Types of Organizational Structures Used in Business

Types of Organizational Structures

There are various responses to the challenge and frequently asked question:

“What is the best type of organizational structure for my business?”

Certain people might say it is using a useful vision, other people might claim it is marketing the products and services which is very popular, others may see another perspective of being the main driver of the organization structure…

In the end, it is the organizational structure which enables you to establish good results and achieve your organizational goals.

A good organizational structure can be considered process employed to establish the structure in a corporation. This recognizes every job, the work as well as exactly where this job position reports to within your company. The structure is created to generate how a company functions to implement the objectives.

There are many different types of organizational structures. As one example, conventional structure, the actual divisional system, a matrix structure and then the flat structure. Every organizational structure incorporates various pros and cons and should simply work with businesses or companies in some cases and in specific areas within their process.

Inadequate organizational structure leads to confusing messages throughout functions, too little co-ordination between capabilities, failing to express suggestions as well as sluggish making decisions will deliver professionals pointless difficulty, tension and turmoil.

Eventually, it is necessary to get your organizational structure right to achieve success.

Main Types of Organizational Structures:

Functional Organizational Structure

A functional structure is reliant upon a business to be split in small teams having certain jobs or functions. To give an example, a small business can have a team getting work done in IT, an additional with selling and yet another within finances.

 

Functional Organizational Structure Example

 

Every team provides a supervisor or manager that reports to a management higher level within the structure that might manage several divisions. One case in point is manager of advertising that is supervising advertising and marketing team and reports to VP who might be in control of a marketing and advertising, finances along with IT departments.

The personnel are categorized by set of skills and work, enabling these to concentrate the group efforts in performing the functions as the team.

One of many issues this specific structure features is a shortage of cross functional communications, with many problems going on on the managing levels between divisions. To provide an example, a team working together with yet another on assignment might have different objectives or information for the certain work that may bring on problems in time.

Furthermore, having teams combined by work functionality, there is the likelihood personnel could create limited perspective — viewing the organization only through eyes of a single functionality and purpose. This might work in some cases against the overall goals and priorities of the organization.

Divisional Organizational Structure

Bigger businesses which function throughout a number of horizontal goals often work with divisional organizational structure.

This particular structure enables great deal more independence between teams throughout the company. An example of this is organization such as GE which has different divisions which includes aircraft, transport, power, electronics as well as alternative energy, to name a few.

 

Divisional Organizational Structure Example

 

Within this kind of structure, every department basically functions like its business by itself, handling its assets plus deciding how much cash it spends in specific jobs or pieces of the department.

Furthermore, in this framework, departments may be designed based on location, region or country, with organization for example having departments in United States, European countries, Africa, Asian countries and so on.

This form of design provides higher mobility to the big organization with lots of departments, enabling every to run like its business having a small number of individuals reporting directly to the CEO or top management. Instead than having all of the plans authorized at a top level, most concerns may be clarified within the division level.

The disadvantage to this form of organizational structure tends to be that by specializing in departments, personnel operating within the exact same functionality in a variety of departments may perhaps be incapable to connect properly among departments. This specific structure at the same time brings problems through procedures as well as could have consequences of not leveraging the overall resources, knowledge and assets.

Matrix Organizational Structure

The hybrid structure or matrix structure is combination of functional organizational structure and project structure.

Within the matrix structure, personnel could report back to a couple of or even more managers based on scenario or assignment.

As for instance, within standard functioning conditions, the industrial engineer at big industrial company might work with a manager, yet a whole new assignment could develop in which this know-how is required. For length of the assignment, the staff member also will report back to this project manager and his/her supervisor for any additional day-to-day responsibilities.

 

Matrix Organizational Structure Example

 

A matrix structure can be demanding since it may be challenging reporting to several managers and understanding precisely what to convey for them for different projects. That is the reason why it’s actually absolutely essential for workers to recognize their particular jobs, assignments and goals very clearly.

Benefits of the structure tends to be that personnel can easily discuss the know-how across various functioning departments, enabling improved communications and knowing of every function. By functioning throughout activities, employees may expand the abilities as well as know-how, resulting in development within the organization.

Having said that, reporting to several supervisors could add misunderstandings and issue among supervisors around precisely what would be reported. Workers at the same time can get lost relating to their tasks and roles.

Flat Organizational Structure

As the preceding types of organizational structures could work in certain businesses, an additional organizational structure may possibly be superior when it comes to startups and other small businesses. More and more companies try to have a flat structure. This cuts the red tape in any business, makes the business more efficient and responsive to customers’ needs.

Regardless of the type of structure you are using always pay attention to ways to make your current structure more flat and more responsive….

Types of Organizational Structures Used in Business