There are three common types of organizational structures within businesses: functional, divisional, and matrix. Each type of structure has its own advantages and disadvantages that business owners must consider when determining the best way to organize their company. The type of organizational structure that a business chooses should be based on the company’s size, industry, and goals.
What is an organizational structure?
An organizational structure, also known as an “organogram structure” or “org structure,” describes the roles, responsibilities, and lines of command that exist within an organization to achieve its business objectives.
Organizational structures establish clear departmental relationships so that employees know who to report to and what their goals are. This helps employees be more focused and productive. Businesses frequently produce “org charts” to illustrate the structure of reporting and accountability within the organization. ”.
10 types of organizational structures
Here are 10 popular organizational structure types for businesses, along with advantages and disadvantages for each:
1. Hierarchical structure
In an organizational structure with a hierarchy, workers are grouped and given a supervisor. It is the most common type of organizational structure. Employees may be categorized according to their job title or function, location, or the kind of goods or services they offer. Because there are multiple levels of authority and the highest level of leadership is at the top, their direct subordinates are below them, and so on, this structure is frequently pictured as a pyramid.
Benefits of this type of structure include:
Potential disadvantages include:
2. Functional structure
An organization is divided into groups according to roles, responsibilities, or specialties in a functional structure. For instance, a company might have departments for marketing, finance, and sales, each of which is supervised by a manager who also has a supervisor who is in charge of several departments. A functional structure can be advantageous because departments can feel confident that their staff members have the knowledge and abilities necessary to support their objectives.
Benefits of this type of structure include:
Potential disadvantages include:
3. Matrix structure
Benefits of this type of structure include:
Potential disadvantages include:
4. Flat structure
Most middle management levels are eliminated in a flat organizational structure, which reduces the distance between staff members and upper management. Without the usual hierarchical pressures or supervision, employees are given more responsibility and decision-making authority and are frequently more productive. Due to the fact that they frequently have fewer employees and projects to manage, small businesses and early-stage start-ups tend to use this type of structure. It may also be referred to as a “horizontal structure. ”.
Benefits of this type of structure include:
Potential disadvantages include:
5. Divisional structure
Organizations are divided into divisions based on particular goods, services, or regions in a divisional structure. Because of this, large corporations that operate across a wide geographic area or own separate, smaller corporations are more likely to use this structure. Each division has its own executive leadership, departments and resources. A large software company, for instance, might divide its divisions into those focused on different product categories, such as cloud software, corporate software, and personal computing software.
Benefits of this structure include:
Potential disadvantages include:
6. Network structure
To deliver their goods or services in a network structure, managers at an organization will coordinate relationships with both internal and external parties. For instance, a retailer may only focus on selling clothing items, but in collaboration with other businesses, it may outsource the design and production of those items. This organizational structure prioritizes relationships and open communication over hierarchy.
Benefits of this type of structure include:
Potential disadvantages include:
7. Line structure
In a line structure, power is distributed evenly throughout the organization from top to bottom, and no specialized or auxiliary services are provided. It is one of the simplest types of organizational structure. The organization is typically divided into departments, each of which has a manager in charge of its staff and is under the direction and control of the general manager. The departments work independently to support the organizations primary goal.
Benefits of this type of structure include:
Potential disadvantages include:
8. Team-based structure
Employees are organized into skill-based teams in a team-based organizational structure to work on specific tasks while pursuing a common objective. This is frequently a flexible structure that permits staff members to switch between teams as they finish projects. This structure focuses on problem-solving and employee cooperation.
Benefits of this type of structure include:
Potential disadvantages include:
9. Circular structure
The inner rings of a circle represent higher-level employees, while the outer rings represent lower-level employees in a circular organizational structure. Leaders, seated in the middle of the organization, give directives externally rather than down the chain of command. This structure eliminates the strict division between departments and looks at the bigger picture with all departments being a part of the same whole, in contrast to many other structure types where different departments work independently with individual goals.
Benefits of this type of structure include:
Potential disadvantages include:
10. Process-based structure
In an organization with a process-based structure, the tasks that employees perform and how they interact with one another are designed around the organization’s processes. The services are outlined in this structure from left to right rather than from top to bottom.
The structure’s executive is in charge of the departments below, which stand in for the various processes, but no process can begin until the one before it has finished. Additionally, each division will have its own management and team working to complete its responsibilities so that the company can move on to the following job and eventually accomplish its main objective, such as selling a product to customers.
Benefits of this type of structure include:
Potential disadvantages include:
Types of Organizational Structure in management
FAQ
What are the 4 types of organizational structures?
Functional, divisional, flatarchical, and matrix structures are the four types of organizational structures.
What are the 8 types of organizational structure?
- Hierarchical org structure.
- Functional org structure.
- Horizontal or flat org structure.
- Divisional org structures (market-based, product-based, geographic)
- Matrix org structure.
- Team-based org structure.
- Network org structure.
What are the 5 types of organizational structures?
- Functional structure. …
- Line structure. …
- Line and staff structure. …
- Matrix structure. …
- Divisional structure. …
- Organic structure. …
- Virtual structure. …
- Project structure.
