Whether you’re a small start-up with five employees or a sprawling enterprise composed of thousands of people, you need to organize your company so people have clear roles and responsibilities.
A lack of structure – especially on large or cross-functional teams – can result in employees struggling to take ownership of their workflows. In this way, business outcomes are a by-product of the organizational structure of a company.
When organizations identify the right structure for them, they build a well-oiled machine that aligns employee productivity with customer needs. When there is structural misalignment, your company might struggle with disjointed workflows and misdirected product offerings.
Read on to determine what organization structure is best for your needs.
An organizational structure is a modeling system companies use to organize people, build org charts, and define how employees fit within an organization.
There are virtually hundreds of organizational structure types companies can use to lay out their businesses, but there are a few favorites that modern companies return to time and time again. Here are three of the most common organizational structures:
Functional organizational structure is the most common organization structure companies use. This popular model groups people into teams and departments based on specific functions. For example, a company’s marketing department might consist of a copywriter, a graphic designer, and an SEO strategist, all of whom fall under one marketing manager.
Simply put, these structures follow a traditional top-down approach that eventually rolls up into an overarching C-suite (think: Facebook, Amazon, Tesla).
ChartHop’s org chart visualizes your company’s functional structure by color-coordinating teams and departments.
Opposite of the functional approach, flat organizational structures often have few, or no, people in middle management. In most cases, the chain of command is literally flat: there are less managerial layers, so employees and managers all work on a level playing field.
The philosophy behind the flat organizational structure eliminates seniority and red tape to distribute responsibilities and power equally across the board, giving everyone a hand in the decision-making process. Many startups begin with a flat structure but may choose to add hierarchy into the mix as they scale.
ChartHop’s org chart enables you to visualize your company’s flat org structure.
Matrix organizational structure is a popular hybrid structure that is often used to streamline project management.
This model promotes collaboration from different teams and departments. So rather than having one manager oversee a single team, employees from different departments might report to two or three different types of managers, like a functional manager and a project manager, throughout the process.
When laid out on a physical org chart, the intersections from various teams create a grid, hence the name “matrix organizational structure.”
ChartHop’s org chart visualizes your company’s matrix structure by labeling and color-coordinating by cross-functional or project-specific teams.
There are countless different types of organizational structures a company can use to build its org chart. While the above three are the most popular, below are other organizational structures to consider.
Large enterprises especially might employ a divisional organizational structure to configure their org chart.
This structure type splits parts of the business into self-governing divisions, each with its own executive suite. This allows larger sections of the company to run with autonomy, often having their own business operations entirely, like hiring, marketing, and budgeting.
A network organizational structure involves two or more independent organizations partnering together in some capacity to do business. It’s not necessarily something that is displayed in an org chart, as it usually involves externally outsourced operations and contracted business agreements.
The philosophy behind a network organizational structure is simple: complete an assignment. Whether that’s manufacturing a product, shipping goods, or providing services, organizations that “network” with other businesses to complete tasks might employ this structure.
Team, or team-based, organizational structure refers to the business model that functions when groups of employees collaborate on teams towards a shared goal under the direction of one supervisor.
Contrary to the functional organizational structure, which groups employees based on common skills, the team organizational structure groups people depending on an explicit goal, meaning skill sets are often deliberately different.
Given the nature of this structure, it’s very dynamic and ever changing, moving people from team to team as assignments come and go. These dynamics make it advantageous for its emphasis on teamwork and collaboration, but not necessarily a feasible structure for the long-haul.
Your organization’s structure is important when planning for the future of your business. How you decide to structure your org chart depends solely on your company’s goals, its players, and how you envision its future.
When investing in an org chart software, look into options that enable you to visualize a variety of organizational structures. That way, you have a platform that can accommodate all of your organization’s changing needs.
It all boils down to this: Whatever you choose to do, do the research, communicate your decisions effectively, and be transparent with your people so they have the tools and insights needed to ensure business success.
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