An organizational structure is a set of rules, roles, responsibilities, and other procedures that outline how activities are directed in order to achieve a company’s goals. Organizational structures vary based on the needs of individual organizations and their respective industries. Senior leaders should consider a number of factors before making the decision on which type of structure will best meet their business’s needs.
Hierarchical: This organizational structure has a clear chain of command, with each employee assigned a specific job function and responsibilities. Typically, this structure involves employees reporting to directors, who report to vice presidents and then to C-level executives.
Functional: This type of structure divides the company into functional work areas, such as marketing, customer service, sales, and HR departments. Each department is usually led by a manager who oversees all of the employees in that department.
Divisional: This type of structure is common in large companies, where employees work in teams whose jobs are structured around different areas of expertise. The team members share skills and frequently collaborate on projects. The team leader is typically a manager and the team includes employees who may not be managers.
Flat: This is a newer organizational structure that flattens the hierarchy and the chain of command and gives almost every employee receiving a high level of personal agency. This allows for faster collaboration and communication across teams.
Matrix: This is another newer organizational structure, which is used by many startups. Its goal is to give a company as much flexibility and autonomy as possible without having to rely on a core group of people to make decisions or regularly approve changes in the company’s direction.
A team-based approach is similar to a divisional or functional structure, but it’s focused on close-knit groups of people that are tasked with serving particular goals and functions. This is typically a good choice for teams that need to be highly organized and collaborative but want a bit of room to maneuver.
Network: This organizational structure is useful for companies that outsource some of their services to independent freelancers. This type of structure often helps to reduce costs, as the team doesn’t have to pay for a full-time administrator or office space to manage the business’s information and communication technology.
Decentralized: This type of structure gives employees a lot of autonomy and freedom to do their jobs. It also encourages creativity and innovation.
This type of structure is ideal for a company that’s growing rapidly and wants to get their products out to as many customers as possible quickly. It’s also a good option for a company that needs to streamline their processes and operations.
An organizational structure is an essential part of a business’s success, as it outlines how certain activities are directed in order to achieve a given purpose. It can be the key to a successful business and its employees’ satisfaction with their job.