haya.Learning made clear
Unit III · Organizing: structure, human resources, groups and teams
9 min readConcept sheetOften a 5- or 10-mark answer

Traditional and contemporary organizational designs

Traditional designs are simple, functional and divisional. Contemporary designs such as team, matrix, project, virtual, network and learning organizations add flexibility.

TraditionalSimple, functional, divisional
ContemporaryTeam, matrix, project, boundaryless (virtual, network), learning
Matrix weaknessTwo bosses break unity of command
Learning organizationContinuously learns, adapts and changes

Traditional organizational designs

DesignMeaningStrengthWeakness
SimpleLittle departmentalization, wide spans, authority with one person, little formalizationFast, flexible, cheap, clear accountabilityDoes not suit growth; risky to depend on one person
FunctionalGroups similar or related specialities together: production, marketing, finance, HRCost savings from specialization; experts work togetherManagers chase functional goals and lose sight of the whole
DivisionalSeparate, semi-autonomous units by product, region or customerFocus on results; each division head is accountableActivities and resources are duplicated, raising costs

Contemporary organizational designs

DesignMeaningStrengthWeakness
Team structureThe whole organization is made up of work teamsEmployees involved and empowered; fewer barriersNo clear chain of command; pressure on teams
Matrix structureSpecialists from functional departments work on projects led by project managersFlexible; responds fast to changeTwo bosses break unity of command; conflict
Project structureEmployees work continuously on projects, moving from one to the nextFlexible and quick to respondComplex to plan; conflict over people
Virtual organizationA small core of full-time staff plus outside specialists hired as neededHighly flexible; low overheadsLess control; communication problems
Network organizationOwn staff do the core work; outside suppliers provide other parts or processesFocus on what the firm does bestDepends on outsiders; less control
Learning organizationHas developed the capacity to keep learning, adapting and changingShared knowledge; lasting competitive advantagePeople may hoard knowledge; experienced staff may leave

Contemporary factors affecting organizational structure

  • Keeping a scattered workforce connected through mobile and cloud technology.
  • Global differences: culture affects how much hierarchy and formality staff accept.
  • Building a learning organization: shared vision, collaboration and open information.
  • Flexible work arrangements: telecommuting, compressed workweeks, flextime and job sharing.
  • A growing contingent workforce of temporary, part-time and freelance (gig) workers.
  • Digital platforms and automation that remove layers of middle management.

Choosing a design

No single design is best. A small family business usually starts with a simple structure, becomes functional as it grows, and a diversified group becomes divisional. When the environment changes fast and innovation matters, managers add team, project or matrix features, or outsource parts of the work through a network design. The choice follows the contingency factors: strategy, size, technology and environmental uncertainty.

In Sri Lankan business

Hayleys groups its businesses into separate sectors, such as hand protection (gloves), purification (activated carbon), plantations, agriculture, and transportation and logistics. This works like a divisional design. Inside a business, work is usually grouped functionally: production, sales and finance.

Exam angle

Short answer: “What is a matrix structure?” A design that assigns specialists from functional departments to projects led by project managers, so employees have two bosses.

Structured question: “Distinguish functional and divisional structures.” Functional groups similar specialities for savings from specialization but weak coordination; divisional creates semi-autonomous units by product, region or customer for results focus, at the cost of duplication.

Essay: “Explain traditional and contemporary organizational designs with their strengths and weaknesses.” Simple, functional and divisional; then team, matrix, project, boundaryless (virtual, network) and learning organization, each with one strength, one weakness and a Sri Lankan example.

Remember it

Traditional: 'Sri Food Delivery' = Simple, Functional, Divisional. Contemporary: 'Teams Make Projects Very New; Learn' = Team, Matrix, Project, Virtual, Network, Learning.