Research into the usage of organizational structures in the Czech ...

Research into the usage of organizational structures in the Czech
companies
Ing. et Ing. Ondřej Tichý
Vysoké učení technické v Brně, Kolejní 2906/4 Brno 612 00, Česká republika, tichy@fbm.vutbr.cz
Abstract
We distinguish several types of organizational structures, which are divided according
to various criteria. For example a classification based on the division of powers. The article’s
aim is to determine which type of organizational structure is used in companies in Czech. The
results show that always depends on the number of employees in a company what kind of
organization structure it uses.
Key words
Line, functional, divisional, matrix, organizational structure
Introduction and research objectives
This article carries out a survey of usage of organizational structures in companies in
the Czech Republic. The company’s organizational structure can be defined as: efforts to
create such system of relations, actions and behavior of people in the company to satisfy their
aspirations in a common activity, whether to make a profit, or to fulfill a mission (Veber a
kol., 2009). The right organizational structure for everyday activities in a company is as
important as motivating, stimulating, and controlling management employees. One can
therefore argue that the organizational structure is a management tool to manage the
company.
The aim of this survey is therefore verify whether the Czech companies use
organizational structures, according to the theoretical assumptions. The text itself is divided
into: a theoretical part, where types of organizational structure are defined; further into the
practical part, where the results of the survey are shown; and in the end, there are summary
and conclusions.
Theoretical prerequisites
Division according to the development of organizational structures 1
Each type of organizational structure, which will be introduced in this chapter, is
based on a certain typology. The structures are characterized by basic attributes: power status,
the application of decision-making power and relationships between entities of the company,
the manner of association, according to the content of the activities of organizational units
(basic characteristics), slope, flatness, the number of hierarchical levels of management,
segmentation, time duration, degree of centralization / decentralization (additional features)
(Semorádová, 2009).
1 According to: (Donnelly, 2005).

Classification based on the division of powers 2
The organizational structures that are based on the breakdown of separation of powers,
based on where and how decision-making occurs. Within this division we distinguish three
possible variants of organizational structures: line, staff, and combined (as line staff).
Line organizational structure
The line organizational structure is one of the oldest species. A single accountable
manager characterizes it, clear, liner ties between subordinates and superiors. The chief
executive is equipped with comprehensive powers for his organizational unit.
The main advantages of the line organizational structures are: clear competencies
single links of subordination and superiority, clarity and relatively short string of information
links. The main disadvantage of this structure is its unsuitability for larger units.
This type is suitable for very small and simple companies. Within the growth of
company and increasing demands, however, the structure is unsatisfactory and must go to the
next stage, and to exercise more control steps.
Staff organizational structure
The staff organizational structure fulfills an advisory or preparatory function, in order
to ensure an informed decision for someone who has the power to decide the matter.
Important is that the staff has only advisory competence, no decision making powers. Its task
is to collect and process information, documents etc. Then presents the conclusion and
recommendations for the client request. It is assumed that the materials will be processed in
such way, that those who have competence in the matter, may accept or reject the proposal
without further studies, meetings or information retrieval.
Line staff organizational structure
The main asset of the line staff organizational structure is a functional leader who
tends to have high level of expertise. This type structure is characterized by different tasks in
the management of line and staff components. The task of the line component is complex
management of the department. A head of department shall have authority over all employees,
including the staff component. A leader creates the professional staff that is dedicated to a
specific problem (e.g. economics, foreign trade, legal issues, etc.) Staff workers are entrusted
with some managerial work, such as planning, regulating, controlling, motivating, etc.
However, the decision-making and participation in the decision happens only indirectly 3 .
But now, this structure is beginning to appear inadequate, because it seems
cumbersome, inflexible and highly assailable. The biggest problem is communication in
system, because in the vertical plane there is an overload of information channels. Therefore,
these organizational structures used primarily for specialized fields, which usually do not deal
in a company, such as enter to foreign markets.
2 According to: (Cejthamr a Dědina, 2010).
3 This type comes from the staff organizational structure. That means, what has been
written about decision-­‐making in the previous section, fits to this type as well.

Classification based on association activities 4
The pressure on clustering activities is evident everywhere. This means that a single
entity, unit, etc. will perform multiple functions simultaneously. In terms of this division can
be distinguished: functional and divisional organizational structure.
Functional organizational structure
The functional organizational structure is composed of functional elements and
functional relationships. This means that workers are grouped into departments according to
expertise, experience, qualifications or similarities task. The grouping staff by the similarity
of tasks leads to the fact that e.g. all employees with experience in foreign trade will work on
that business sector, financial analysts in the analytical section, etc. The head of such
department is usually the senior director for this function.
The functional form of an organizational structure is most commonly found in small
and medium-sized companies that are focused on a smaller range of products, which are
usually very specialized. For example, all technical staff is located in the technical section, all
financial experts in the financial section etc. This structure allows the head section to be fully
informed about results of the section.
Divisional organizational structure
The growth of company can be linked with the growing number of products or
services, respectively with the penetration on the new market. In this case, there arise situation
where a centralized way of managing may not be longer left because of increasing demands
for coordination and seeks a way to change the management system. The solution is the
transition to decentralized management system (Stein, 2002) and lower organizational units,
which in terms of extent powers are relatively independent. These units are called divisions.
Most often divisional organizational structures are used in the division of company
into: product or service, customer or group of customers or site exposure (Blažek, 2011).
Flexible organizational structure 5
In the sixties of the twentieth century there was demand for a new way of a company’s
management. The organizational structures that were described in previous chapters did not
meet the new demands for solutions to complex projects. Thus began with forming flexible
organizational structures, which, in case of necessary, may handle big projects.
Matrix organizational structures
The matrix organizational structure arises as a combination of line staff structure and
additional structure. A leader of the complementary organizational structure and selected staff
from the line staff structure will create a team, which then participates in the project. Always
concerns the single, complex projects and the very existence of the organizational form are
dependent on the time of solving the task. After a project the workers return to their original
position within the company.
The advantage for employees who participate in such project is: increasing workers‘
skills, experience from other jobs and easy to get training in the management of such projects.
Among disadvantages of this type of structure belongs fact that there are not clearly defined
powers and responsibilities. That often leads to conflicts and misunderstandings with roles in
the project. One may experience antipathy between the various members, or to fight for
4 According to: (Semorádová, 2009).
5 According to: (Veber a kol., 2009).

power, and before one establishes the role, the project is not effectively managed or solved
(Dědina a kol., 2007).
Used methods and research results
The primary research was used to obtain the results. There were generated list of
companies using the Amadeus database 6,7 . Companies were divided into four groups: smallsized
enterprises ( 250 employees, LE) 8 . Public institutions (PI) consists the fourth
group, which is a little bit specific but for completeness of this survey were also included.
The survey was conducted this way: on the official web-site page of each company in
the list was found an organizational structure. The survey’s limitation lies in the fact that it
relies on information on this page. For example, if the company had went well / wrong, it
would go over another form of structure, without updating its site; or the company can
misrepresent, either accidentally or intentionally. The last and relatively frequent situation is
that no such information is disclosed on its website 9 . But sometimes the employee contacts
can help because it deduces the organizational structure.
Table 1 gives the results of the survey. The table shows that many companies did not
disclose its organizational structure. In case of small-sized enterprises the survey was
conducted in all companies. For medium and large companies a sample of 100 companies was
chosen. The summary of rows does not give a total result or the taken sample. The reason is
that some companies’ web-site pages were not found.
Table 1: Survey’s results
Unlisted Functional Staff Line Divisional Matrix Total
SE 42 11 0 4 0 0 114
ME 45 20 0 0 6 0 405
LE 12 3 0 0 45 0 1688
PI 10 x x x x x x
Source: own
6 The Amadeus database is not generally accessible. More information can be obtained from
the distributor's website: http://bvdinfo.com/home.aspx.
7 Using this database it was found that in the Czech Republic there is a total of 436,760
active companies. It is surprising because this number is higher than ČEKIA says. It recently
published article where states that we have only 350,236 companies in the Czech Republic
(ČEKIA, 2011). However, the number of companies is so high that it can be said that this
selection is representative.
8 The division according to: (Vítková, 2009).
9 Typically, we can come across with it in companies, which do business in the
construction or forwarding sector.

Discussion
The survey showed that the theoretical assumptions were confirmed. For small-sized
enterprises the functional organizational structure dominates, followed by the line structure.
The divisional organizational structure prevails at the large-sized enterprises. In case of
medium-sized enterprises there always depends on the specific number of employees. If the
number of employees is close to fifty, the functional organizational structure prevails. If the
number of employees moves at the upper limit (under 250 employees), the divisional structure
prevails.
The public institutions are built on a pyramid base. The top person is a head of state –
a president (given by Constitution). Under him, there is a Prime Minister. Under him, the
particular minister are subordinated with theirs ministry. And this way, every public
institution is responsible to someone from government (Filip a kol., 2009). That is why the
public institution cannot be classified to any organizational structure. They use the centralized
system of management.
Conclusions
The survey showed that the small-sized enterprises use the functional organizational
structure in the Czech Republic more often than every other. This structure is based on the
fact that workers are grouped into departments according to expertise, experience,
qualifications or similarities task. The large-sized enterprises, contrary, use mainly the
divisional organizational structure, which is based on a decentralized management system. In
the medium-sized enterprises it always depends on specific number of employees. If the
number is close to fifty employees (lower limit) than the company tends to the functional
organization structure. If the number is close to 250 employees (higher limit) than the
company tends to the divisional organization structure.
References
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