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Traditional organizational structure is a strategy for organizing a business or other entity in what is known as a hierarchy or a top-down structure. With this approach, the processes of task allocation and management focus on a vertical structure that strictly defines a chain of command. A bureaucracy of this type allows relatively little open communication between different levels of employees, with those who are assigned to work within departments normally being assigned jobs and told what to do, without much of an ability to have input into policies and procedures.
Hierarchical structures of this type have been common in a number of different organizations, ranging from companies 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 that include a lack of checks and balances. The creativity of the organization may also be somewhat limited in this type of business structure, since 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 ultimate responsibility and decision making at the topmost layer 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 the 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 chief executive officer chooses to delegate certain responsibilities to a small group of individuals, usually managers or supervisors. While retaining the ability to reverse any decisions made by the staff, the owner will normally focus on issues that are considered of higher importance while the staff managers handle issues that are essential but considered of lesser importance.
Over time, alternatives to the traditional organizational structure have become common. While owners still retain ultimate control of an business, efforts to alter the structure so that employees have more input into how decisions are made have proven successful in many situations. The delegation of more responsibilities to competent employees, establishing committees and other processes that allow for easy communication between all levels of company organization — even cross training so employees are more versatile — can also add new elements of creativity and productivity to an organization. As time goes on, additional alternatives to traditional organizational structure are likely to be developed, providing business owners with an expanding array of options for structuring a company organization.
Organizational structure can be a source of competitive advantage for a company. Many have used non-traditional structures to beat competitors. However, the older and bigger companies are still hierarchical and vertical in nature.