A conventional organizational structure can facilitate operational efficiency. This structure prioritizes authority from the top down and clearly defined tasks and responsibilities for each employee.
Despite this, a number of organizations have adopted a more modern organizational structure that decentralizes authority and allows for greater employee autonomy.
This article contrasts the conventional organizational structure with the current organizational structure to help you determine the optimal solution for your situation.
What Is a Traditional Organizational Structure?
A conventional organizational structure is a method for arranging a company or other entity hierarchically or from the top down. This strategy centers the processes of work allocation and management on a vertical structure that specifies a clear chain of command.
This style of bureaucracy allows for little open communication between different levels of employees, with individuals assigned to work within departments frequently being assigned tasks and told what to do, with little ability to influence policies and procedures.
This type of hierarchical structure has been prevalent in businesses, non-profits, and religious organizations, among others.
This model has significant flaws, including a lack of checks and balances, despite the fact that a traditional organizational structure can be advantageous when highly qualified individuals are placed in positions of responsibility.
In this type of corporate structure, the organization’s creativity may be somewhat constrained, as the ideas originate from a very small number of individuals who are involved in the entire operation.
This organizational structure consists of two fundamental types. A line approach is one illustration. This method is characterized by a well-defined and rigid chain of command that places ultimate authority and decision-making at the top of the structure.
This method may have developed out of necessity in smaller business operations with a single owner and a small number of employees.
As the company grows and the capacity of one or two individuals to maintain a strong hands-on approach to the operation diminishes, this paradigm can become increasingly problematic.
The line and staff technique is a variation on the conventional organizational structure. Here, there is still a clearly defined chain of command, but the owner or chief executive officer delegate certain responsibilities to a small group of employees, typically managers or supervisors.
While retaining the right to overturn any decisions made by the staff, the owner frequently focuses on issues deemed to be of greater significance, while the staff managers address issues deemed to be of lesser significance.
Alternatives to the traditional organizational structure have become increasingly prevalent over time. While owners still retain ultimate authority over a corporation, efforts to alter the structure so that employees have a greater say in decision-making have frequently been successful.
The delegation of additional responsibilities to competent employees, the establishment of committees and other processes that facilitate communication between all levels of a company’s organization, and cross-training to make employees more versatile can all contribute to the creativity and productivity of an organization.
As time passes, it is anticipated that additional alternatives to conventional organizational structure will emerge, giving business owners a growing number of organizational structure options.
Examples of traditional organizational structures
Functional organizational structure
The organization classifies its employees based on their positions or areas of expertise. For instance, a business with this organizational structure may have a finance department, a marketing department, and a research and development department, each with specialist groups reporting to the department manager.
Divisional organizational structure
This structure divides individuals into teams based on particular products, projects, or geographic regions, which is advantageous for larger organizations. A bank may have retail banking, investment banking, and private banking divisions, for instance.
Differences between traditional and modern organization structures
The list below illustrates the distinctions between traditional and modern organizational structures:
In a standard organizational structure, decision-making authority is centralized at the top and decreases as one moves down the hierarchy. The CEO has the most decision-making authority and may delegate certain choices to department heads, who may then delegate certain choices to team leaders.
In this organizational structure, employees have limited authority to make decisions and instead receive directives from their superiors.
Consolidating authority within a small number of individuals within an organization can be advantageous because it delivers unambiguous messages regarding organization-wide goals and expectations, thereby reducing the likelihood of misunderstanding.
However, modern organizational structures no longer employ this form of centralized authority. Instead, non-management employees are frequently permitted to select their own projects and methods for completing them.
In some situations, managerial personnel may interact with employees or seek their input on business decisions. This strategy empowers employees by allowing them to express their thoughts and opinions within the organization.
Modern organizational structures confer greater decision-making authority on employees, allowing them to choose when and how to assist other teams on projects without waiting for instructions from their supervisor.
Due to the hierarchical nature of a standard organizational structure, the highest level of management may have limited contact with employees who are not their direct subordinates.
For example, information from upper management may be transmitted via email, newsletters, or department heads. A modern organizational structure has fewer departmental divisions, enabling quicker and more effective communication.
They may use instant messaging applications or software to facilitate internal communication. And in a flat organizational structure, for example, there is no middle management, so employees have a greater opportunity to communicate directly with upper-level managers.
Traditional organizational structures divide individuals based on their responsibilities into departments or divisions. Therefore, opportunities for collaboration between personnel from different departments may be limited.
The emphasis on their unique function also assists them in acquiring extensive knowledge and expertise, which may enable them to become subject matter experts.
Due to the fact that they only perform their specific job and work with coworkers who perform similar tasks, they may have fewer opportunities to develop their skills and gain knowledge of other aspects of the organization.
Modern organizational models foster teamwork and collaboration, allowing employees from various departments to collaborate. Utilizing resources expedites problem resolution and achievement of objectives.
Typically, these teams have more autonomy than those in conventional organizational structures, which must wait for instructions from their supervisor on how to complete tasks or projects.
This strategy can contribute to the development of company-wide connections, as employees will recognize that they must rely on one another to achieve corporate objectives, regardless of their respective business divisions.
In conventional organizational structures, employees have predefined duties and responsibilities. This structure is advantageous for organizations with stable business environments because personnel are able to perform their jobs and overcome the recurring obstacles they present.
These predetermined positions can increase productivity and efficiency if the nature of an organization’s business does not fluctuate frequently. Due to the rigidity of these organizations, it may be difficult for them to adapt to changing environments, or they may be slower to address unanticipated problems.
Modern organizational structures offer greater flexibility in terms of employee responsibilities, which is advantageous for businesses operating in increasingly volatile environments.
This adaptability enables personnel to collaborate across departments to solve problems. In addition to gaining new knowledge, these employees have the opportunity to participate in projects or teams of their choosing.
People assume that the operations and growth of conventional organizations are stable. In contrast, the modern business is more dynamic as a result of its numerous business strategies. They necessitate numerous advancements and constant modification.
Contemporary Organisations Flow “Flat Hierarchy” and “Tall Hierarchy” are two types of hierarchies.
You have greater freedom and flexibility to alter your evaluation as a modern employee. Consequently, staff morale is high with this type of organization. Traditional is a business that focuses on jobs; therefore, you are uncertain about employee morale.
Traditional organizations have a distinct policy to protect the organization or its employees against any type of threat. Consequently, personnel are better informed about the issue and can take appropriate action. In this regard, contemporary organizations are rather courageous. Even though they are constantly willing to accept new challenges, everyone here is prepared to immediately confront any threat.
In addition, business practices are the primary distinction between contemporary and conventional organizations. Established organizations are relatively conservative and strive to adhere to conventional regulations. They consistently utilize a static corporate plan, a standard marketing strategy, and an employee management system with a workflow model. A contemporary corporation is characterized by modification, rescheduling, flexible entity management, and a dynamic business plan.
The modern organization is increasingly reliant on technology and borderless. Therefore, employee count and office space are irrelevant. However, traditional corporations are centralized and adopt innovative technologies slowly.
Consequently, it is time to evaluate the business model of your company. Current public expectations are limitless, and their focus is diversifying rapidly. Consequently, you should be more active, virtual, and tech-savvy.
History of the Traditional Organization
The typical hierarchical structure emerged as production migrated from small shops to large factories and assembly lines. Analysts and theorists began to view corporations as machines as industry became increasingly automated.
Low-status individuals were instructed to perform their duties as efficiently and consistently as possible. Each human cog served a distinct function within the overall mechanism. The staff members were specialists in their respective fields.
Managers and executives remain indispensable parts of the machine. They wield power and influence not due to their personal qualities or leadership, but rather due to their positions.
A machine requires rules, regulations, and a strict chain of command in order to function effectively.
The result? Large, bureaucratic corporations with centralized authority and decision-making. Front-line employees are required to submit complaints or suggestions and wait for a response as decisions percolate through multiple levels of management.
Traditional Structure in Decline
During the middle of the twentieth century, when the U.S. economy was booming and companies were growing in size, conventional hierarchies appeared ideal for large conglomerates that wished to maintain the status quo.
By the end of the 20th century, the traditional hierarchy was no longer considered the ideal organizational structure. The military is an example of this type of functional organizational structure in the real world; it is large, powerful, and effective at what it does. As the twentieth century came to a close, however, this structure’s commercial success diminished.
Employees have limited input regarding their jobs, and they cannot be certain that their suggestions reach the executive level.
Decisions and changes are communicated exclusively from the top down, which can inhibit creativity. Change occurs slowly in conventional organizations because it must pass through so many administrative layers.
When the business environment changes quickly or the company encounters new obstacles, it may be unable to respond quickly enough. Even the military struggles to avoid becoming management-heavy and maintain its leanness.
Traditional Structure Survives
Despite its flaws, the conventional organization survived into the twenty-first century. This is due in part to inertia. It is easier for established businesses to maintain their current organizational structures than to modify them.
Some businesses have attempted to alter the conventional organizational structure. One strategy is to flatten the structure to reduce the number of management levels. Eliminating middle management facilitates collaboration between employees and the boss and accelerates the rate of change.
Structure From the Ground Up
If you are just beginning to expand your business, you have a variety of organizational structures from which to choose. Even if you do not make a decision consciously, you may make one unconsciously. Then, business requirements may necessitate that you duplicate a conventional structure:
- The work must be divided into specific tasks.
- As an organization grows, it becomes more efficient to group jobs together, resulting in the establishment of departments.
- As your workforce grows, you might need a layer of middle management so that not every employee reports directly to you.
- Maintaining the majority of decision-making authority may be simpler than consulting with employees.
- If you want a flatter, more adaptable organization, you may need to avoid slipping into a conventional structure.
The organizational structure of a company determines how work is assigned within the organization. A conventional organizational structure is characterized by a system in which authority flows upward and all employees follow a chain of command.
Traditional organizational charts typically resemble pyramids. The chief executive officer would hold the highest position, followed by department managers who report to the CEO and oversee the department’s overall operations.
Next would be the non-management personnel who report to the first-line managers or supervisors who oversee the daily operations of their respective departments or teams.