Types of Organizational Structure

Organizational Structure?

Organizations are set up in specific ways to accomplish different goals, and the structure of an organization can help or hinder its progress toward accomplishing these goals. Organizations large and small can achieve higher sales and other profit by properly matching their needs with the structure they use to operate.

Seven types of Organizational Structure:

1.      Functional structure

A functional structure groups employees into different departments by work specialization. Each department has a designated leader highly experienced in the job functions of each employee supervised by them. The main challenge companies with a functional structure face is the lack of coordination between departments. Employees may lose the larger company context when focusing on very specific tasks and failing to interact with members of other departments. To create a functional organizational structure that works, you’ll need to train leaders to foster collaboration across departments.

 

2.Divisional structure

A divisional structure organizes employees around a common product or geographical location. Divisional organizations have teams focused on a specific market or product line. Examples of companies applying a divisional structure are McDonald’s Corporation and Disney. These brands can’t help but split the entire organization by location to be able to adjust their strategies for audiences representing different markets

3.Matrix structure

Having multiple supervisors allows for company-wide interaction and faster project delivery. For instance, when answering to functional managers and project managers, employees have a chance to collect experience outside their team. While functional managers can help to solve job-specific issues, project managers can bring in knowledge or talents from other departments. If you go after a matrix organizational structure, you’ll need to find a way to avoid authority confusion and prevent conflicts between managers. 

4. Team structure

A team-based organizational structure creates small teams that focus on delivering one product or service. These teams are capable of solving problems and making decisions without bringing in third parties. Team members are responsible for managing their workload and have full control over the project. Team-based organizations are distinguished by little formalization and high flexibility. This structure works well for global organizations and manufacturers.

5. Network structure

Network Structure 

A network structure goes far beyond your internal company structure. It’s an act of joining the efforts of two or more organizations with the goal of delivering one product or service. Typically, a network organization outsources independent contractors or vendors to complete the work. In a network organization, teams are built from full-time employees as well as freelance specialists the way, in-house workers can spend most of their time focusing on the work they specialize in. Such an approach allows companies to adapt to market changes and obtain the missing skills fast. Working with individuals that aren’t integrated into your company culture results in lower formalization and higher agility.

6. Hierarchical structure

You must already have an idea of what a hierarchical structure is. It’s the most common organizational structure type that follows a direct chain of command. A chain of command, in this case, goes from senior management to general employees through a range of executives on the departmental and team level. The highest-level executive has the highest power over the decision-making process. On one hand, this structure enables organizations to streamline business processes, develop clear career paths, and reduce conflicts. A company hierarchy leaves no place for challenging managers’ authority, which can be good in some cases. On the other hand, a hierarchical structure slows down decision-making and may hurt employee morale.

7. Flat organization structure

In a flat organizational structure, there are few middle managers between employees and top managers. The structure requires less supervision, increases employee involvement, and boosts trust in the workplace