Management Structures

Management Structures

Management Structure describes the ways in which parts of an organisation are formally arranged to achieve objectives. An LSOs’ structure is usually represented in an organisational chart. The most typically arrangement is a Management Hierarchy, which the arrangement that provides increasing authority at higher levels of the hierarchy.

A Management Structure within an LSO provides:

  • A Chain of Command
  • The Lines of Communication
  • Positions of Accountability
  • Positions of Responsibility

Types of Organisational Structure

Traditional Hierarchical Organisation

A Traditional Hierarchical Organisation is centralised and with a rigid, multiple layered structure. An autocratic management style or a similar style is typically used in this structure. Power is not shared amongst the employees, and rests with the higher levels of management. The communication and delegation of this structure is top-down from management to the employees.

Emerging Flatter Organisations

A Flatter Structure is decentralized and has a more flexible structure. This structure is more people-centered using a laissez-faire management style or a similar style. Communication is determined by consensus and delegation is determined by agreement. There is equal power-sharing allows decision-making power

Types of Management Structures

Functional Management Structure

The Functional structure involves grouping employees together according to the tasks they will perform. It can also be referred to as the task structure.

Advantages of the Functional Structure
  • Specialization/expertise
  • Efficient use of resources
  • Workers have a manager in their own area
  • Ensures high productivity
Disadvantages of the Functional Structure
  • A narrow department focus – not a broad opinion
  • The structure only works if the different functional managers communicate with each other
  • Longer to make decisions if you have to go through each department 

Divisional Management Structure

Divisional Structure groups employees together according to divisions that may be geographical, or customer, product or process focused. A Divisional Structure can be further broken down into a Product Structure, Geographic Structure, Customer-Based Structure and Process Structure.

A Product Structure groups employees together due to the products or goods in which they produce.

A Geographic Structure organizes employees and decision-making based on the geographical trading patterns and regional business activities of an organisation.

A Customer-Based Structure involves departments based on the types of customers dealt with by a group of employees.

A Process Structure involves organising employees based on the tasks that the employees perform.

Advantages of the Divisional Structure
  • Allows for expertise at the division
  • There is more cooperation between organizational department
  • There is greater flexibility in adapting to environmental changes
  • Allow for best practices because of the expertise
Disadvantages of the Divisional Structure
  • Doubling up of resources as organisations as not using economies of scale
  • Conflict of opinion between departments
  • Potential to promote rivalry between divisions

Matrix Management Structure

A Matrix Structure combines specialization by function and division in the structure. This involves specialization by project while each member of staff remains part of a department based on.

Advantages of the Matrix Structure
  • Control is decentralized, ensuring better monitoring of all aspects of a job.
  • There can be many opportunities for both horizontal and vertical career directions.
Disadvantages of the Matrix Structure
  • Due to complexity, communication can become difficult between projects and head office.
  • There may be staffing issues when one project finishes if there is not another one to begin immediately.

Network Management Structure 

The Network Structure functions are outsourced to other organisations. The core organisation exerts control via contracts.

Advantages of the Network Structure
  • Money is not wasted on employing people all year when their work may be needed occasionally. For example advertising
Disadvantages of the Network Structure
  • Outside firms may not have a good understanding of the values of the business.
  • Some control is lost as to how the task is finished.