Types of Traditional Organizational Designs: Simple, Functional & Divisional Designs

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  • 0:07 Organizational Design
  • 1:51 Simple Design
  • 3:07 Functional
  • 5:02 Divisional
  • 6:23 Lesson Summary
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Lesson Transcript
Instructor: Sherri Hartzell

Sherri has taught college business and communication courses. She also holds three degrees including communications, business, educational leadership/technology.

Choosing an organizational structure is an ongoing design process. In this lesson, you will learn to identify types of traditional organizational designs, including simple, functional and divisional designs.

Organizational Design

In another lesson, we discussed the fact that organizational structure refers to the type of framework that a company uses to distinguish power and authority, roles and responsibilities and the manner in which information flows through the organization. Once an organization has chosen its structure, it can move on to selecting the design. Organizational design is the process by which managers assess the tasks, functions and goals of the business, allowing them to make decisions about how to group people together to best and most efficiently achieve their objectives.

The six most common approaches to organizational design include simple, functional, divisional, matrix, team and network designs. A company will choose their organizational structure based on their needs. The organizational design will reflect a structure that aligns to the business at any given moment in time. Essentially, because organizations are living, breathing entities, it is never assumed that the best organizational structure will be chosen on the first attempt. Rather, the best structure is achieved through strategic evaluation and reevaluation of tasks and employee groupings. Managers will rearrange these tasks and groupings into workable combinations aimed at fully realizing organizational objectives.

To give you a better understanding of the organizational design concept, this lesson will define and discuss the first three designs, also known as traditional organizational designs, which include simple, functional and divisional design structures. To learn more about other design structures, make sure that you also watch the lesson on contemporary organizational designs, which include matrix, team and network designs.

Simple Design Structure

The first type of traditional design is called simple structure. Simple structure is a basic organizational design structure with low departmentalization, little work specialization, wide spans of control, centralized authority (typically the owner has most of the power) and little formalization or rules that govern operation. Organizations that use a simple structure are typically flat, in that there are not many hierarchical levels such as in what you see on the screen now.

Hierarchal levels

This diagram of a simple structure depicts a small start-up business, in which the simple structure is very common, with few employees and an owner who manages and controls the majority of the business functions. Because there are a limited number of employees in this landscaping company, it is necessary for each employee to perform multiple functions in various areas of the organization, creating little, if any, departmentalization. Policies, procedures and rules are limited in the simple structure due to the wide span of control and limited work specialization. Of course, once the landscaping company expands, it will more than likely outgrow its simple design structure and move into a more complex structure.

simple design structure

Functional Design

The next type of traditional design an organization can utilize is the functional structure. The functional structure focuses on practical specialization whereby similar or related occupational specialties are grouped together (also referred to as departmentalization). Departmentalization groups workers with similar job roles into work units based on a product or service, activities performed by employees, level of skill or expertise, types of customers or resources. Explicit job titles, chain of command, reporting relationships and a well-defined channel of communication exist within these specialized work units in order to maximize their functionality.

Functional design structure

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