Question

Explain what a functional organization is in relation to a horizontal organizational structure and provide its advantages and disadvantages. Explain what a divisional organization is in relation to horizontal structures and provide the advantages and disadvantages of using a divisional organization

Answer 1

Companies are finding the benefits of incorporating horizontal organizational structure in the workplace. The horizontal organizational structure emphasizes an employee-centered approach with emphasis on teamwork and collaboration. This allows for workers to focus and invest time and energy on company goals. In a small business, where it is like a small town and everyone knows everyone, teamwork is an essential practice to ensuring the group has cohesion and move the company forward.

Advantages of horizontal organizational structure are:-

Employee-Centered Approach :- An employee-centered approach to leadership is an important aspect of horizontal organizational structure that has gained attention in the past few years. The horizontal organizational structure and the employee-centered approach to leadership focus on the ability of employees to come up with innovative solutions. It empowers employees by emphasizing training and giving employees the tools needed to succeed.

Teamwork :- Horizontal organizational structure in an organization places emphasis on the collective goal of the company. Unlike the vertical organizational structure where emphasis is placed on the individual, the organizational structure emphasizes teamwork. The focus is on the processes and procedures that directly affect products rather than individual jobs.

Performance Incentives :- Since horizontal organizational structure emphasizes the group, when a group works well together, everyone benefits. Each individual has an incentive for the group to succeed. Rather than a power-struggle, the focus group is working toward achieving the goal. Economic incentives can be tied to performance.

Workplace Culture :- Increasing worker job satisfaction has shown to increase worker motivation, which in turn, increases productivity. The horizontal organizational structure may help to increase job satisfaction, since emphasis is placed on creating an inclusive workplace culture and environment. Value is placed on openness, cooperation and collaboration.

(b) Any business employing more than a few people needs to organize itself into a structure that defines how information travels within the company, and how workers in different roles and at different levels of responsibility relate to each other. Organizational structures increase efficiency by ensuring that all employees know to whom they report and from whom they take direction regarding their work activities. The two most common types of organizational structure are known as functional and divisional.

Advantages of Divisional Organizational Structure

Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major strategic objectives. Having its own president or vice president makes it more likely the division will receive the resources it needs from the company. Also, a division's focus allows it to build a common culture and esprit de corps that contributes both to higher morale and a better knowledge of the division's portfolio. This is far preferable to having its product or service dispersed among multiple departments through the organization.

Disadvantages of Divisional Organizational Structure

A divisional structure also has weaknesses. A company comprised of competing divisions may allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources. Thus, one division will sometimes act to undermine another. Also, divisions can bring compartmentalization that can lead to incompatibilities. For example, Microsoft's business-software division developed the Social Connector in Microsoft Office Outlook 2010. They were unable to integrate Microsoft SharePoint and Windows Live until months after Social Connector could interface with MySpace and LinkedIn. Some experts suggested that Microsoft's divisional structure contributed to a situation where its own products were incompatible across internal business units.