form of organizational structure is simple, since a single person (usually the entrepreneur himself/herself) directs the activities of the firm. The major advantage of this form of organizational structure is that it can quickly build trust and can quickly change the existing norms, when such norms are incompatible. However, when relationships are not built on trust, such organizations may demonstrate a great amount of instability.
The fifth and the final type of organizational structure is the divisional form, such form or organizational structure focuses on autonomous divisions, which, however, may not always imply decentralization of decision-making power. Often, this form of organizational structure sparks intra-unit fighting and generates cowboy mentality.