To put it simply, you're constantly searching for a vehicle that can safely transport you (as well as your passengers) from point A to point B.
Beyond that, there are other options to think about. Manual or automatic? Two or four wheels? GPS built-in? Leather inside? Capacitor flux? (Of course, only if you're traveling through time.)
The possibilities available to you in the world of organizational structures include to name a few, the chain of command (long or short? ), the span of control (broad or narrow? ), and centralization (centralized or decentralized decision-making?).
The organizational hierarchy of a corporation is made up of its teams, managers, leaders, and individual contributors. The tasks that employees perform, to whom they report, and how decisions are made are all governed by organizational structures. An organizational chart should at the very least list the titles of the personnel and the fundamental connections between the teams.
Organizational structures can be tailored to fit the needs of companies in certain sizes and industries by using functions, markets, products, regions, or processes as their guides.
What function does an organizational structure serve? Do you even need one as a business leader? An organizational structure can be beneficial for new hires as your business grows since it helps them understand who is in charge of what tasks.
Then, by modifying your organizational structure diagrams, you can see how the workflows might look if you needed to pivot or change your leadership.
Simply described, an organizational structure is similar to a map that shows how your business operates and how its roles are distributed.
Four Fundamental Organizational Structure Components
According to your company's demands, you can add additional building blocks or components to an organizational structure, which normally comprises four basic components.
No matter what, make sure to incorporate the following fundamental components:
Sequence Of Command
You assign duties and approve work according to your chain of command. You can specify how many "rungs of the ladder" a specific department or business line should have using an organizational structure. Who instructs people to do what, in other words? And how are things transmitted up and down that ladder—issues, requests, and proposals?
One of the most crucial components of any organizational structure is departmentation. It enables you to comprehend how each department interacts with the others by grouping your teams according to similar tasks and duties.
Period Of Control
Your span of control can be used to denote two different things: the people that a manager is in charge of managing, and the tasks that each department is in charge of handling. In addition to preventing double work from your various teams, having a clear span of control makes it easier to spot structural flaws.
Centralization refers to the location of decision-making. After determining your chain of command, you must decide who and which departments are involved in each decision. A corporation may tilt toward centralization, where only one or two organizations make the final decisions, or decentralization, where the team or department in the responsibility of implementing the decision makes the final decisions.
It's possible that you won't need an organizational chart right away, but the more staff members and items you create, the more difficult it will be to run your business without one.
We'll look at how to mix those elements to create various organizational systems below. We'll also discuss the advantages and disadvantages of several structure types so you can decide which is ideal for your business, division, or team. Let's start now.
Organizational Structures: Mechanistic Vs. Organic
There is a continuum of organizational systems, with "mechanistic" at one extreme and "organic" at the other.
Look at the illustration below. As you can undoubtedly guess, the organic structure indicates a more collaborative, flexible approach, and the mechanistic structure symbolizes the conventional, top-down approach to organizational structure.
Mechanistic structures, also known as bureaucratic structures, are characterized by high levels of formalization, specialization, and centralization, as well as by having a limited range of control. In terms of what particular departments are expected to do for the corporation, they are likewise extremely rigorous.
The decisions made by the company are governed by precise standards and norms under this organizational structure, which is significantly more rigid than an organic structure. While this model does make employees more responsible for their job, it can also limit the organization's ability to be creative and adapt to sudden changes in the market.
As intimidating and rigid as the mechanical structure may seem, it always makes the chain of command apparent, no matter how long or short it may be. A growing business must ensure that everyone (and every team) understands what is expected of them. In the beginning, teams that work together with other teams as needed may help a business get off the ground, but maintaining that expansion — with more people and projects to manage — will eventually demand some policymaking. Keep mechanical structure in your back pocket, in other words, because you never know when you'll need it.
The characteristics of organic structures, usually referred to as "flat" structures, include decentralization, low specialization, and loose departmentalization. What does all that mean? In this model, rather than focusing on what the team intended to achieve, many teams could report to a single person and take on projects based on their importance and capabilities.
As you can undoubtedly guess, this organizational structure has a rather ad hoc approach to meeting business objectives and is considerably less formal than mechanistic. This can occasionally make it challenging to understand the chain of command, no matter how lengthy or short it is. And as a result, leaders may approve some projects more rapidly while creating confusion in the assignment of tasks.
Nevertheless, a company trying to navigate a quickly changing sector or just trying to get its footing after a challenging quarter might benefit greatly from the flexibility that an organic structure gives. Additionally, it gives employees the freedom to experiment and grow as professionals, enhancing the workforce's long-term effectiveness. In conclusion? Since they are merely attempting to establish their brand and get their business off the ground, startups are frequently ideal candidates for organic structure.
The organizational structure of the team will differ depending on the size of the company and its objectives. Establishing a distinct organizational structure has a universal advantage despite the fact that each form has advantages and drawbacks of its own. It aids workers in comprehending their position within an organization, allowing them to manage expectations and objectives.
To be successful, a company needs to have an established organizational structure. Nine of the common organizational structure types employed by businesses are covered in the following paragraphs.
1. Organizational Structure That Is Functional
The functional structure, one of the most prevalent forms of organizational structure, divides an organization into departments based on typical job responsibilities.
For example, a company with a functional organizational structure would place all of the marketers in one department, all of the salesmen in another department, and all of the customer service representatives in a third department.
2. A Divisional Structure Based On Products
Each division within a divisional organizational structure may have its own marketing team, sales team, etc. A divisional organizational structure is made up of numerous, smaller functional structures. In this scenario—a divisional structure focused on products—each division within the company is devoted to a specific product line.
For businesses that offer a variety of items, this structure is great since it helps speed up the process of product development. This enables small enterprises to quickly launch new products on the market.
3. A divisional Structure Based On Markets
The market-based organizational structure is another variant of the divisional organizational structure, in which an organization's divisions are based on markets, industries, or client kinds.
The market-based structure is great for a company that offers goods or services that are exclusive to certain market niches, and it works especially well if the company has an in-depth understanding of such niches. Additionally, this organizational structure keeps the company constantly informed of changes in demand among its many consumer segments.
4. The Structure Of Geographical Divisions
As you might have guessed, the geographical organizational structure bases its divisions on geography. A geographical structure can be divided into territories, regions, or districts, for example.
The ideal candidates for this structure are businesses that require proximity to suppliers and/or clients (for on-site assistance or delivery purposes, for example). Additionally, it brings together a variety of business specialties, enabling each geographical division to make decisions from a wider range of perspectives.
5. Process-Based Organization
Organizational structures based on processes are created around the end-to-end flow of various processes, including "Research & Development," "Customer Acquisition," and "Order Fulfillment." A process-based structure, as opposed to one that is merely functional, takes into account both the activities that personnel carry out and how those various activities relate to one another.
You must read the following diagram from left to right in order to completely comprehend it: You can't begin the customer acquisition process until you have a finished product to sell. In a similar vein, order fulfillment can't begin until clients have been found and product orders need to be filled.
Process-based organizational structures are excellent for enhancing a company's speed and efficiency, and since they are so versatile, they are best suited for businesses in fast-changing industries.
6. Matrix Organization
A matrix organizational structure deviates from the conventional, hierarchical model, in contrast to the other structures we've just looked at. Instead, there are two levels of reporting for each employee (indicated by the green boxes). A functional reporting line (shown in blue) and a product-based reporting line (shown in yellow) are both common.
In an organizational chart with a matrix structure, solid lines denote strong direct reporting links, whereas dotted lines denote secondary or weaker relationships. Functional reporting clearly takes precedence over product-based reporting in our example below.
Because there are two lines of command instead of simply one, the matrix organization can offer flexibility as well as more balanced decision-making. These business lines may not typically be able to exchange resources or interact openly with one another, but having a single project overseen by many business lines gives them the chance to do so.
7. Circular Design
The circular organizational structure nevertheless relies on hierarchy, with higher-level employees occupying the inner rings of the circle and lower-level employees occupying the outer rings, despite the fact that it may appear dramatically different from the other organizational models highlighted in this area.
However, in a circular organization, the executives or leaders are not viewed as sitting at the top and giving orders to subordinates. Instead, they serve as the organization's hub and project their vision outward.
A circular organizational structure is intended, from an ideological standpoint, to encourage collaboration and the free flow of information among various divisions of the company. The circular structure presents all divisions as being a part of the same total, in contrast to the traditional arrangement which shows various departments or divisions as occupying separate, semi-autonomous branches.
8. Flat Design
While a more conventional organizational structure might resemble a pyramid, with several tiers of supervisors, managers, and directors separating staff from leadership, the flat structure restricts the levels of management such that any member of staff is only a short distance away from that position. Additionally, it might not necessarily take the shape of a pyramid or even another shape. It's also a type of the "Organic Structure" we mentioned earlier, as we previously stated.
It is also believed that workers can be more productive in an environment with fewer pressures associated with hierarchy. This structure is perhaps one of the most comprehensive. This organizational structure may also give employees the impression that the managers they do have are more like team members or equals than frightening superiors.
9. Network Organization
When two businesses collaborate to pool resources, or if your business has many sites with distinct activities and leadership, a network structure is frequently developed. If a large portion of your employees or services is outsourced to independent contractors or various other organizations, you might also utilize this structure to describe your company workflows.
The structure resembles the divisional structure depicted above very closely. However, it might feature outsourced services or satellite locations outside of the office in place of offices.
This is an excellent approach to demonstrate to staff members or stakeholders how outsourcing of off-site activities works if your business doesn't do everything under one roof. For instance, if a worker wants assistance from a web developer for a blogging project and the company's web developers are outsourced, they could use this kind of chart to determine which office to contact or who to speak with when they are not at their place of employment.
Using Organizational Structures To Navigate
A successful team relies on its organizational frameworks. When given a clear explanation of their position within an organization, employees can function comfortably, confidently, and effectively.
It's vital to keep in mind that these structures are not universal because the sorts of structures will vary from business to business. There's a probability that one of them will work for your company even though not every variety will. The actual work may then start when you use this guide to establish which organizational structure is best for you.