Organizational structure, which represents a certain ordering of tasks, roles, powers and responsibilities, creates conditions for the enterprise to carry out its activities and achieve established goals. It develops and changes under the influence of the characteristics of the enterprise's strategy, its internal complexity and changes in the external environment. The wide range of structures extends from stable monolithic formations to dynamic multifaceted structures of modern organizations.
The diversity of organizational structures is associated with differences in the field of activity, the nature and complexity of the products produced, the size, degree of differentiation and territorial location of enterprises. Thus, the structure of a small trade organization or repair shop cannot have anything in common with the structure of a large machine-building enterprise that produces a wide range of machines and equipment. In turn, the organizational structure of a transnational corporation and a financial-industrial group is incomparable. Small enterprises do not have any complex problems with the organizational structure. If the functions at such an enterprise are carried out properly (without an excessive number of services and not necessitated hierarchical structures), then their implementation requires such a limited number of workers that the problems of the structure fade into the background before the problems associated with the personal characteristics of managers (their knowledge, experience, work style, organizational abilities, responsible performance of official duties).
However, problems of organizational structure arise not only in large enterprises. The organization of vertical and horizontal communications and project management is also necessary in medium-sized enterprises. This is directly related to all cases where there is an intermediate management team between the top management of the organization and the personnel performing direct work, as well as when it is generally possible to implement a certain division of labor. Under all conditions, the problem of choosing one or another organizational type arises? structure adequate to the real requirements of the external and internal environment, the tasks of meeting consumer demand, technological and social development, and achieving cost-effective results. Below we consider the main types of organizational structures that have developed to date.
Linear-functional structures
Functional structuring is the most widespread form of organizing activities and occurs in almost all enterprises at one level or another of the organizational structure. It is the process of dividing an organization into separate elements, each of which has a clearly defined, specific task and responsibilities. Creation functional structure (Fig. 9.1) comes down to grouping personnel according to the broad tasks they perform (production, marketing, finance, etc.). The specific characteristics and features of the activities of a particular unit correspond to the most important areas of activity of the entire organization. In cases where the functional structure is used partially, one of the functions (for example, financing) is carried out either at a higher level of management, or at the same level as divisions structured by product, customer or territorial basis.
The importance of the sales, production and financial functions of an enterprise is widely recognized, and they are often taken as the basis for the structure of the organization. The coordination of these functions is determined at a level above which only the head of the enterprise is located. This position is ver-
Rice. 9.1.
Functional management structure
but no matter on what basis the grouping of activities within the enterprise is carried out and how important the functions of a particular unit are. The chain of command comes from the president (chief executive) and permeates the structure from top to bottom. Management of sales organization, financial issues, data processing and other functions that are characteristic of a particular enterprise is carried out by vice presidents. Managers report to them. And so on down the hierarchical ladder, tasks are subject to further functional division in accordance with processes.
Functional organization aims to stimulate the quality of work and creativity of workers, as well as economies of scale in the production of goods or services. However, maintaining interaction between different functions is a complex task. The implementation of different functions involves different deadlines, goals and principles, which makes coordination and scheduling of activities difficult. In addition, a functional orientation is associated with a preference for standardized tasks, encouragement of narrowly limited perspectives, and reporting on performance.
The functional structure is not suitable for organizations with a wide range of products, operating in an environment with rapidly changing consumer and technological needs, or for organizations operating internationally, simultaneously in several markets in countries with different regulations. The logic of this form is centrally coordinated specialization. It is difficult to trace the contribution of each element of resources to the final result and the overall profitability of the organization. In fact, the modern trend towards disintegration(i.e. purchasing rather than producing components, etc.) reflects the understanding of many firms that the necessary coordination of costs and resources is reflected in performance. A functional organization may fail due to improper modification because the logic of the organization is centralized control, which does not easily adapt to product diversification.
In its pure form, the functional structure is practically not used. It is used in organic combination with linear structure (Fig. 9.2), built on the basis of a vertical management hierarchy and based on the strict subordination of the lower management level to the higher one. With this structure, the performance of highly specialized functions is intertwined with a system of subordination and responsibility for the direct implementation of tasks for the design, production of products and their delivery to consumers (Fig. 9.3). Decentralization of management within linear-functional structure leads to the fact that the division of rights and responsibilities is fragmented between different bodies that manage technical developments, purchase of raw materials, production, sales, etc. This process is most typical for enterprises where a huge number of homogeneous products are consistently produced and economies of scale of production significant. One of the conditions for decentralization of the structure may be a situation when the market
Rice. 9.2.
Linear management structure
Rice. 9.3.
Linear-functional management structure
represents a single whole and is characterized by a high degree of concentration of consumption.
At the same time, the development of diversification of production, the sharp complication of internal and external relations, the dynamism of the introduction of technical innovations, and the fierce struggle for markets for products lead to serious difficulties and in many cases completely exclude the use of functional forms of management. With the growth of the size of corporations, the expansion of the range of products and their sales markets, functional management structures, due to the disunity of rights and responsibilities for individual functions, lose the ability to respond to changes. In the management process, conflicts arise when choosing priorities, decision-making is delayed, communication lines are lengthened, and the implementation of control functions becomes difficult.
Rice. 9.4.
Building an organization according to a linear-functional principle
(grouped by type of activity)
The departure from the use of strictly functional schemes for managing corporations in favor of a divisional structure of organizing activities by departments can be quite clearly seen with the development of diversification of production. However, in practice, a certain restraint is shown regarding decentralization and its acceptable limits are established. This is due to the fact that the negative aspects of excessive freedom of departments and enterprises in choosing areas of production activity and making responsible management decisions have become clearly visible. In many cases, corporate management loses the ability to control the production and economic activities of departments, and complex information problems arise. Therefore, the top managers of many corporations, without abolishing departments that have gained sufficient independence, make significant amendments to their organizational structure, subordinating them to their authority to a much greater extent.
The divisional form can be considered as a combination of organizational units serving a specific market and managed centrally. Its logic lies in the combination of departmental autonomy with a centrally controlled process of resource allocation and evaluation of results. Although divisional firms can easily expand into related industries, there is a danger of overexpansion. Thus, many similar firms that expanded their activities in new markets were unable to properly evaluate their results and make investment decisions. Divisional firms are also exposed to the danger of modifications that violate the chosen logic of the organization's functioning.
It is known that enterprises switching to a product type of structural structure were initially functionally organized. As organizations expanded, managers of production, sales and other departments, as well as technical specialists, were faced with problems of increasing scale of activity. The manager's functions became increasingly complex, and his range of control limited his ability to increase the number of subordinates. Product-based structural reorganization began to be seen as a way out of this situation. This approach allows for the delegation of broad authority by senior management to direct production, sales, support and engineering activities associated with the manufacture of a specific product or range of products. (Fig. 9.5).
Rice. 9.5.
Product management structure
A product or product range is an important feature of structural division, since in this case conditions are created for the use of specialized means of production, coordination is facilitated, and the widest possible use of individual abilities and special knowledge of personnel is allowed. Structuring by product becomes objectively justified if it is important for an enterprise to coordinate various activities related to the production of a product. Due to this structuring, greater consistency of actions is achieved and customer service is improved. If the primary basis of sales activities and technical support is industrial production, then the cooperation of these two functions with production activities acquires key importance.
When structuring by product, responsibility for generating profits rests primarily with department heads. Where managers have control over production, sales, engineering and support activities, and also control the associated costs, the real possibility of achieving predetermined goals increases dramatically. Divisional managers share responsibility for generating profits with other similarly organized groups, which provides senior management with the ability to evaluate each individual's contribution to the overall profit of the enterprise.
Division on a territorial basis is a fairly common method of structuring enterprises dispersed over a vast territory. All activities of the enterprise in a given territory are grouped and subordinate to its top manager (Fig. 9.6). Territorial structuring particularly attractive to large, diversified firms. They resort to this form when similar business transactions are carried out in different geographical regions. Territorial structuring is appropriate in cases where its goal is not only to encourage the participation of local units in the decision-making process, but also to save money achieved by localizing the business operations of the enterprise. Her choice is associated with lower costs. The choice of area for locating enterprises can be made based on the desire to reduce transportation costs. The correct location of warehouse premises will reduce the time spent on delivery, which is an important factor that can affect the receipt of orders. Regional offices are seen as the best place for aspiring managers to gain experience. Moreover, at that level of the organizational structure it will be most useful for them with minimal risk for the company.
Rice. 9.6.
Regional organizational structure
From the point of view of local factors, the use of a territorial organizational structure acquires some additional advantages. This causes the creation of new jobs for the local population, not to mention the economic benefits, namely the reduction of transport costs, rent, and labor costs. The advantages of territorial organization of sales activities lie mainly in cost savings and high operational efficiency. Sales staff can spend more time selling products and reduce travel costs. In addition, by being closer to customers, he has the opportunity to study their needs, market preferences and find out which market strategy will have the greatest chance of success. In large diversified companies, divisional structures of a mixed type appear, combining both product and territorial principles of construction (Fig. 9.7).
One of the noticeable trends in the organizational restructuring of enterprises in a transition economy is a significant increase in the independence of individual parts of management structures and the creation of subsidiaries on this basis. A network of small mobile firms is being formed around large enterprises, capable of quickly adapting their applications.
Rice. 9.7.
Mixed divisional management structure
responsive to changing demand. Thanks to this, enterprises producing products are brought closer to the consumer sector, and the process of selling products is accelerated. From the production and organizational structure of many large enterprises, divisions with a full production cycle are distinguished. On the one hand, independent economic entities are created, focused on certain consumers, and on the other hand, the integrity of the production and technological complex, the general focus and profile of its activities are preserved.
An equally significant trend is the formation of independent commercial organizations that use the property of the base enterprise on the basis of rental relations. By periodically adjusting lease agreements, a certain coordination of the activities of newly created organizations is ensured. Retention of ownership of the base enterprise makes it possible to maintain and develop the production system as a whole. Below is a comparative assessment of the advantages and disadvantages of linear-functional and divisional organizational structures, which allows, taking into account the characteristics of specific conditions, to determine the possibilities of using one or another form of organizational structure (Table 9.1).
Table 9.7
Comparative characteristics of organizational management structures
|
Linear-functional |
Divisional |
|
Ensure the implementation of specialized tasks controlled through plans and budgets |
Decentralized operations of departments with centralized assessment of results and investments |
|
Most effective in a stable environment |
Most effective in a changing environment |
|
Promote the efficient production of standardized goods and services |
Suitable for conditions of interconnected diversification by product or region |
|
Provide savings on management costs |
Focused on prompt decision making |
|
Provide for specialization of functions and competence |
Create organizational conditions for an interdisciplinary approach |
|
Focused on price competition |
Operate successfully under non-price competition |
|
Designed to use existing technologies and established markets |
Focused on developing new markets and new technologies |
|
Production specialization that exceeds the capabilities of centralized planning |
Intervention by the highest level of the organization to strengthen the coordination of departments and increase the efficiency of their activities |
|
Quick resolution of problems within the competence of one functional service |
Quickly resolve complex cross-functional problems |
|
Vertical integration, often exceeding the full capacity of specialized units |
Diversification within the corporation or acquisition of external organizational units |
Collegial bodies
When using different types of organizational structures, collegial forms of work become important. These are committees, task forces, commissions, councils, and collegiums. Of course, these forms do not represent any distinct type of structure. They can be permanent or temporary, have different status, level of authority granted and perform different tasks in the organization. Collegial bodies often endowed with the authority to make certain decisions, exercise leadership (or delegate authority to exercise leadership). There is a well-known practice of forming such bodies to perform advisory functions, i.e. presenting a reasoned opinion on a particular issue to a manager at any level. Let us consider in more detail the issues of organizing their activities and the level of authority.
1. Collegial body of informational nature. At meetings of this body, contacts are made between the heads of departments. Their general leader informs the meeting participants about the current situation, about the decisions made and planned. As a result, methods for implementing solutions can be clarified. Information bodies are needed primarily at the highest levels of management. Their use at lower levels serves to improve mutual understanding, in particular between specialists (or employees of functional departments) and line managers. The activities of such a body are intended to lead to strengthening ties and improving personal relationships.
2. Collegial advisory body. Such a body (committee, expert council, etc.) may have the task of studying a problem and presenting a conclusion about it. It does not replace, but complements the activities of existing expert specialists in the organization. It is necessary to distinguish between bodies engaged in research and bodies that use the research conducted to draw up their conclusions. An advisory body may carry out its activities with the help of specialists or experts when it becomes possible to combine their knowledge on a particular complex problem. There are cases when the head of an organization gathers a number of specialists working in advisory and headquarters services for collegial work. At the same time, the issue under consideration is complex and requires the knowledge of various specialists, and the body can perform some coordinating role.
3. A collegial body authorized to make decisions. This kind of body can be used in the absence of a line manager to perform this function, as well as to assist the line manager in making particularly important decisions. For example, there are committees that make decisions on the overall policy of the organization. Such a body is headed by the highest leader of the organization, and the heads of the most important departments and experts included in it play a very active role.
4. Collegial body exercising control. In relation to managers, such an organizational link primarily performs the role of a body that gives permission to make decisions that meet certain requirements. He also monitors the implementation of these decisions. The activities of collegial bodies can cover various areas of the organization’s activities: 1) decisions related to general strategy and policy; 2) acts of management and administrative actions; 3) direct executive activities that implement decisions made.
The advantages of this organizational form are associated primarily with the collaboration of a group of people. Particular mutual understanding between people is achieved in groups whose members are characterized, as a rule, by the same behavior and even specific skills (line and functional managers, specialists in the field of technology, economics, commercial activities, etc.). At the same time, coordination of the work of various services or employees of the management apparatus is ensured. It is also significant that there is a clash of different points of view of people usually engaged in different types of activities, and most importantly, having unequal training and experience. In many cases, this contributes to the emergence of new ideas. In addition, collegial bodies contribute to the stability of the organization, since they enable a certain number of managers to keep abreast of the problems of related services, and also create conditions for the training of young management personnel.
Features of the internal environment of the management structure
Modern organizational structures focused on solving strategic problems of organization development
The functional organizational structure of management is a scheme of operation of management bodies in which each of them is assigned to perform a certain range of technological, production, design, financial or information functions. Production units subordinate to the functional body are required to comply with all its instructions.
The most common type of management structure is linear-functional. This management scheme includes linear units that perform the main work in the organization, as well as functional service units. Linear units are involved in decision-making at their level, while divisions help the manager make and develop decisions, and also inform him.
Linear-functional organizational structure: description
This management scheme is based on the mine construction method, in which specialization is carried out by functional subsystems (production, marketing, finance, development and research, personnel, etc.). Each subsystem forms its own hierarchy, which permeates the entire organization from top to bottom. The performance of each service is assessed through indicators that characterize the performance of its tasks. The entire system of rewarding and motivating employees is built accordingly. The final result (the quality and efficiency of the enterprise as a whole) fades into the background, since it is believed that all departments are working to achieve it.
disadvantages and advantages
Positive aspects are the clarity of the system of interaction between departments, unity of command (the manager takes control of overall management), delimitation of responsibilities (everyone knows what he is responsible for), and the ability of executive departments to quickly respond to instructions received from above.
The disadvantage of the structure is the absence of links that develop a common work strategy. Managers at almost all levels primarily solve operational problems rather than strategic issues. There are prerequisites for shifting responsibility and red tape when solving problems that require the interaction of several departments. Enterprise management has little flexibility and does not adapt well to change. The organization and divisions have different efficiency and quality of work. The current trend towards formality of indicators tends to create an atmosphere of disunity and fear.
The disadvantages of management in this structure lie in the large number of intermediate links that are located between employees and the decision-making manager. Top-level managers are susceptible to overload. The dependence between work results and the qualifications, business and personal qualities of senior management personnel is increasing.
Thus, we can conclude that in modern conditions the linear-functional organizational structure has more disadvantages than advantages. With this organizational system, it is difficult to achieve high-quality work of the enterprise.
The linear-staff organizational structure is designed to eliminate the shortcomings of the linear scheme. It allows you to eliminate the main drawback, which is associated with the lack of links intended for This structure provides for a reduction in the workload of senior managers, it is possible to attract external experts and consultants. However, the distribution of responsibilities remains unclear.
Organizations that carry out processes such as: determining the timing, volume and sequence of work, division of labor and resource provision, need to implement stable relationships between the elements of the management system. For this purpose, an organizational management structure is being developed.
Organizational structure is divided into two types: hierarchical and organic.
A hierarchical structure implies a clearly defined hierarchy, management comes from one center, a strict division of employee functions, and a clear definition of the rights and responsibilities of employees.
Let's take a closer look at the types of hierarchical structures:
1. Linear management structure
The linear structure is suitable for small organizations and for organizations operating in a stable external environment.
To eliminate the weaknesses of the structure it is necessary:
Determine the areas of competence of subordinate managers and delegate appropriate powers to them;
To relieve line managers, introduce a staff unit - an assistant, who will be assigned some of the responsibilities;
To eliminate the problem of shifting responsibility, it is necessary to establish horizontal communication between line managers.
This type of structure is used, as a rule, in small organizations in the initial period of their formation.
2. Functional management structure
The functional structure is most often used for large volumes of specialized work in an enterprise.
How to eliminate structure deficiencies:
If the principle of unity of command is violated, as a rule, the responsibility of the performers decreases. This problem must be solved by introducing motivation and budgeting systems;
It is necessary to clearly define the areas of competence of functional managers, provide the right to make independent decisions within their competencies, as well as clear planning of activities.
Linear and functional structures in their pure form are not used by any large organization in Russia or in the world.
3. Linear-functional structure
The linear-functional structure is suitable for medium and large companies. This structure helps improve the quality of horizontal communications.
This structure is effective where:
Management tasks and functions rarely change;
Mass or large-scale production occurs with a limited range;
Manufacturing is the least susceptible to the progress of science and technology;
External conditions are stable.
This structure is usually used by banks, industrial and state enterprises. It is also effective together with other structures.
To overcome the weaknesses of the linear-functional structureit is necessary to clearly define powers and responsibilities between line and functional managers.
Linear-functional system using the example of the bank OJSC AK BARS:
Source : OJSC "Ak Bars" Bank, akbars.ru
In modern conditions, a linear-functional structure, as a rule, is used mainly by small and medium-sized organizations and very rarely in transnational companies. For many large companies, the divisional approach has become relevant.
4. Divisional management system
The divisional structure is suitable for organizations that have diversified production or different areas of activity.
This structure was first used by the company "General Motors." The need to implement such a structure was caused by a sharp increase in the size of the company, the complication of technological processes, as well as the diversification of activities. In a rapidly changing environment, the linear-functional structure made it impossible to manage from a single center.
To smooth out the shortcomings of this structure, a clear delineation of functions for each department of the organization is necessary.
Divisional system using the example of the oil company OJSC Rosneft:
Source : OJSC NK Rosneft, rosneft.ru
Sometimes environmental conditions change so rapidly that the process of developing and making decisions in hierarchical structures slows down. For such a case, when an organization is no longer able to effectively interact with its environment, adhocratic (organic) structures have been developed.
In the second part of the article we will look at organic organizational structures.
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For functional management structure characterized by the creation of structural units, each of which has its own clearly defined, specific task and responsibilities (Fig. 2.5). In this structure, each management body, as well as the executive, is specialized in performing certain types of management activities (functions). A staff of specialists is created who are responsible only for a certain area of work.
Rice. 2.5. Functional structure of organization management
The functional management structure is based on the principle of complete management: compliance with the instructions of the functional body within its competence is mandatory for departments.
Advantages of a functional management structure:
High competence of specialists responsible for performing specific functions;
Specialization of divisions in performing a certain type of management activity, eliminating duplication, performing management tasks for individual services.
Disadvantages of this type of organizational structure:
Violation of the principle of full management, the principle of unity of command;
Lengthy procedure for making management decisions;
Difficulties in maintaining constant relationships between various functional services;
Reducing the responsibility of performers for work, since each performer receives instructions from several managers;
Inconsistency and duplication of instructions and orders received by performers;
Each functional manager and functional unit considers their tasks to be paramount, poorly coordinating them with the overall goals set for the organization.
So, for example, in OJSC AVTOVAZ the functional management structure is used in the generalized structure, auxiliary production, and machine tool building. An example of a functional organizational structure is presented in Fig. 2.6.
Rice. 2.6. Example of a functional organizational structure
To a certain extent, the so-called linear-staff and linear-functional management structures, which provide for the functional division of managerial labor in departments of different levels with a combination of linear and functional management principles, help eliminate the shortcomings of linear and functional organizational structures. In this case, functional units can carry out their decisions through line managers (in a linear-staff structure) or, within the limits of delegated special powers, communicate them to specialized services or individual performers at a lower level (in a linear-functional management structure).
At the core line-staff management structure There is a linear structure, but under line managers special units (headquarters services) are created that specialize in performing certain management functions (Fig. 2.7). These services do not have the right to make decisions, but only provide, through their specialists, a more qualified performance by the line manager of his duties. The activities of functional specialists in these conditions come down to searching for the most rational options for solving problems. The final decision-making and transfer of it to subordinates for execution is carried out by the line manager. In conditions of this type of management structure, the principle of unity of command is preserved. An important task of line managers in this case becomes coordinating the actions of functional services (units) and directing them towards the general interests of the organization.
Rice. 2.7. Line-staff structure of organization management
Unlike the line-staff linear-functional structure, the most common structure of the hierarchical type, still widely used throughout the world, is based on functional units that can themselves give orders to lower levels, but not on all, but on a limited range of issues determined by their functional specialization.
In addition to the linear principles of management, the basis of linear-functional structures is formed by the specialization of management activities by functional subsystems of the organization (marketing, research and development, production, finance and economics, personnel, etc.).
Organizations designed according to a linear-functional principle, while maintaining the rigidity and simplicity of linear structures, acquired highly productive, specialized management potential. Freeing line departments from solving general organizational management tasks made it possible to sharply increase the scale of their activities and thereby realize the resulting positive effect. The implementation of management functions on the basis of delineation and specialization of management ensured an increase in the quality of management of the entire organization, an increase in the efficiency of control of linear units and the achievement of corporate objectives.
The transfer of current management to the heads of line departments and the functional division of the management activities of the organization as a whole allow top management to focus on solving strategic problems of enterprise development and ensure the most rational interaction with the external environment. For the first time, the organizational structure acquires some strategic potential, and management acquires the conditions for its implementation.
The undoubted advantage of the organizational structures under consideration is their flexibility. The linear-functional organization provides sufficient opportunities for restructuring linear units as the organization develops, technology changes and the separation of related industries. With the expansion of the enterprise, both the “set” of functional departments and the content of the tasks performed change. Thus, in the recent past, HR departments interacted relatively weakly with the departments of labor organization and wages; nowadays, these departments are increasingly merging into a single personnel management service of the company.
Thus, the main advantages of linear-functional structures include:
Stimulating business and professional specialization under this management structure;
High production response of the organization, since it is built on the narrow specialization of production and the qualifications of specialists;
Reduce duplication of efforts in functional areas;
Improved coordination of activities in functional areas.
Despite the widest distribution of linear-functional management structures, we note at the same time their significant disadvantages:
Erosion of the developed development strategy of the organization: divisions may be interested in realizing their local goals and objectives to a greater extent than the entire organization as a whole, i.e., setting their own goals above the goals of the entire organization;
Lack of close relationships and interaction at the horizontal level between departments;
A sharp increase in the workload of the head of the organization and his deputies due to the need to coordinate the actions of different functional services;
An overly developed vertical interaction system;
Loss of flexibility in the relationships between management staff due to the use of formal rules and procedures;
Weak innovative and entrepreneurial response of an organization with such an organizational management structure;
Inadequate response to environmental demands;
Difficulty and slowdown in the transfer of information, which affects the speed and timeliness of management decisions; the chain of commands from the manager to the executor becomes too long, which complicates communication.
The figurative name of the positions of a hierarchical type structure - “fox holes of managers” - implies that the internal interests of individual divisions often run counter to corporate interests and it is very difficult to understand what is being done in each of the individual management divisions, and each head of such a division, as a rule, carefully hides what is happening in his “kitchen”.
One of the disadvantages of linear-functional management structures is the “bottleneck effect”. Its essence is the development of predominantly vertical relationships within the framework of a functional approach, which raises the solution of problems arising at various levels of the organization to its main leader. As a result, managers' attempts to concentrate on solving strategic problems are drowned in operational work and routine. And this is not the fault of the manager, but the flaw of the organizational system used.
Considering all the above disadvantages, it is important to find out under what conditions they are smoothed out:
Linear-functional management structures are most effective where the management apparatus performs routine, frequently repeated and rarely changing tasks and functions, i.e. in organizations operating in conditions of solving standard management problems;
The advantages of these structures are manifested in the management of organizations with a mass or large-scale type of production, in organizations that produce a relatively limited range of products;
They are most effective under a cost-based economic mechanism, when production is least susceptible to progress in the field of science and technology;
Linear-functional structures are successfully used in organizations operating in a stable external environment.
For the conditions for the effective functioning of an organization with a linear-functional management structure, it is important to have normative and regulatory documents that determine the correspondence between the responsibilities and powers of managers at different levels and divisions; compliance with controllability standards, especially among first managers and their deputies, who form rational information flows, decentralize operational production management, and take into account the specifics of the work of various divisions.
At OJSC AVTOVAZ, the basic type of management structure, according to which most structural divisions are organized, remains linear-functional. An example of a linear-functional management structure is presented in Fig. 2.8.
Rice. 2.8. An example of a linear-functional management structure
Historically and logically, the importance of linear-functional structures in the development of an economic system cannot be overestimated. It is in this case that the enterprise tests its capabilities in establishing mass production, and the “superior-subordinate” relationship is brought to a level adequate to the requirements of the external environment.
The American corporation General Motors was one of the first organizations that managed to overcome the limitations of a linear-functional structure. In the conditions of diversified production, it was decided to significantly expand the independence of large divisions and give them the right to respond to market conditions themselves, turning them into “profit centers.” This bold management decision was proposed and implemented by company president A. Sloan, who called the new structure “coordinated decentralization.” Subsequently, this organizational structure was called divisional.
Divisional (departmental) structures- the most advanced types of organizational structures of a hierarchical type, sometimes they are even considered something between bureaucratic (mechanistic) and adaptive structures. In some cases, these structures can be found in the literature under the name “fractional structures”.
Divisional structures arose as a reaction to the shortcomings of linear-functional structures. The need for their reorganization was caused by a sharp increase in the size of organizations, the complication of technological processes, diversification and internationalization of activities. In a dynamically changing external environment, it is impossible to manage dissimilar or geographically distant divisions of an organization from a single center.
Divisional structures- these are structures based on the allocation of large autonomous production and economic units (departments, divisions) and the corresponding levels of management with the provision of operational and production independence to the units, with the transfer of responsibility for making a profit to this level.
A department (division) is an organizational commodity-market unit that has the necessary functional units of its own.
The department is given responsibility for the production and marketing of certain products and generating profits, as a result of which the management personnel of the upper echelon of the organization are freed up to solve strategic problems. The operational level of management concentrates on the production of a specific product or on the implementation of activities in a certain territory and is separated from the strategic level, which is responsible for the growth and development of the organization as a whole. As a rule, the top management of the organization has no more than 4-6 centralized functional units. The highest governing body of the organization reserves the right to exercise strict control over corporate-wide issues of development strategy, research and development, finance, investment, etc. Consequently, divisional structures are characterized by a combination of centralized strategic planning in the upper echelons of management and decentralized activities of departments, at the level at which operational management is carried out and which are responsible for generating profit. In connection with the transfer of responsibility for profit to the level of departments (divisions), they began to be considered as “profit centers”, actively using the freedom given to them to increase operational efficiency. In connection with the above, divisional structures of the board are usually understood as a combination of centralized coordination with decentralized management (decentralization while maintaining coordination and control) or, in accordance with the statement of A. Sloan, as “coordinated decentralization.”
The divisional approach ensures a closer connection between production and consumers, significantly accelerating its response to changes occurring in the external environment.
Divisional structures are characterized by full responsibility of department heads for the results of the activities of the units they head. In this regard, the most important place in the management of organizations with a divisional structure is occupied not by the heads of functional departments, but by the managers heading production departments.
The structuring of the organization into departments is carried out according to three principles:
Product - taking into account the characteristics of the products manufactured or services provided;
By targeting a specific consumer;
Regional - depending on the territories served.
There are three types of divisional structures:
Divisional productive structures;
Customer-oriented organizational structures;
Divisional-regional structures.
With a divisional product structure, the authority to manage the production and sales of any product or service is transferred to one manager, who is responsible for this type of product (Fig. 2.9).
Rice. 2.9. Product divisional structure
Heads of functional services (production, procurement, technical, accounting, marketing, etc.) must report to the manager for this product.
Organizations with such a structure are able to quickly respond to changes in competitive conditions, technology and consumer demand. Activities for the production of a certain type of product are under the leadership of one person, which improves coordination of work.
A possible disadvantage of the product structure is an increase in costs due to duplication of the same types of work for different types of products. Each product department has its own functional divisions.
An example of a product divisional structure in OJSC AVTOVAZ is the service of the vice president for technical development, which includes: a scientific and technical center (STC), which ensures the creation and production of new and modernized car models; production of technological equipment (PTO), manufacturing machine tool products; production of molds and dies (PPSh), which produces technological equipment (Fig. 2.10).
Rice. 2.10. Example of a product divisional structure
When creating consumer-oriented organizational structures, units are grouped around a certain number of consumers (for example, the army and civilian industries, industrial, technical and cultural products). The goal of such an organizational structure is to serve the needs of specific customers as well as an organization that serves just one group. An example of an organization that uses customer-oriented management structures is commercial banks. The main groups of service consumers in this case will be: individual clients, organizations, other banks, international financial organizations.
If the organization’s activities are extended to a number of regions in which it is necessary to use different strategies, then it is advisable to form a divisional management structure on a territorial basis, i.e. use divisional-regional structure(Fig. 2.11). All activities of the organization in a particular region must be subordinate to the appropriate manager responsible to the highest governing body of the organization. The divisional-regional structure facilitates the solution of problems associated with local customs, peculiarities of legislation and the socio-economic environment of the region. Territorial division creates conditions for training management personnel of departments (divisions) directly on site.
Rice. 2.11. Divisional-regional structure
An example of a specific regional divisional structure implemented at JSC AVTOVAZ in the supply management system for the domestic market is presented in Fig. 2.12.
Rice. 2.12. An example of the regional divisional structure of JSC AVTOVAZ
As organizations develop and enter international markets, the gradual transformation of national corporations into transnational ones, the achievement of these corporations at the highest level of their development leads to the creation of global corporations, where divisional structures are transformed into international and transnational ones. In this case, the organization stops relying on activities within the country and is restructured structurally in such a way that international operations have a predominant importance in the national market.
We can identify the most common types of international divisional structures, the construction of which is based on a global approach.
Globally oriented product (commodity) a structure based on a divisional structure with divisions based on product characteristics, each of which independently operates on the entire world market, is shown in Fig. 2.13. This structure is used by organizations with highly diversified products and products that differ significantly in their production technology, marketing methods, sales channels, etc. It is applicable in organizations where the differences between the types of products produced are more significant than the differences between geographical regions, in which these products are sold. This type of structure contributes to the international orientation of the organization, however, they are characterized (though, like any other type of divisional structure) by weakening coordination between the individual divisions of the organization and increasing duplication of their activities.
Rice. 2.13. Globally oriented product (commodity) structure
Globally oriented regional structure is also based on a divisional structure using the geographical principle of construction (Fig. 2.14), and the national market is also considered as one of the segments of the regional division. It is most advisable to use this type of structure by organizations in which regional differences are of fundamental importance. Often, globally oriented regional organizational structures are used in industries with technologically slowly changing products (beverages, cosmetics, food, petroleum products). The advantage of such a structure is the close relationship of geographical regions and the coordination of activities within them, and the disadvantages are the weak coordination of the work of individual units and the high degree of duplication of their activities.
Rice. 2.14. Globally oriented regional structure
Mixed (hybrid) structure It is characterized by the fact that, along with an emphasis on a specific product (geographical region, functions), structural connections of the territorial and functional (product and functional or territorial and product) type are built into it. This type of structure arose due to the fact that each of the above structures can have strengths and weaknesses. There is no single organizational structure that could be considered ideal. The organizational structure of management must correspond to the specific operating conditions of the organization, and for large economic entities they are quite complex and varied and cannot be adequate to any organizational structure in its pure form. The mixed structure is currently very popular among American multinational corporations (especially those with highly diversified activities).
Summarizing the consideration of divisional structures, it should be noted their advantages, disadvantages and conditions for the most effective use. The advantages of these types of structures are:
The use of divisional structures allows an organization to pay as much attention to a specific product, consumer or geographic region as a small specialized organization does, as a result of which it is possible to respond more quickly to changes occurring in the external environment and adapt to changing conditions;
This type of management structure focuses on achieving the final results of the organization’s activities (production of specific types of products, meeting the needs of a specific consumer, saturation of a specific regional market with goods);
Reducing the management complexity faced by senior managers;
Separation of operational management from strategic management, as a result of which the organization's top management concentrates on strategic planning and management;
Transfer of responsibility for profit to the division level, decentralization of operational management decisions;
Improved communications;
Development of breadth of thinking, flexibility of perception and entrepreneurship of heads of departments (divisions).
At the same time, it is necessary to emphasize the disadvantages of this type of organizational structure:
Divisional management structures have led to an increase in hierarchy, i.e., vertical management. They demanded the formation of intermediate levels of management to coordinate the work of departments, groups, etc.;
Contrasting the goals of departments with the general goals of the organization’s development, the discrepancy between the interests of the “tops” and “bottoms” in a multi-level hierarchy;
The possibility of conflicts between departments, in particular in the event of a shortage of centrally distributed key resources;
Low coordination of the activities of departments (divisions), headquarters services are disunited, horizontal connections are weakened;
Inefficient use of resources, inability to use them fully due to the assignment of resources to a specific department;
Increased costs of maintaining the management apparatus due to duplication of the same functions in departments and a corresponding increase in the number of personnel;
Difficulty in exercising control from top to bottom;
Multi-level hierarchy and within the departments (divisions) themselves, the effect of all the shortcomings of linear functional structures;
A possible limitation in the professional development of department specialists, since their teams are not as large as in the case of using linear-functional structures at the organizational level.
It should be noted that the most effective use of divisional management structures is in large-sized organizations, when expanding production and economic operations, in organizations with a wide range of products, in organizations with highly diversified production, in organizations in which production is weakly susceptible to fluctuations in market conditions, with intensive penetration of organizations into foreign markets.
The existence of many varieties of divisional structures is due to the many possible states of an economic entity under different input and output production conditions and the presence of business restrictions.
It is extremely rare to encounter a situation in which an organizational structure of the required type is immediately formed. This is possible when organizing a completely new enterprise or with a clearly modeled process of reorganizing the production and organizational structure.
However, we note that reorganization of the structure occurs when management problems create a “critical mass” and must be resolved by any means. This is the impetus for the beginning of the evolutionary development of a new structure through soft change or through hard reorganizations.
The accumulated experience in the theory and practice of reorganizing the management structure shows that the feasibility of moving to a divisional organization is determined by the potential of the enterprise and presupposes the presence of several markets with different specifics. The transition process occurs when the previous structure accumulates a sufficient number of unresolved problems, and another reorganization is inevitable. Divisional structures are also subject to transformation. Thus, improving the organizational structure is a natural, necessary and constant process for all enterprises, where everything is determined by the specific situation, goals, values, experience, and knowledge of managers. Familiarity with theoretical models gives an idea of the organizational structure system in which each company finds the most convenient starting scheme for itself.
As indicated in the work, there is no doubt that the basis for the construction and development of any systems is a linear model with a functional distribution of relationships. However, in management theory, a dependence is noted - the more structurally complex the management system, the easier it is to organize and regulate management flows. In this regard, distinguishing between schemes for organizing relationships between a set of system elements (schemes such as linear, linear-functional, divisional, functional, etc.), it should be noted that there are new trends in the formation of structures that correspond to the changing principles of the effective functioning of economic systems.
Since linear-functional and divisional organizational structures are most common in the modern economy, including the Russian one, we will conduct a comparative analysis of their main economic parameters. This will make it possible not only to clarify the strengths and weaknesses of these structures, but also to formulate their general assessment and role in the effective development of enterprises (Table 2.4).
Table 2.4 Comparative analysis of economic characteristics of organizational structures
Thus, the widespread use of linear-functional and divisional structures of organizations is quite justified. These structures are quite adaptive, moderately rigid and stable, allow the use of management personnel of diverse quality and create conditions for professional growth.
It is important that such organizations inherently assume the possibility of restructuring both in the event of changes in the external environment and in the event of a change in the management team or goals.
Let us consider the process of evolution from the simplest (linear) structure to a divisional one from the point of view of the influence of external and internal factors and identifying patterns of structural changes.
As we have already determined earlier, one of the features of the divisional structure of product orientation is the duplication of functions against the backdrop of expanded powers of the heads of sales departments. This structure makes it possible to improve the system’s response to local minor market changes by reducing the chain of command and concentrating operational information in decision-making centers. The chain of changes in the organizational structure during the transition from a conventional (functional structure) to a divisional one can be described by the initial, for example functional, and final divisional structures (Fig. 2.15-2.17).
Rice. 2.15. Functional structure of the enterprise
Rice. 2.16. Divisional structure of the enterprise
Rice. 2.17. Matrix structure model
Sales divisions must undergo reorganization, to which warehouse and transport groups, as well as marketing groups, have been transferred. At the same time, the headquarters marketing department is retained, which in the divisional structure no longer deals with local markets, but with market technologies, company-wide strategy and problems of internal interaction. Issues of economic planning are distributed between divisions and headquarters, the system-analytical and software complex (ACS) remains common. Duplication of functions across departments allows for improved management efficiency and coordination of decisions. However, such a system must have an appropriate level of authority and management resources without unnecessary duplication of functions, which at certain levels can become a negative factor.
In Russian practice, a typical divisional structure is often called an “internal holding” and acts as a transitional step to an external holding. It can be stated that it really eliminates many contradictions, since it breaks up a complex, clumsy organization into separate blocks, in which “local” problems are solved in their own way.
Currently, there are many structures that are essentially a type of divisional structure, in which, for example, the differentiation of divisions is carried out not according to a functional, but according to a design principle, or organizations in which independent business units (having legal status) act as elements of the structure. In this case, it is believed that we are talking about a network, cooperative structure. This does not entirely correspond to the concept of a division, but reflects its more advanced structure. On the other hand, domestic practice of management consulting shows that it was impossible to maintain and even increase production volumes at some enterprises in the first half of the 1990s. allowed the transition to a divisional management structure (delegation of powers and responsibilities to middle managers, transition to internal cost accounting, etc.). Although such a transition for the manager personally is fraught with the transfer of “administrative resources,” which was considered the main factor, into “the wrong hands,” which could pose a threat for the manager to be relegated to the background and become unnecessary.
Further development of the economic system moves the structure into the realm of flexible systems, based either on integrated structures in the form of business units, or on adaptation to changes (matrix structures or their analogues). At the same time, the matrix organizational structure involves the formation of a flexible system through the distribution of main functions and dual management. Creating such interaction (dual management) requires careful coordination of the balance of interests with maximum commonality of goals and high corporate culture. The features of such structures will be discussed further.
The most developed type of divisional management structures can be called organizational structures based on strategic business units (strategic economic centers). They are used in organizations if they have a large number of independent departments with a similar profile of activity. In this case, to coordinate their work, special intermediate management bodies are created, located between the departments and senior management. These bodies are headed by deputies of the organization's senior management (usually vice presidents), and they are given the status of strategic business units.
Strategic business units are responsible for developing the organization's strategic positions in one or more areas of business. They are responsible for choosing areas of activity, developing competitive products and marketing strategies. Once the product range is developed, responsibility for implementing the program falls on the divisions of ongoing business activities, i.e., divisions.
The analysis of the varieties of hierarchical organizational structures showed that the transition to more flexible, adaptive management structures, better adapted to dynamic changes and production requirements, was objectively necessary and natural.
(Materials are based on: Fundamentals of Management. Edited by A. I. Afonichkin. - St. Petersburg: Peter, 2007)
Advantages and disadvantages.
LINEAR STRUCTURE management is characterized by a clear unity of command - each manager and each employee is subordinate to only one superior person.
R– head of the organization;
P1, P2– heads of departments;
AND– performers
The line manager provides direct guidance to his subordinates in the form of orders, instructions, etc.
Used in small organizations (shops, canteens, etc.).
Advantages:
Unambiguous influence of the subject on the control object;
Relatively short communication channels;
Possibility for subordinates to receive consistent assignments;
High responsibility of the manager for the results of the work of the team subordinate to him;
Ensuring unity of leadership from top to bottom.
Flaws:
The manager lacks knowledge of individual management functions;
Overload of line managers and lack of time for high-quality implementation of all management functions.
FUNCTIONAL STRUCTURE management is based on the functional division of labor in the management apparatus. Therefore, instead of one manager, several specialists are appointed for certain types of work.
R– head of the organization;
F– functional units or specialists;
AND– performers.
Flaws:
The unity of management in the organization is disrupted and the role of the line manager is reduced;
The division of power between line and functional managers makes cross-functional coordination difficult;
Responsibility is dispersed between linear and functional management;
The possibility of conflict situations arises due to the contradictory nature of the instructions given.
20.Linear-functional management structure: diagram, characteristics, scope of application. Advantages and disadvantages.
The linear-functional structure is built on a combination of line management and specialized functional blocks.
P1, P2 – line managers;
Ш1, Ш2 – headquarters of specialists under line managers;
And – performers.
Advantages:
Attracting highly qualified specialists in certain functions to the management staff;
Improving the quality of decisions made;
The ability of line personnel to concentrate on the overall results of the organization.
Flaws:
An increase in the number and complexity of business connections in the management apparatus;
Increased costs for maintaining the development of management teams;
Lengthening the process of developing control commands;
Separation of staff employees from direct economic activities.
21. Divisional management structures: types, scheme, characteristics, scope of application. Advantages and disadvantages.
As a rule, large divisional structures are used.
Divisional structures- these are structures based on the allocation of production units (divisions-departments), granting them operational and production independence and transferring responsibility for making a profit to this level.
There are three types of divisional structures:
Grocery(departments are created by type of product (General Motors)),
Consumer oriented(divisions are formed around certain consumer groups (commercial banks)),
Regional(at the location of the company's divisions, if the company has international activities (Coca-Cola)).
Flaws:
Increased costs for management personnel;
Complexity of information connections.
