The Difference Between

Whtat are the Difference between traditional and modern organization structure?

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August 05, 2012 10:40AM

Traditional vs Modern Organizational Structures

The differences between traditional organizational structures and modern organizational structures are quite extensive, as you can see below. It helps to identify examples of each type of organizational structure. For example, all government, church and military organizations are based on traditional structures; lots of layers of managers and red tape. These organizations are very stable and robust but they cannot respond to change and are very slow to act. Companies that use modern organizational structures are project based companies such as video game producers and Boeing. These companies or very organic and can change and adapt quickly to new trends.

Traditional Table 1- Traditional Organizational Structures

Organizational Structure

Descriptors

Advantages

Disadvantages

Simple Structure

· Low departmentalization

· Wide spans of control

· Authority centralized to a single person

· Little formalization

· Fast

· Flexible

· Inexpensive to maintain

· Clear accountability

· Not appropriate as organization grows; reliance on one person

Functional Structure

· Grouping of similar or related occupational specialities together

· Cost savings from specialization

o Economies of scale

o Minimum duplication of people and equipment

· Employees are grouped together with others who have similar tasks

· Short sighted manager

· People can become too specialized and lose focus on other areas

Divisional Structure

· Consists of separate business units or divisions

· Focuses on results

· Managers are responsible for what happens to their products and services

· Duplication of activities and resources increasing costs and reduces efficiency

(Robbins, Coulter, & Langton, 2009)

Modern Table 2- Modern Organizational Structures

Organizational Structure

Descriptors

Advantages

Disadvantages

Team

A structure in which the entire organization is made up of work groups or teams.

· Employees are more involved and empowered

· Reduced barriers among functional areas

· No clear chain of command

· Pressure on teams to preform

Matrix-Project

Matrix is a structure that assigns specialists from different functional areas to work on projects but who return to their areas when the project is completed. Project is a structure in which employees continuously work on projects. As one project is completed, employees move on to the next project

· Fluid and flexible design that can respond to environmental changes

· Faster decision making

· Complexity of assigning people to projects

· Task and personality conflicts

Boundaryless

A structure that is not defined by or limited to artificial horizontal, vertical or external boundaries; includes virtual and networked types of organizations

· Highly flexible and responsive

· Draws on talent wherever it's found

· Lack of control

· Communication difficulties

(Robbins, Coulter, & Langton, 2009)

Every organization is different and therefore there is no set "best" organizational structure for a company.. It is important to note when establishing a company that how you structure the organization will have implications on how responsive the organization can be to change. For example, during the recession, the auto-manufacturing industry had to be bailed out due to their practices of locking capital into fixed costs and mass production, effectively spreading the fixed costs onto many products. Well this technique works when there is a stable demand, but when demand drops, and you are unable to slow down your production line to meet the new demand, you are going to have a lot of cars and trucks that need buyers. It was more cost effective to simply continue creating vehicles that will not sell than to slow down production. Traditional organizational structures are very useful in stable economic climates.