In a simple term, structure is the pattern in which various parts or components are-related or inter-connected. The organization structure is the pattern of relationships among various components or parts of the organization. This prescribes the relationship between various activities and positions.

Organizational structure determines the manner and extent to which roles, power, and responsibilities are delegated, controlled, and coordinated, and how information flows between levels of management.



Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leaves little discretion for interpretation. In some societies and in some organizations, such rules may be strictly followed; in others, they may not be followed properly.


The informal organization is the interlocking social structure that governs how people work together in practice.

It is the aggregate of, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations.

It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation.

The informal organization evolves, and the complex social dynamics of its members.


1.StructuredNot structured.
2.Designed by top management.Also known as informal group.
3.Concentration more on the performance of the job.Design by middle & low level management.
4.OfficialConcentrates more on relations.
5.Focus on positionsMembership is voluntary (a person may become member of several informal organization at the same time).
6.Centralization.Non official.


Henery Mintzberg has a different scheme of classification of organization structures. There are seven types of organizations structure:


Line organization is the oldest and simplest method of administrative organization. According to this type of organization, the authority flows from top to bottom in a concern. The line of command is carried out from top to bottom. This is the reasons for calling this organisation as scalar organization which means scalar chain of command is a part and parcel of this type of administrative organization. In this type of organization, the line of command flows on an even basis without any gaps in communication and co-ordination taking place.


  • It is the simplest form of organization.
  • Line of authority flows from top to bottom.
  • Specialized and supportive services do not take place in these organizations.
  • Unified control by the line officers can be maintained since they can independently take decisions in their areas and adheres.
  • This kind of organization always bringing efficiency in communication and bringing stability to a concern.


  • SIMPLEST: it is the most simple and oldest method of administration.
  • UNITY OF COMMAND: in these organizations, superior-subordinate relationship is maintained and scalar chain of command flows from top to bottom.
  • BETTER: the control is unified and concentrates on one person and therefore, he can independently make decisions of his own. Unifies control ensures better discipline.
  • FIXED RESPONSIBILITY: in this type of organization, every line executive has got fixed authority, power and fixed responsibility attached to every authority.
  • FLEXIBILITY: these are co-ordination between the topmost authority and bottom line authority. Since the authority relationships are clear. Line officials are independent and can flexibly take the decision. this flexibility gives the satisfaction of line executives.
  • PROMT DECISION: due to the factors of fixed responsibility and unity of command. The officials can take prompt decisions.


  • OVER RELIANCE: the line executive’s decision is implemented to the bottom. This results in over-relying on the line officials.
  • LACK OF SPECIALIZATION: a line organization flow in a scalar chain from top to bottom and there is no scope for specialized functions. For example, expert advice on whatever decision is taken by line manager are implemented in the same way.
  • INADEQUATE COMMUNICATION: the policies and strategies which are framed by the top authority ar carried out in the same way. This leaves no scope for communication from the other end. The complaints and suggestions of lower authority are not communicated back to the top authority. So there is one way of communication.
  • LACK OF COORDINATION: whatever decision are taken by the line officials, in certain situations wrong decision, are carried down and implemented in the same way. Therefore, the degree of effective co-ordination is less.
  • AUTHORITY LEADERSHIP: the officials have a tendency to misuse their authority positions. This leads to autocratic leadership and monopoly in the concern.

2. LINE AND STAFF  ORGANIZATION STRUCTURELine and staff organization structure

The line officers have the authority to make a decision and implement them to achieve the objectives of the organization.

The line officers may be assisted by the staff officers while framing the policies and plans and taking framing the policies and plans and decision organization.

The authority flows from top level to the lower level of the organization through the line officers while the staff officers attached to the various departments advise the departments. The staff officers are not in a position to compel the line officers to follow the advice by them. Each department is headed by a line officer who exercises full authority regarding the planning.


  • The staff officers assist the line officers in the planning of business activity.
  • The board of director frames the policies of the business on the basis of recommendations given by the staff officers.
  • The managers regarding the selection. ‘traning’ placement and remuneration fixing the personel.
  • The staff officers give regarding the method of improving the product, the technique of reducing the cost of production, increasing the profit of the concern
  • The staff officers prescribe the procedures to be followed by the line officers in the execution of policies and programs.
  • Staff officers of a department help the manager in the preparation of the budget of the department.
  • The staff officers may be called to solve administrative problems encountered by the officers in general.


  • The staff officers have only theoretical  (academic)  knowledge but do not have practical knowledge.
  • The staff officers go beyond their sphere of activity and assume that they have line officer’s authority.
  • Much of the advice given by the staff officers is impractical.
  • Since the staff officers unnecessary increases the paperwork of the line officers.
  • The staffs gives are very much interested in becoming line officers of the organization rather then impairing advice to them.


  • Both line officers and officers should clearly understand the nature of relationship prevailing between them.
  • A separate staff member should be appointed to bring about co-operation between the line officers and staff officers.
  • The line officers should be encouraged to use the advice of staff officers.
  • Only qualified persons should be selected and placed as staff officers.the staff officers should be convinced bt the line officers it their advice is not accepted.
  • The responsibility for results could be ffixed on both line officers and staff officers.
  • Only experienced persons alone should be promoted as line executives.
  • Remove the fear of the line officers and staff officers whether the new ideas of adivice would be properly put into use or not.

3. FUNCTIONAL ORGANIZATION STRUCTUREFunctional organization structure

The functional structure groups employees together based upon the functions of specific jobs within the organization. Employees within the functional divisions of an organization tend to perform a specialized set of tasks, for instance if the engineering department would be staffed only with software engineers. For Example A division of an internet service provider (ISP).

It is created by grouping the activities on the basis of functions required for the achievement of organizational objectives. It is widely used in medium & large organizations. It works better if the organization has one major product or similar product lines.


  • A functional organization structure is a classical hierarchy in which each employee has a single superior.
  • Employees are then organized by specialty and work accomplished is generally specific to that specialty.
  • Communication with other groups generally occurs by passing information requests up the hierarchy and over to the desired group of manager.
  • Of all the organizational structures, this one tends to be the most difficult for the project manager.the project manager lacks the authority to assign resources and must acquire people and other resources from multiple functional managers.
  • In many cases, the project’s priority is viewed lower than operations by the functional manager.
  • In these organizations, it is more common or the project manager to appeal to the senior management to solve  resource issues.

4.DIVISIONAL ORGANIZATION STRUCTUREDivisional organization structure

The divisional structure is a organizational structure that groups each organizational function into a division.

A divisional structure groups employees around geographic areas, clients, or output of product or service.

It is also known as profit decentralization.

5. PROJECT ORGANIZATION STRUCTUREProject organization structure

Projectized organization is project focused organizational structure where project manager has the final authority over the project to make project decisions, priority, acquire and assign resources.

A projectized organization refers specifically to an organizational structure that has been set up in a manner in which the project manager leads the group and on which the project manager has the ultimate authority to make any decisions involving the organization.

In a projectized structure, all the work is looked at as a project. The project manager has complete control, unlike in the functional structure, all the team members report directly to the project manager.

Sometimes these team members are permanent, and sometimes they are hired as temporary workers to help with the project until its completion. If the organization takes on a large project, it will have all the necessary resources available to sustain the project and will act as a small, self-contained company.

The project manager works with complete autonomy (central authority, power) over the project, the team is on the project full time and report to the project manager.

As a project manager, you have the responsibility to take authority, rather than waiting for someone to give you the authority.


The advantages to the projected structure include the project manager’s opportunity for career progression. In addition, because good communication exists within the project work, the team members tend to be more committed to, and excel in, their responsibilities.

The disadvantage of a projected structure is that, because the team breaks up a disperses after the completion of the project, there are no long-term goals or a sense of job security for the rest of the workers. Another disadvantage is that the organization has to essentially clone the same resources for each project ( project manager, work area, administrator ).


Matrix organization was introduced in USA in the 1960s. it was used to solve management problems in the Aerospace industry.

Matrix organization is a combination of two or more organization structures. For example, functional organization and project organization.

The organization is divided into different functions,e.g. purchase, production, R & D, etc. Each function has a functional ( Department ) manager, e.g. purchase manager, production manager, etc.

The organization is also divided on the basis of projects e.g. project A, project B,etc. Each project has project manager e.g.  project A manager, Project B manager, etc.

The employee has to work under two authorities (bosses). The authority of the functional manager flows downwards while the authority of the project manager flows across (sidewards). So, the authority flows downwards and across. Therefore, it id called “matrix organization”.


1. Hybrid structure: Matrix organization is a hybrid structure. This is so, because it is a combination of two or more organization structures. It combines functional organization with a project organization. Therefore, it has the merits and demerits of both these organization structure.

2. Functional manager: the functional manager has authority over the technical (functional) aspects of the project. The responsibiliie of functional manager are:

  • He decides how to do work.
  • He distributes the project work among his subordinates.
  • He looks after the operational aspects.

3. Project Manager: The project manager has authority over the administrative aspects of the project. He has full authority over the financial and physical resources which he can use for completing the project. The responsibility of project manager is:-

  • He decides what to do.
  • He is responsible for scheduling the project work.
  • He coordinates the activities of the different functional members.
  • He evaluates the project performance.

4. Problems of Unity of Command: in a matrix organization. There is a problem of the unity of command. This is so because the subordinates receive orders from two bosses viz., the project manager and the functional manager. This will result in confusion, disorder, indiscipline, inefficiency, etc, all this will reduce the productivity and profitability of the project.

5. Specialization: in a matrix organization, there is a specialization. The project manager concentrates on the administrative aspects of the project while the functional manager concentrates on the technical aspects of the project.

5. Suitability: matrix organization companies for multi-project organizations. It is mainly used by large construction companies, that construct huge residential and commercial projects in different places at the same time. Each project is looked after by a project manager. He is supported by many functional managers and employees of the company.


1. Sound decision: in a matrix organization. All decisions are taken by experts. Therefore, the decision is very good.

2. Development of Skills: it helps the employees to widen their skills. Marketing people can learn about finance, finance people can learn about marketing, etc.

3. Top Management can Concentrate on Strategic Planning: the top managers can spend more time on strategic planning. They can delegate all the routes. Repetitive and less important work to the project managers.

4. Responds to Changes in Environment: matrix organization responds to the negative changes in the environment. This is because it takes quick decisions.

5. Specialization: in a matrix organization, there is a specialization. The functional managers concentrate on the technical matters while the project manager concentrates on the administrative matters of the project.

6. Optimum Utilisation of Resources: in the organization. Many projects are run at the same time. Therefore, it makes optimum use of human and physical resources. There is no wastage of resources in a matrix organization.

7. Motivation: in a matrix organization, the employees work as a team. So, they are motivated to perform better.

8. Higher Efficiency: the matrix organization results in higher efficiency. It gives high returns at lower costs.


1. Increase in workload: In a matrix organization, workload is very high. The managers and employees not only have to do their regular work. But also have to manage other additional works like attending numerous meetings, etc.

2. High Operational cost: in a matrix organization, the operational cost is very high. This is because it involves a lot of paperwork, reports, meeting, etc.

3. Absence of Unity of Command: in a matrix organization, there is no unity of command. This is because, each subordinate has two bosses, viz. functional manager and project manager.

4. Difficult of Balance: in a matrix organization, it is not easy to balance the administration and technical matters. It is also difficult to balance the authority and responsibilities of the project manager and functional manager.

5. Power Struggle: in a matrix organization, there may be a power struggle between the functional manager and the project manager. Each one looks after his own interest, which causes conflict.

6. Morale: in a matrix organization, the morale of the employees is very low. This is because they work on different at different times.

7. Complexity: matrix organization is very complex and the most difficult type of organization.

8. Shifting of Responsibility: if the project fails, the project manager may shift the responsibility to the functional manager. That is, he will blame the functional manager for the failure.

7. TEAM BASED ORGANIZATIONteam based organization structure

A team is a small number of people with complementary skills who are committed to a common purpose, performance, goals & approach for which they hold themselves mutually accountable. Three types of skills are required in a team Is:

  1. Technical or functional skills
  2. Problem-solving skills & decision-making skills
  3. Interpersonal skills.

Teamwork is essentially a mindset that requires a complete mental revolution from individual orientation to collective orientation from
individual contribution to collective contribution & from individual rewards to collective rewards. A feeling is generated among team
members that no one is authorized to direct others & no one is in the team to be directed by others. if the team performs well, credit
goes to all & if it performs worse than all members share responsibility for that.

Types of team

  1. Problem-solving team
  2. Cross-functional team
  3. Self-managing team
  4. Virtual team( not face to face. Communications through technology)

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