BMGT 300 – ORGANISATION THEORY

ORGANISATIONAL STRUCTURE

An organizational structure, also known as “organogram structure” or “org structure,” outlines the
hierarchy within an organization and describes the roles, responsibilities and lines of command
that exist to achieve the organization's business goals.
By establishing clear relationships between departments, organizational structures provide clarity,
focus and efficiency to employees so that they know who they report to and what their goals are.
To visually explain the company’s reporting and accountability structure, business often create
“org charts.”

Definitions:
i. It refers to the division of labour as well as the patterns of coordination communication,
workflow and formal power that direct organizational activities structure support or inhibit
communication and relationships across the organization. They also serve as mechanisms
that either support change or make change initiatives more difficult.
ii. An organisation’s structure specifies its division of work activities and shows how different
functions or activities are linked; to some extent it also shows the level of specialisation of
work activities. It also indicates the organisation’s hierarchy and authority structure, and
shows its reporting relationships
iii. An organisational structure is defined as the pattern or network of relationships that exist
among various positions. It is a pattern of relationships that has been generated through a
conscious planning process. Key executives typically decide upon the basic pattern of
structure that in their opinion will be most appropriate for themselves, their work, and
organisation goals.

According to Peter Drucker (a management guru), organisational structure is an indispensable

means of organizing operations in organisations, and thus, a wrong structure will seriously impair
business performance and may even destroy it. Organisational structure must be so designed as to
make possible the attainment of the objectives of the business for 5, 10, 15 or more years
henceforth.
Thus, an organisational structure should be designed to clarify who is to do what and who is
responsible for what results, to remove obstacles to performance caused by confusion and
uncertainty of assignment, and to furnish decision-making and communications networks
reflecting and supporting organisation objectives.

Importance of Organisational Structure:

The following are the importance of organisational structure:
1. Clear definition of authority, responsibility relationship facilities better understanding of
the objectives and the policies of the organisation.

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 2. Organisational structure lays down both channels and the patterns of communication. It
facilitates proper administration.
3. It helps to coordinate activities of the component parts in order to facilitate the realisation
of the goals of the organisation.
4. It helps in growth and diversification of the activities of an organisation.
5. Workers participation in organisation increases their cooperation and improves their will
to work. It stimulates initiation and creative thinking.
6. Implementation of policies and the achievement of the goals become easier.
7. It prevents duplication of functions and makes it possible to achieve maximum production
with minimum efforts.

Purpose of organisational structure

i. Division of labour: This refers to the sub-division of work into separate jobs assigned to
different people. Sub-divided work leads to job specialization, because each job has a
narrow subset of tasks necessary to complete the product or service. Work is divided into
specialized jobs because this potentially increase work efficiency. Employees can master
their tasks quickly because work cycles are shorter. Training costs are reduced because
employees require fewer physical and mental skills to accomplish the assigned work
ii. Coordination: Organizations are groups of people who work interdependently towards
some goal. To accomplish their work, they must divide the work into manageable chunks.
They must also introduce coordinating mechanism to ensure that everyone is working
effectively towards the some objectives, Coordinating work activities can be achieved
through the following means:
a) Informal communication: This allows flexibility because employees transmit a
large volume of information through face to face communication and other media
channels. This is crucial in handling non-routine and ambiguous situations
b) Formal hierarchy: Hierarchy assigns legitimate power to individuals who use the
power to direct. Work processes and allocate resources. Thus work is coordinated
through direct supervision
c) Standardization: This is the creation of routine patterns of behavior or output. This
is achieved through job description and work procedures. This coordinates work
that is simple and routine, but less effective where work is complex and conditions
are ambiguous

Principles of Organizational Structure

There are some principles, which are common to all organizations. These principles offer guidance
for the creation of a sound, efficient and effective organization structure. In other words, these
principles are the sound criteria for efficient organizing. They ensure smooth and orderly working
of an organisation. Some of the principles are as follows:

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1. Unity of Objectives: Objectives of the organisation influence the organization structure
and hence the objectives of the organisation should first be decided clearly and firmly. In
addition, there should be unity among the objectives decided. This gives clear direction to
the whole organization and it will be geared for the achievement of such objectives. The
organization acts as a tool for achieving the objectives.
2. Division of Work and Specialization: Division of work leads to specialization. Every
department of an organization should be given specialized functions. This will raise the
overall efficiency and quality of work of an organization.
3. Delegation of Authority: There should be proper delegation of authority in every
organization, particularly in large organizations. The basic idea behind delegation is to see
that decision-making power is placed at a proper place. Delegation should go to the lower
levels of management. Everyone should be given authority, which is adequate to
accomplish the task assigned to him. Delegation is useful for getting the things done
through others.
A successful manager normally does not perform the jobs by himself. He delegates the
authority and responsibility to his subordinates. He also motivates his subordinates and
sees that they take initiative, work efficiently and contribute for achieving organizational
objectives.
4. Coordination: Organization involves division of work and departmentation. This naturally
suggests the need of proper coordination among the departments and efforts of people
working in an organization. Due to coordination one clear-cut direction is given to
people/departments, and efforts will not be wasted.
5. Unity of Command: Unity of command principle suggests that each subordinate should
have only one superior whose command he has to obey. Dual subordination is undesirable
as it leads to confusion, disorder, uneasiness and indiscipline. An employee should not
have more than one boss to whom he has to report and also function as per his orders and
instructions. Reporting to more than one boss leads to confusion.
6. Flexibility: According to the principle of flexibility, the organization structure should be
flexible and not rigid. Such structure is adaptable to changing situations and permits
expansion or replacement without any serious dislocation and disruption. There should be
an in-built arrangement to facilitate growth and expansion of an organisation.
7. Simplicity: The organization structure should be simple for clear understanding of
employees. The structure should be easy to manage. Internal communication will be easy
due to simplicity of organization. The organization structure should be simple as far as
possible. The levels of management should also be limited.
8. Span of Control: The span of control, as far as possible, should be small and fair. This
means a manager should not be asked to keep supervision on large number of subordinates.
The span of control should be narrow and manageable. It should be properly balanced.
9. Authority and Responsibility: Authority acts as a powerful tool by which a manager can
achieve a desired objective. Authority of every manager should be clearly defined.

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 Moreover, it should be adequate to discharge the responsibilities assigned. The superior
should be held responsible for the acts of his subordinates. He cannot run away from the
responsibility simply by delegating authority to his subordinates.

Elements of Organizational Structure

1. Span of control
This refers to the number of people directly reporting to the next level of the hierarchy. This is
important because it determines the number of levels and managers an organization has. There are
two types of spans:

a. Wide span of control- It is one in which a manager can supervise and control effectively
a large group of persons at one time. The features of this span are:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs

According to this span, one manager can effectively and efficiently handle a large number of
subordinates at one time. However efficiency reduces because managers may no longer have the
time to provide necessary support and leaderships

b. Narrow span of control- According to this span, the work and authority is divided
amongst many subordinates and a manager doesn't supervise and control a very big group
of people under him. The manager supervises a selected number of employees at one
time. The features are:-
i. Work which requires tight control and supervision, for example, handicrafts,
ivory work, etc. which requires craftsmanship, there narrow span is more helpful.
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.

Narrower spans are advantages as managers can maintain close control however; they are
expensive as they add levels of management. They slow down decision making and tend to isolate
management. They also encourage tight supervision and discourage employee autonomy and
empowerment.

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 2. Centralization and decentralization
Centralization means that formal decision making authority is held by a small group of people,
mainly those at the top of the organizational hierarchy. This means that middle management does
not have a significant input to company decisions, and these are left to top level management only.
This is typical of a larger organisation. All important decisions are taken by the top executives and
operative decisions and actions at lower levels in the organisation are subject to the close
supervision of the top executives under the process of centralisation.
Advantages of Centralization
i. There is a clear chain of command. A centralized organization benefits from a clear chain
of command because every person within the organization knows who to report to. Junior
employees know who to approach whenever they have concerns about the organization.
On the other hand, senior executives follow a clear plan of delegating authority to
employees who excel in specific functions.
ii. Top management will have closer control of operations
iii. It helps in achieving uniformity of action in situations where the organisation wishes all
employees and relevant departments to perform certain functions in the same manner thus
requiring centralisation of appropriate decision-making.
iv. Centralised control enables organisation in keeping all the parts of the organisation moving
harmoniously towards a common objective. A certain degree of centralisation of authority
is necessary to unite and integrate the total operations of the organisation.
v. To Handle Emergencies – In uncertain business conditions, centralisation of decision-
making is essential as there are chances that emergency conditions may develop to
endanger the very existence of the company. Centralisation facilitates rational decisions
from both short- as well as long-term perspectives to meet such uncertainties.

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 vi. To Overcome Duplication – Centralisation of various functions at the top level avoids
duplication of activities and efforts and thus leads to minimization of wastage in operations.
vii. Quick implementation of decisions: In a centralized organization, decisions are made by a
small group of people and then communicated to the lower-level managers. The
involvement of only a few people makes the decision-making process more efficient since
they can discuss the details of each decision in one meeting.
viii. Focused vision: When an organization follows a centralized management structure, it can
focus on the fulfillment of its vision with ease. There are clear lines of communication and
the senior executive can communicate the organization’s vision to employees and guide
them toward the achievement of the vision.

Disadvantages
i. It can delay decision-making process as decision-making is not allowed at the lower levels.
ii. It leads to increases the burden on the top managers and hampers the growth of lower level
managers.
iii. It reduces motivation and morale of the lower level executives and employees who have
no input in the decision making process.
iv. Success and growth of the organisation becomes dependent on the capability of top
management
v. The chances of misuse of authority by the top executives increases
vi. Centralized management resembles a dictatorial form of leadership where employees are
only expected to deliver results according to what the top executives assign them.
Employees are unable to contribute to the decision-making process of the organization, and
they are merely implementers of decisions made at a higher level.

Decentralization
Organizations that operate in complex business environments tend to decentralize, i.e. dispense
decision authority and power throughout the organization. Decentralisation refers to a situation in
which ultimate authority to command and ultimate responsibility for results is localised as far
down in the organisation as efficient management of the organisation permits. It also refers to the
systematic effort to delegate to the lowest levels all authority except that which can only be
exercised at central points by top management.
Thus, decentralisation can be understood as retention of some authority (to plan, organise, direct
and control) at the top level and delegation of authority to make routine decisions at points as near
as possible to where action is actually required.

Advantages of Decentralisation:

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 i. Reduces the burden on top management: Decentralisation relieves the top managers of
the burden of performing various functions. Centralisation of authority puts the whole
responsibility on the shoulders of an executive and his immediate group. This reduces the
time at the disposal of top managers who should concentrate on other important managerial
functions.
ii. Facilitates diversification: Under decentralization, the diversification of products,
activites and markets, etc. is easily facilitated. A centralised enterprise with the
concentration of authority at the top will find it difficult and complex to diversify its
activities and start the additional lines of manufacturing or distribution.
iii. Management Development: When the authority is decentralised, managers in the
organisation will get the opportunity to develop their talents by taking initiative which will
also make them ready for managerial positions.
iv. It promotes motivation: It improves the morale of employees as they get involved in
decision-making process.
v. Better control and supervision: Decentralisation ensures better control and supervision
as the subordinates at the lowest levels will have the authority to make independent
decisions.
vi. Quick Decision-Making: Decentralisation brings decision making process closer to the
scene of action. This leads to quicker decision-making of lower level since decisions do
not have to be referred up through the hierarchy.

Disadvantages of Decentralisation:
Decentralisation can be extremely beneficial. But it can be dangerous unless it is carefully
constructed and constantly monitored for the good of the company as a whole. Some disadvantages
of decentralisation are:
i. Uniform policies not followed: Under decentralisation, it is not possible to follow uniform
policies and standardised procedures as each manager will make his/her own policies based
on his insight and capabilities.
ii. Problem of coordination: Decentralisation of authority creates problems of co-ordination
as authority lies dispersed widely throughout the organisation.
iii. More financial burden: Decentralisation requires the employment of trained employees
with the required competencies in order to accept authority. Thus, it involves more
financial burden to recruit and continuously train employees which means that small firms
cannot afford to appoint experts in various fields.
iv. Require qualified employees: Decentralisation becomes useless when there are no
qualified and competent employees.
v. Decentralization is as efficient as the manager in charge of that department. If a manager
lacks the skill or competence for taking the right decision, the whole organization might
have to incur heavy losses.

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 vi. There is a risk of each department getting self-centered and not bothering about the broader
interest of the entire firm.

3. Formalization
This is a process in which managers specify (in writing), procedures, rules and responsibilities for
the individual employees, organizational units, groups, teams and the organization as a whole,
which leads to the development of processes, relationships, and operating procedures. The
formalization of the organization is the result of the management's tendency towards bureaucracy
and centralization. Larger companies formalize as a coordinating mechanism because direct
supervision and informal communication do not operate easily

Problems with formalization:

Formalization occurs in every organization, but there is a wide variety of its degree and scope. A
common problem for management is therefore to find the so-called optimum level of
formalization. When it is not achieved, they have to deal with the following:
✓ Over-formalization: This occurs when there are too many organizational rules, which
leads to a lack of flexibility. Employees are forced to follow prescribed behaviours even
when the situation may require creative and innovative solutions. Although employees may
working in highly formalized organization, others become alienated and feel powerless in
these foormalised structures.

✓ Under-formalization: The existence of too few rules and guidelines, may lead to too much
freedom of action of workers, which in turn can result in chaos and a decline in the
efficiency in organisation.

4. Departmentalization
Departmentalization is defined as a process that groups activities into different departments.
These departments are created so that tasks can be performed by specialization within the
organization. Departmentalize also refers to an organization’s formal structure that includes
several departments and positions and their respective relationship with each other.

To achieve the common goal of an organization, the company combines teams under different
departments. These have several employees who carry out a similar type of activities for the
betterment of their company. It groups individuals as per the functions and activities they will be
performing in a single department.
The departments are headed by managers who are responsible for delegating duties and tasks to
the employees in their department. Employees of every department are accountable to their
department head for their performance.

The objectives of departmentalization are as follows-

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 i. Maintaining control
ii. Simplifying the operational process in the company
iii. Grouping the specialized activities under one umbrella
iv. Increasing the efficiency of management and ultimately the organization
v. Fixing responsibilities and of course accountability

5. Chain of Command
The chain of command in an organisation refers to the different levels of management in the
organisation. The top position in the chain of command is held by the CEO or owner of a business,
and the workers make the lowest level of the chain of command of the organisation.
The chain of command in an organisation clarifies the sequence of reporting in the organisation.
Every employee working in an organisation has knowledge of his/her authority and the
responsibility of reporting. With the help of the chain of command, discipline is created in the
organisation.
Employees are placed at different levels of the organisation. The chain of command tightly controls
the flow of information and decision-making in an organisation. There are three levels of the chain
of command in an organisation, such as Top-level managers, middle-level managers, and front-
line (lower level) managers.
The top-level management consists of a board of directors, CEO, president, vice president, and
owner of an organisation. Top-level managers control the whole organisation. They are responsible
for deciding the goals and objectives of an organisation. They are also responsible for
preparing strategies to achieve the goals and objectives of the organisation. They give orders to
the managers working at the middle-level of management.

Middle-level managers play an essential role in the organisation. They establish communication
between front-line (lower level) and top-level managers. They take instructions from the top
management and pass that information to front-level managers. They supervise the work of front-
line managers and make sure that work is being done as required and on time. In addition to this,
middle-level managers are also responsible for the allocation of resources to front-line managers.

And the last level of the chain of command in an organisation is the front-line managers. The role
of front-line managers in an organisation is to supervise and control the day-to-day activities of
employees working in the organisation. They make sure that each employee is completing their
work as required and on time. Employees working in the organisation take their problems to the
front-line managers, and front-line managers are responsible for providing solutions to them.

Mechanistic versus Organic Structures

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Mechanistic structures: The mechanistic organizations are defined as an organizational structure
that is bureaucratic as well as hierarchical by nature. It is one of the most formal
organisational structures which have a specific division of labor that results in specialized job
profiles. The centralized system ensures a strict chain of command and a higher authority with all
the power. They have narrow span of control and a high degree of formalization and centralization.
They have many rules and procedures, limited decision making at lower levels, tall hierarchies of
people in specialized roles and vertical communication. Tasks are rigidly defined and altered only
when sanctioned by top management. They also have tall structures.

Tall structure is one that fosters narrow span of management, a large number of management levels
and more centralized decision making.

The basic advantages of this structure are close supervision, prompt decision making, close
control of subordinates activities, employees are disciplined and fast communication between
superior and his subordinates.

The disadvantage of this structure is that it results in too much control, rigid and not receptive to
change, creation of many levels of management, formalised structure discourages creativity and
innovation, high costs to the organisation and excessive distance between lowest level and highest
level in the organisation.

Organic Structures: They have a wide span of control, decentralized decision making and little
formalization. Tasks are fluid. It values knowledge and takes the view that information may be
located anywhere in the organization rather than among senior management. Communication is
from every direction with little concern for hierarchies. Organic structures have flat structures.

The organic organization is all about teamwork as the organization encourages group leadership.
It means that now several people are entrusted with leadership qualities. It is now the responsibility
of the group and not a single individual to handle and manage the rest of the employees.

The best thing about the organic organization is that it takes into account the ideas of the employees
so that they can feel a part of the system. It acts as an incentive for better efficiency, productivity,
and cooperation.

Flat structure is that which reduces the levels of management, widens span of control of managers
at various levels of the organisation and is often decentralized with regard to decision making
autonomy. Their main advantages are more delegation of authority, more clear policy,
development of managers for higher positions because of their initiatives and authority to make
decisions, etc.

Its disadvantages are a tendency to overload the superiors to become bottlenecks in decision
making, danger of superior’s loss of control, and requirements of highly trained employees.

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Types of organizational structure

The classification of organisation structure is based on the way various activities are grouped
together to create departments and units and prescribing their relationships in the organisation.
There are different types of structures. Four types will be discussed in this unit namely, simple,
functional, divisional and matrix structure. Each of this emphasizes different arrangements of
organizational activities.

Simple structure: This is an organizational form in which the owner-manager makes all major
decisions directly and monitors all activities, while the staff serves as an extension of the manager’s
supervisory authority. These organizations employ a few people and have only one distinct product
or service. There is minimal hierarchy, i.e. employees report directly to the owners. Employees are
grouped into broadly defined roles because there are insufficient activities to assign them into
specialized roles. They are flexible but depend on the owner’s direct supervision to coordinate
work activities. It cannot operate under complex condition

Functional Structure: This is most commonly used in medium and large organisations. This
structure is based on the idea that the organisation must perform certain functions in order to carry
out its operations. It organizes employees around specific knowledge or other resources among
people with similar occupations. Specialties are put together formally e.g. employees with
marketing expertise are grouped into a marketing unit; those with production skills are located in
manufacturing, etc. Organizations with functional structures are centralized to coordinate their
activities effectively.

Advantages

i. Benefits of Specialisation: The whole company is divided into many departments on the
basis of major activities to be performed. Each department is headed by an expert manager.
This results in more and better work being accomplished in much lesser time. Hence, the
benefits of specialisation become available.

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 ii. Coordination is established: All the persons working within a department are specialists
of their respective jobs. It makes coordination easier at the departmental level.
iii. Managerial Efficiency is increased: It helps in increasing managerial efficiency because
of performing the same work again and again. Further, this results in increased profit.
iv. Minimal Duplication of Efforts: In this type of organisation unnecessary duplication of
efforts is eliminated. For example, the function of finance is only carried out by the finance
department. There is no need to establish two or more departments. It makes it possible to
utilise the human and other resources effectively.
v. Training is facilitated: It facilitates the training of employees as the focus is only on a
limited range of skills. For example, the employees of finance department are given
training on financial issues.
vi. Direct supervision is easier, because managers have backgrounds in that functional area
and thus employees approach them with common problems and issues.
vii. They create common pools of talent that services everyone in the organization

Disadvantages

i. Ignorance of Organisational Objectives: Because employees with common interests and

backgrounds are grouped together, these structures tend to emphasize sub-
unit/departmental goals over organizational goals. Hence, overall organisational objectives
suffer. For example, to establish its image, the production department may produce quality
product ignoring the fact that market trend favors accepting medium quality product.
ii. Employees in different functional areas e.g. purchasing, accounting, engineering etc are
less likely to give priority to organization goals as compared to the goals of their specific
department.
iii. Difficulty in Interdepartmental Coordination: All departmental heads may
independently of other departments. Although this may facilitate effective coordination
within the department, it makes interdepartmental coordination difficult.
iv. Every departmental head wants to become successful resulting conflict for resources
among various departmental heads.
v. Hurdle in Employee Development: This system is a hurdle in employee development
Each employee specialises only in a small part of the whole job.

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Divisional Structure: Divisional structure is built around business units. In this structure, the
organisation is divided into several autonomous units. Each unit is relatively self-contained in that
it has the resources to operate independently of other divisions. These groups are mostly self-
managed and focused upon a narrow aspect of the company's products or services. Each unit is
directly accountable to the organisation (company headquarters). This structure group’s people
around geographical areas, clients or output (products/services) as follows:
a) Geographical Divisional Structure (e.g. Kenya Power)

Geographical divisionalised structures: This structure establishes regional offices as separate

entities. Each regional office has its own set of functional departments and operates under the
strategic policies and guidelines established by the corporate management. This is useful for
organisations whose activities are geographically spread such as banking, transport, etc.
Managing Director

Western Central Rift Mt. Kenya Coastal

Region Region Region Region

b) Customer Divisional Structure, e.g. Bank

Customer/client structure: This structure organizes activities or employees based on common

customer or client groups.

Managing Director

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 Consumer Mortgage Loans Business Loans Agricultural
Loans Loans

c. Products/service structure (e.g. Electronics firm): This structure organizes activities

around similar products or services. Each product division caters for different customers
and has different types of competition.
Managing Director

Consumer Domestic Lighting Semi-

Electronics Appliances Products conductors

Advantages
i. It accommodates growth easily.
ii. Related products or clients can be added to existing division with little need for additional
learning, whereas increasing diversity may be accommodated by sprouting a new division.
iii. They allow a team to focus upon a single product or service, with a leadership structure
that supports its major strategic objectives.
iv. Having its own president or vice president makes it more likely the division will receive
the resources it needs from the company.
v. A division's focus allows it to build a common culture and harmony 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.
vi. It allows for a high degree of specialization. Workers with similar talents and abilities can
work together and focus on specific projects that help the division meet its objectives.
vii. Because the division operates autonomously, management is more likely to be familiar
with the needs of the workers, which ensures they will have access to the resources they
need to complete their tasks. Like-minded individuals may also find it easier to develop a
sense of teamwork.

DRAWBACK
i. Divisional structures duplicate and insufficiently use their resources.
ii. They also create a lot of knowledge because functional specialists are spread throughout
the different business units. Consequently, new knowledge and practices spread in one part
of the organization are not shared elsewhere.
iii. 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.

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 iv. It may result in too great of a sense of autonomy among each division. Each division may
view itself as completely separate from the other divisions and become concerned only
with meeting its own objectives instead of those of the organization as a whole.
v. It may be more expensive to operate. Because each division operates as a separate entity,
it also needs its own resources, as sharing resources among divisions may not always be
practical. This can result in a duplication of resources that might not be present in a more
centralized structure.

Matrix structure: In this structure, an organisation combines functional and divisional chain of
command in a grid so that there are two command structures-both vertical and horizontal. The
functional structure usually doesn’t change, i.e. Finance, Marketing, Production departments, etc.
headed by deputy CEOs and remain as part of organisation functions. The divisional structure may
vary, e.g. by product, brand, customer, geographical region, etc. This structure violates the
principle of unity of command since have two bosses.
Matrix structure (e.g. Toyota manufacturing firm)
CEO/MD

Deputy MD Deputy MD Deputy MD

Marketing Production Finance

Project Manager,
Prado

Project Manager,
Land cruiser

Project Manager,
Corolla

Subordinate reports to both

Deputy MD (Marketing) and
to the Project Manager (Prado)

Advantages
i. They optimize the use of resources and expertise.
ii. They improve communication efficiency, flexibility, and innovation compared to purely
functional or products designs.
iii. They focus technical specialists on the goals of serving clients and creating marketable
products.

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 iv. Resources can be used efficiently, since experts and equipment can be shared across
projects.
v. Information flows both across and up through the organization.
vi. Employees are in contact with many people, which helps with sharing of information and
can speed the decision process.
Disadvantages
i. They require more coordination than functional or divisional designs.
ii. They tend to generate conflicts, organizational politics and stress.
iii. Stress is common in poorly managed matrix structures because employees must cope with
two managers with diverse needs and expectation
iv. Violation of unity of command (one worker, one boss) resulting in confusion
v. Costly structure: Matrix organizational structure involves huge overhead cost. There will
be much paper work and information collection that involves heavy cost.
vi. Difficult to balance: There will be two types of specialists functional and project specialist.
And, to make a balance between these two specialist is a difficult task. Therefore, high
level of interpersonal skill or specialists is required to balance these two types of experts
and to maintain balance between project authority and functional authority is also difficult
task.
vii. Lack of effective coordination: In a matrix organization there will be a problem of
maintaining effective coordination among project workers, functional workers and among
the workers from various functional areas.

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