Traditional organizational structures use a vertical hierarchy with limited communication between employees. There are two models: line, with a rigid chain of command, and line and staff, with delegated responsibilities. Alternatives, such as employee input and cross-training, can increase creativity and productivity.
Traditional organizational structure is a strategy for organizing a business or other entity into what is known as a hierarchy or top-down structure. With this approach, the asset allocation and management processes focus on a vertical structure that strictly defines a chain of command. Such a bureaucracy allows for relatively little open communication between different levels of employees, those assigned to work within departments are normally given jobs and told what to do, without much ability to have input in policies and procedures.
Hierarchical structures of this type have been common in a number of different organizations, ranging from corporations and non-profit organizations to religious organizations. While a traditional organizational structure can often be effective when highly competent individuals are placed in positions of authority, there are also potential pitfalls with this model which include a lack of checks and balances. Organizational creativity can also be somewhat limited in this type of business structure, as the ideas all come from a relatively small number of individuals who are actually involved in the overall operation.
There are two basic models for this type of organizational structure. One is known as a line approach. This strategy is characterized by a very well-defined and rigid chain of command that places maximum accountability and decision-making at the top level of the structure. In smaller business operations, this strategy may develop out of necessity, since the business may involve a single owner and no more than a few employees. This model can become increasingly problematic as the organization grows and the ability of one or two people to have a strong hands-on approach to the operation becomes less and less efficient.
A slightly different approach to traditional organizational structure is known as the line and staff method. Here, there is still a well-defined chain of command, but the owner or CEO chooses to delegate certain responsibilities to a small group of people, usually managers or supervisors. While retaining the ability to overrule any decisions made by staff, the owner will normally focus on matters that are considered of greater importance while staff managers handle matters that are essential but considered of minor importance.
Over time, alternatives to the traditional organizational structure have become common. While owners still retain ultimate control of a business, efforts to change the structure so employees have more input into how decisions are made have proven effective in many situations. Delegation of greater responsibilities to competent employees, the creation of committees and other processes that allow for easy communication between all levels of the company organization – even cross-training to make employees more versatile – can also add new elements of creativity and productivity to an organization. Over time, more alternatives to the traditional organizational structure are likely to be developed, providing entrepreneurs with an expanding range of options for structuring a business organization.
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