Organizational Structure: Definition, Types & Impact - Essay Sample

Introduction

An organizational structure is a term describing a system that outlines how various activities are directed in an organization to achieve designated goals. Most of these activities include responsibilities, roles, and rules or regulations. The structure of an organization plays a significant role in determining the flow of information between the different levels existing in a country. A centralized structure, for instance, is a situation where decisions flow from the people at the upper managerial levels to the subordinates. In a decentralized structure, power and decision-making capabilities are equally distributed among the different organizational levels. Therefore, this paper discusses three functional areas of an organizational structure that include human resources, information systems, and the sales and marketing department.

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Functional Area 1 - Human Resources

In every business organization, transformation is paramount. According to Ramlall and Melton (2018), human resources are one of the essential aspects to consider for the change of an organization and goal attainment. Employees are not only workers within a company, but instead, they are significant assets that enhance and facilitate productivity within an organization. The lack of proper human resources such as human input signifies the failure to achieve goals and business strategies.

Accordingly, strategic human resource practices in an organization, as Ramlall and Melton (2018) indicated, tend to enhance the performance of an individual and that of an organization. More so, the department is concerned with training and motivating the staff to ensure that they are committed to their work hence enhancing the achievement of goals within an institution. Coaching is an essential aspect of HR management that helps to ensure that all the employees are capable of accomplishing their duties desirably. Also, training is a form of motivation employed by HR professionals to enhance motivation and reduce instances of turnover. Through training, employees feel that the organization is concerned with their career growth and development. Ramlall and Melton (2018) stipulated that human resources are related to the making of strategic decisions that enhance performance. Other significant roles of HR managers include compensating the employees, building and improving diversity in places of work, and encouraging teamwork activities among workers. All these functions of the HR leaders are critical in enhancing organizational performance. Without human resources in a corporate structure, employees are likely to be demotivated in their duties, which would, in turn, affect the overall productivity of an organization.

Functional Area - Information Technology Systems

Information technology is critical for the growth and survival of a firm. IT has an integral role to play in supporting, sustaining, and growing a business (Farhanghi et al., 2013). With this in mind, one can get to understand why most companies are dedicating themselves to investing in information technology systems regardless of the slow economic growth. According to Farhanghi et al. (2013), advanced information technology systems have a role to play in assisting firms to deal with the complexities of the market and gain a competitive advantage. From this, it is clear that information technology systems are a critical component of the organizational structure.

Advancements in IT have to facilitate effective changing of organizational forms. The implementation of IT systems in companies has allowed for vertical relations of information hence leading to the centralization of information. Some of the influences of IT on the organizational structure include the need for fewer employees, a reduced control span, and a reduction in the corporate levels (Farhanghi et al., 2013). In addition to that, the vertical flow of information has allowed for routine tasks, and organizational structures have become more bureaucratic than they were previously (Farhanghi et al., 2013). In effect, an organization tends to become more proactive and reactive in the environment within which it functions. In uncertain situations, traditional structures, as Farhanghi et al. (2013) argued, would not create the flexibility generated after the implementation of It systems, especially in centralized structures. Thus, IT aid in enhancing flexibility by enhancing the processing of more information about the environment.

Further, Farhanghi et al. (2013) also offered a variety of reasons as to why IT systems are more effective than centralized systems and traditional structures of an organization. The reasons include the fact that IT enhances the coordination of information; hence information processing is less costly when compared to conventional centralized structures. The enhanced information processing has had a significant role to play in ensuring that managers govern projects efficiently and on time.

Functional Area 3 - Sales and Marketing

Organizations in the world today have to adapt their structures to the changing external factors to ensure that they survive and thrive in the long run. According to Lyus et al. (2011), companies that are responding effectively to the market pressures are likely to succeed and have a competitive advantage over others. Some of the macro-environmental opportunities that include new prospects, the threat of new entrants, and changing expectations of the customers are beyond the control of the managers. In the sequel, managers need to adapt their organizations quickly and ensure continued prosperity. The sales and marketing department has a significant role to play in an organization since they determine the overall profits that a company could acquire based on the techniques they employ (Lyus et al., 2011). As such, the departments are under pressure due to the changing macro-environmental factors to ensure that they have the right strategies in place to ensure that the desired changes happen. The changes could be minor changes to the marketing mix or significant changes that include entering a new market, launching a new product, or the adoption of a channel for distribution. The sales and marketing department has a significant connection with the market. With this in mind, they are likely to influence changes within an organization that aim at ensuring that a company remains profitable.

Recommended Organizational Structure

The organizational structure that best suits the functional areas discussed above is the functional structure. The arrangement entails grouping of the employees to the functional regions based on their skills and areas of expertise. The head of each functional area is the Chief Executive Officer (CEO). Employees will be grouped to work in the human resource department, sales, and marketing, or IT bodies. Importantly, a functional structure allows for increased specialization and an increased focus on expertise during the hiring process. Increased specialization has a role to play in allowing for more significant labor division and higher productivity eventually.

Conclusion

The three functional areas discussed are sales and marketing, human resources, and IT systems. Sales and marketing is a department in charge of marketing the products and services offered within a company. The human resources provide human input to a company by using their skills and expertise to facilitate the production process. Lastly, the IT systems allow for effective communication in a company and have allowed for the automation of tasks. All these functional areas can be grouped into a functional organizational structure where all employees are arranged to the various fields based on their skills and expertise.

References

Farhanghi, A. A., Abbaspour, A., & Ghassemi, R. A. (2013). The effect of information technology on organizational structure and firm performance: An analysis of Consultant Engineers Firms (CEF) in Iran. Procedia - Social and Behavioral Sciences, 81, 644-649. doi: 10.1016/j.sbspro.2013.06.490

Lyus, D., Rogers, B., & Simms, C. (2011). The role of sales and marketing integration in improving strategic responsiveness to market change. Journal of Database Marketing & Customer Strategy Management, 18(1), 39-49. doi: 10.1057/dbm.2011.5

Ramlall, S., & Melton, B. (2018). The role and priorities of the human resource management function: Perspectives of HR professionals, line managers, and senior executives. International Journal of Human Resource Studies, 9(2), 9. doi: 10.5296/ijhrs.v9i2.14492