Learning
Zone

Management
Structures

(Relevant to Paper 2: Business Communication and Organization and Management)
Sebastian A. Bombaci, CPA

Introduction
When a new employee joins a company one of the first things they learn is the company’s management structure. This includes understanding the working relationships with their manager, subordinates and peer group. Management structures appear in every type of organization including government departments, nongovernment organizations (NGOs), charities, and even the local sporting association.
Choosing the correct management structure ensures an organization’s continued growth, content employees and profitable returns for the shareholders. Choosing the wrong structure creates tensions between employees and managers, allows inefficient work practices to flourish and reduces company profitability. In the worst case an incorrect management structure can lead to company closure. Unfortunately, many managers take it for granted that their organization’s management structure is correct, static and never requires changing. However, such assumptions are naïve and as the pace of change increases, there is a need to continually assess the suitability of a company’s management structure.
A very topical example of an inappropriate management structure is that of the American automobile manufacturers.
A combination of out-dated management structures, inefficient business processes, poor work-place relationships, and vague communications between head office and operating divisions have almost caused the collapse of these global giants.

This article explains the different types of management structures that are in use, their advantages and disadvantages, and provides examples of where to use each one. In addition, it discusses other factors that should be considered when assessing