Advantages And Disadvantages Of Different Organizational Types

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Bureaucratic organization

The bureaucratic organization has established strong bureaucratic process and procedures and sticks to them. Many not all government or utility organizations fit this model. Bureaucratic organization is usually boring and unchallenging

Principles, such as universalism that can produce advantages for service users can also create disadvantages. Some of the potentially negative consequences of bureaucratic organization for the client include depersonalization, ritualism-inflexibility, and compartmentalization.


Actual employees of bureaucratic agencies may only approximate the stereotypic bureaucratic in the brown suit who never smiles and rarely looks up from his paperwork, but clients commonly tell stories about staff who do not seem to care about them and about being treated like a "number". A commonly cited example of the most extreme case of Depersonalization is that of Nazi Germany, where bureaucrats who sent Jews and others to deaths ceased seeing their victims as human beings

Depersonalization also occurs for reasons other than bureaucratic organization, with perhaps the primary one being the power imbalance between service user and service providers. Clients of human service agencies tend to be of lower socioeconomic status than the professional who serve them; further, they are likely to come from the least powerful segments of the society. As a result, their personal identities may be lost in blanket condemnation or labeling


Although the written rules that govern a bureaucratic organization can ensure fair and efficient treatment, they can have opposite effect as well. Sometimes the rules take on a life of their own rather than being seen as they were intended- as means to an end-resulting in ritualism. Ritualism occurs most commonly when universalism is practiced regardless of the exceptional needs of the individualism.

Thus, bureaucratic rules designed for the benefit of most people can disadvantage individuals with particularistic needs. This problem is especially acute in human services, because potential clients are often people in serious need of help. Because of funding limitations, most agencies that provide non-entitlement services have waiting lists. Sometimes an effort is made to use a triage process or to serve people with the greatest need first. However, determining degree of need is not always easy, and more reticent clients with great needs may wait longer than those with lesser needs who are more outspoken. Clients who are poor, who are members of racial or ethnic minority groups, may be too intimated to demand special treatment.

Rules that take on a life of their own produce "red tape". Clients are likely to see them as impediments to service even when their needs are not usual. They may question people why they must fill out so many different forms or see so many different people before they can receive the help they need. Sometimes cumbersome procedures are requires satisfying the requirements of different, uncoordinated funding sources. In such an instance, the bureaucratic efforts are compounded by the fact that more than one bureaucracy is involved both state and local government for example


Functional specificity tends to compartmentalize people and to prevent professional from seeing them in a holistic way. In lay settings, people tend to think of one another as individuals with many statuses.

Providers in a bureaucratic system are frequently faced with conflicts involving the goals of compliance and service quality. Although bureaucratic rules are intended to make service system more effective and efficient, they are typically made by bureaucrats who have little direct contact with clients

worker involved in the direct provision of services are usually not in opposition in bureaucratic hierarchy to make the rules that govern them. As a result, established procedures may not be "best practice" in the field and, in the worst cases, may actually interfere with service quality. Although change is possible, it tends to may actually interfere with service quality. Although change is possible, it tends to come slowly, because bureaucrats are trained to enforce the rules, not to change them. Bureaucratic careers are commonly built on enforcement ability, and those who "rock the boat" are not often rewarded in bureaucratic system. Further, as Haledon suggests, human service bureaucracies tend to become entrenched, because employees are likely to protect their own interests at the expense of their clients.( Fournies, Ferdinand F.1987)

Non- bureaucratic Structure

The non-bureaucratic organization may be better able to adapt to new circumstances. The diffusion of authority means that meant different individuals or units are able to experiment with new ideas and try new methods: such an organization is better situated to "let one hundred flowers bloom". As a result usual means of coping with new circumstances are more likely to be discovered. Assuming that internal communications are adequate, any such new techniques can be disseminated to the rest of the organization

Some observers have argued that non-bureaucratic organization are more innovative than centralized one, and have offered several reasons. It increases the amount of information that flows to the company from external stakeholders because it provides more points of contact between the organization and its holders because it provides more points of contact between the organization and its external environment. Access to information from outside the organization is important to innovation because it provides the company with feedback from external stakeholders, which is useful for developing products valued by the marketplace

Second, non-bureaucratic structure increases the number of people in the organization who can engage in innovative activity. Increasing the number of potential innovators is helpful because people are limited in their cognitive capacities. Their ability to think creatively is affected by the information that they have and by their past experiences. Because no two people's backgrounds or information sets are the same ,different people


Improves access to information

Enhances idea generation

Increases market orientation

Reduces financial risk to overall organization

Makes it easier to get government aid for innovation

Facilities innovation in noncore areas


Makes coordination more difficult

Leads to avoidance of radical innovation

Causes conflict with ongoing operation

Hinders strategic management of innovation

Results in underinvestment in large-scale innovation

Thirdly, non-bureaucratic organization facilitates the evaluation of new ideas. The cognitive capacity of headquarters personnel limits an organization's ability to evaluate new ideas. If too many ideas get sent up to headquarters, they stack up waiting for the headquarter staff to evaluate them. Allowing evaluation to occur directly in the units that identify the ideas, rather than requiring the ideas to evaluate at headquarters, removes the obstacle. For example, as Microsoft grew large, its centralized structure made its very slow to take advantage of innovative opportunities. Therefore, when Steve Ballmer became CEO, he divided the company into seven different divisions and gave each division and profit and loss responsibility, with the goal of speeding up decision making

Fourthly, on-bureaucratic makes R & D activities more market oriented, which increases the likelihood that innovations will be valued by customers. In centralized organizations, R & D personnel tend to receive their assignment from headquarters staff and are often isolated from the marketplace, with little or no contact with customers or their needs. Consequently, they tend to focus on developing new technology or advancing science, rather one market-oriented customer problem solving. At the same time, employees in opening units, who are close to customers and having information about their needs and preferences, often find it difficult to obtain assistance from R & D laboratories. To obtain assistance, the operating units need to make their requests through headquarters, which leads to garbled messages to R & D personnel delay in evaluation, and rejection of many requests for assistance, all of which hinder innovation

Fifthly, non-bureaucratic structure makes the organization better able to bear the financial risk of undertaking innovative activity. When innovation is decentralized, each part of the company engages in its own efforts. As a result, the financial downside of a failed effort by one unit does not affect the performance of another unit, thus providing the benefits of diversification

The non-bureaucratic structure makes it easier to obtain government aid for R & D. Many nations will financially support innovative only if that innovation occurs within its geographic boundaries. Thus, by decentralizing innovation efforts, organizations can increase the amount of financial support that can obtain from government entities and reduce the portion of the cost that they have to bear themselves

The non-bureaucratic structure facilitates innovation in areas that are different from the core operation of the company. When innovation occurs in new areas-for instance, a chemical company innovation pharmaceuticals-autonomy from the core activities of the company is useful because the routines and procedures that the company undertakes in its core activities may not be appropriate for the new business .Decentralization helps companies to develop new routines and operating procedures because it permits the physical separation between new and core operations that make it easier for new operation to be run differently. (Kirkpatrick, Donald L.1987)


Matrix Organization

The matrix principle or matrix organization may be referred to as a theoretical model which can be realized in different ways. The principles of the matrix organization are shown in the figure below with the functions logistics, production and sale and the three products 1, 2 and 3. Note that only functions that directly influence logistics, production and sale are included in the figure, while other functions such as accounting are not included.

Forms of matrix Organization

A recent article by Sy and D'Annunzio (2001) identified three matrix forms that have distinct characteristics: functional matrix, balanced matrix, and project matrix.

These three categories have become embedded in almost any discussion of matrix management and stem from its earliest theorists.

Functional Matrix

In the functional matrix, employees remain primarily attached to their functional departments. When the need arises from environmental pressures, the organization institutes procedures to help facilitate cross-functional collaboration. In a functional matrix, the project management role is limited to coordinating the efforts of the functional group. The functional managers retain the primary responsibility for the design and completion of the project objectives.

Balanced Matrix

The balanced matrix is what most people think of as the classic model.We have referred to it earlier on as the ''two-boss'' model where employees are officially members of two organization dimensions inside the organization. They retain their full membership in a functional department, but find it necessary to balance their energies between the functional department and the specialized projects to which they have been assigned. In a balanced matrix, project managers take on more of a leadership role in defining what needs to be accomplished and the time limits. The functional managers hold sway over the actual staffing of the projects and much of the resources the project team will need to accomplish their objectives.

Project Matrix

In a project matrix, employees retain an association with functional departments but have the freedom to move between their functional objectives and various projects almost at will. The organization as a whole takes on a project management overlook. Project managers acquire primary control over the direction, the project, and the resources needed to accomplish the objectives.

In a project matrix, functional managers take on a consultative or advisory role-provide support for the team responsible for carrying out plans and controls established by the project managers. While few, if any, organizations are purely one category or other, the characteristics associated with each category provide benchmarks for analyzing an organizational structure, to determine what type of matrix is most evident in the organization. Making this determination is step one in any scheme to enhance matrix management. (Conrad, Charles.1994)

The Challenges of the Matrix

One of the factors that makes it difficult for matrix processes to gain acceptance is what some theorists call hegemony. The concept of hegemony rests on the observation that most societies are hierarchical in many ways.

When we internalize the taken-for-granted assumptions of our culture, we internalize its hierarchical relationships and come to see them as normal and natural. Therefore, any attempts to break down these hierarchical arrangements are often met with heavy resistance. There are many examples of how hegemony plays out in corporate culture, but our focus here is on the role it plays in the acceptance or rejection of matrix forms. Change at this level causes those involved to question their basic assumptions.

The imposition of matrix management or any other potential structure perceived as outside of the norm forces members of the organization to ask questions about their most basic beliefs, about what is natural and normal as cultural choices, rather than absolute truths. This is difficult because it asks people to question assumptions that make their world seem stable and predictable.

Moving away from the traditional organizational forms is particularly difficult for many organizational leaders. Management style and organizational form are inextricably related. Significant changes like those associated with matrix management require major shifts in style for many executives.

The most receptive executives will be those who have good interpersonal skills, are comfortable with delegating, and enjoy the intellectual challenge of a healthy debate. They favor flatter, more participative designs and feel less threatened about sharing the decision process. On the other hand, executives who have a high need for control, are detail oriented, and demonstrate a strong ability to organize prefer hierarchical closely managed configurations.

Management style, particularly in senior managers, is difficult to change.Much of the failure to effect change lies with the corporate executives themselves. They may begin with the best intentions to design and align the workforce within a corporate strategy that will gain a competitive advantage for the company as a whole or for a SBU (strategic business unit); however, they tend to view the organization mechanistically rather than holistically. As such, they rearrange organizational components, such as reward systems or measures, and ignore the changes in other components caused by the realignment.Management experience in a traditional organization teaches people to focusmore on refining the parts rather than the whole. As we discussed earlier in this book, the ''copycat'' matrix management implementations that attempted to replicate other company's designs failed largely because the executives made the mistake of assuming that an organizational design that works well for a market leader in their industry or a similar industry will work for them as well.


An interesting study done about fourteen years ago by Lawton Burns and Douglas Wholey (1993) examines some of the reasons why organizations adopt or abandon matrix structures. While their study was rigorous and well defined, it focused exclusively on a type of matrix management called unit management, which came into use in hospitals beginning in the 1960s. Despite the limited scope of the study, many of the findings and conclusions are useful for the examination of matrix structures in other organizational types. Their objective in doing the research on the adoption of matrix management was to improve the understanding of factors favoring structures that promote product innovation and quality management.


• Organizational diversity

The complexity of the organization exerted a significant positive effect on adoption. The size of the organization and available resources seemed to have no effect on the decision to adopt matrix management.

• Interorganizational networks

Gaining knowledge that a prestigious organization had adopted the matrix form exerted significant influence on other organizations to adopt the form as well.Published reports and other general media coverage of the matrix plan also had a great influence on other organizations in the network.

• Regional and local cumulative forces

The greater the proportion of regional and local organizations adopting matrix management at a given point, the greater the probability that other organizations would adopt it as well.

What emerges from these results seems to fall into two broad categories.The first is that, as organizations become more complex, the need for approaches to information management and decision-making tends to drive the organization toward matrix structures. The second category, which appears equally critical, is that organizations tend to develop matrix structures based on a ''follow the leader'' principle. This often happens without fully examining the actual need for matrix structures or the ultimate effect, positive or negative, that these changes will have on the organization.

In the second category the examples abound. The total quality management initiatives and all of their variants are a case in point. In some cases, ''prestigious'' organizations move from influence to power by attempting to institutionalize certain approaches across the business community. In the mid to late 1990s, many companies were scrambling to get their ISO 9000 certificates in order to do business with some of their major customers.

GE and its commitment to Six Sigma have forced many companies to attempt to adopt the process. Inside GE, Six Sigma is doctrine, and anybody, who wants to either work there or interact effectively with the organization as an outsider, needs to accept and demonstrate their belief in that process


• Size of the organizations

The study suggests that smaller organizations either experienced implementation failure or adopted the program for inappropriate reasons. As such, they later discovered that the matrix program created more problems than it solved or was not necessary to begin with.

• Local network influence

In the case of abandonment, the organizations were more likely to follow the lead of other organizations abandoning the matrix in the same network, rather than following the lead of more prestigious hospitals in the network.

• Experience with the program

The abandonment of the matrix program appears to be based more on information derived from direct experience with the matrix program, such as issues of financing, turnover, staffing, and conflict between the various factions in the organization.

This study concludes with a suggestion that the findings have two important implications for team-based approaches to managing quality, which at the time of this study were being implemented in many U.S. industries.

The first implication is that the matrix adoption models suggest that organizations implement matrix management primarily for nontechnical reasons,including desires to gain prestige, to emulate larger rivals that have already adopted these forms, and to foster the appearance of quality. Secondly, the matrix abandonment discussion suggests that quality improvement and other efforts may encounter political opposition from vested interests, particularly lower level managers who are likely to resent the loss of power and seek the return to traditional hierarchical arrangements. (Khandwalla, Pradip N.1977)

Example of matrix organization

Many industrial companies decide to improve their competitiveness through intensive focus on the business processes logistics, quality and costs. Companies, which want to improve their performance, often establish a taskforce, which typically consists of staff analysts. In doing so, a conflict of interest may arise between top management's auxiliary arm and the rest of the organization. The consequence is that change projects lack support and ownership and therefore must be forced through. Several companies acknowledge that the individual entities cannot go any further in these areas without sub optimizing, and this may be recommended in preference to working according to matrix organization.

Demands on organizing

The company can continue working by establishing an LQC group (logistics, quality and costs), whose job is to initiate analyses, start projects and implement these primarily within the areas; logistics, quality and costs.

Each main area points out middle managers for the groups who have competences in logistics, quality and costs. This matrix principle structure secures the group in-depth knowledge of all pans of the organization. In this way, the matrix organization becomes the pioneer in an organizational development which aims at better competitiveness.

Each member of the group should in principle be able to spend an agreed percentage of his working time on LQC work. The LQC group should share responsibility for choosing and initiating projects and for establishing working groups for the individual subprojects. In this organizational form, a project should not be initiated without having a sponsor, i.e. (at least) one manager who has announced that he will carry the project through the company's management team. In doing so, it is possible to ensure interaction with the budget holders and make sure that projects and expenses do not suddenly get out of control.

Four challenges

To begin with, the concept of a matrix organization sounds good and right, but it is not easy to make a matrix organization work. The greatest challenges in this type of matrix organization are assessed to be:

Shared starting point

Shared image of the task


Communication and involvement

In order to ensure a shared starting point and shared understanding and responsibility, it is recommended to hold a number of meetings for the entire team. However, middle managers typically have a number of operational tasks which require their presence, and that may make it difficult to gather the entire team.

Creating a shared image of the idea of the task is another challenge. Different academic backgrounds and subcultures make it necessary to devote great efforts to teambuilding.

A third challenge is to make progress in the process. The group must become good at brainstorming and at locating significant problem areas. Also, the group must learn to transform this into concrete projects and ensure that someone heads the project. A possible pitfall is that the LQC group turns into a discussion club, which does not show results. We recommend having focus on project management and personal responsibility.

A fourth challenge is to prepare project descriptions which can be communicated to all parts of the organization, i.e. even the man on the shop floor. This is necessary as one of the LQC group's purposes is to create involvement within the organization and to maintain this involvement.

Process experience

An important process experience is that matrix identity is also linked to physical identity. Good meeting rooms facilitate permanent affiliation to the matrix. There should be places where the matrix organization can store papers etc. so that each participant feels linked to a shared culture. It is recommended to create a reasonable relationship between messages from the management about the importance of the matrix organization, and the facilities made available.

The matrix organization may clash with the company's position structure and reward system, hence with the participants' prioritization of their own working time. Therefore, all members of the matrix organization must have the opportunity to make the agreed part of their working time available to the project. A possible pitfall is that members of the group may tend to give first priority to tasks in their own department as members are only educated and rewarded according to their performance in the individual departments.


The LQC matrix can create the necessary subprojects, e.g. within logistics, quality and costs, and contribute to the company's competitiveness. The LQC matrix structure may also be a motive force to obtaining better business results and organizational development- implemented as pan of the operation.


Promotes coordination possibilities

Relieves top management of coordination tasks

Develop flexibility and quick reactions

Promotes financial use of human resources

Stimulates motivation

Importance of socializing and training of younger employees


Long break-in period

Generates many conflicts

Weakens professional identity

Large administrative cots