What are the common types of organization structure?

The internal formal framework of a company that indicates all of the ways that the management is connected together and how the bureaucracy is conveyed, is called the organizational structure.

To put it simply, this structure is a framework that is used to be able to clarify how the hierarchy of the organization is arranged.

The organizational structure needs to be present in every company to be able to determine the jobs and their functions.

Each organization has its own structure, larger organizations need them even more.

It will prevent confusion about the different functions and departments.

Organizational structure is part of organizational architecture, visit Bizzdesign.com to find out more about that.

When an organization or business implements an organizational structure, they need to find the ones that are suited for them best. 

7 Types of Organizational Structures

The primary goal of any kind of organisational structure is to simplify procedures.

There are, however, other approaches that may be used.

Let’s explore the seven distinct organisational structures so that we can choose the most effective one for your business.

Functional structure

Departments in a functional structure are divided up according to workers’ areas of expertise.

A leader has been appointed in each area, and that person has extensive knowledge of the tasks performed by everyone under their watch.

Department heads often report up to higher-ups in a top-down (centralised) decision-making structure.

Leaders from various teams should coordinate their efforts and communicate often, whereas ordinary workers should know little about the workings of other departments.

The primary difficulty for organisations that use a functional structure is the inability to coordinate across their many divisions.

When workers devote themselves to individual projects without engaging with colleagues in other parts of the firm, they risk losing sight of the big picture.

Training leaders to encourage cross-departmental cooperation is essential to building an effective organisational structure.

Divisional structure

Workforces may be subdivided according to similar responsibilities, for as by product line or region.

Teams within a division of a company tend to specialise in one or more markets or product categories.

Examples of organisations employing a divisional structure include McDonald’s Corporation and Disney.

These companies can’t help but separate the whole company by geography to be able to modify their tactics for consumers representing diverse areas.

These subset communities operate mostly autonomously and according to a decentralised structure.

Even so, it’s probable that the heads of each division report to a central office.

It indicates that the company’s culture is set from the top, but that operational choices are left to the discretion of individual departments.

Companies of this size and scope often partition off certain functions within their organisational structure to facilitate greater management.

Matrix structure

Teams working in a matrix system are accountable to several supervisors at once. 

Having more than one manager on a project increases communication and productivity.

As an example, individuals who report to functional managers and project managers often get exposure to new areas of work and new ways of thinking.

While functional managers specialise in helping employees with their respective jobs, project managers are able to draw on the expertise of colleagues in other areas.

It’s important to find a solution to keep managers from butting heads and causing confusion if you’re going for a matrix structure.

Team structure

When an organisation is structured around teams, members of those teams work together to produce a single product or service.

They can figure things out and make judgments without calling on outside help.

Each member of the team is in charge of their own task and has complete authority over the outcome.

Team-based organisations are characterised by a lack of rigid structure and a great deal of adaptability.

Organizations and factories operating on a worldwide scale benefit from this setup.

Network structure

A network’s structure extends well beyond the hierarchies seen inside a single organisation.

Cooperation occurs when two or more entities work together to produce a single product or service.

In most cases, a network company will hire outside help from consultants or suppliers.

Teams in a network company are made up of both permanent employees and contract workers, allowing permanent staff to devote more time to their core competencies.

A strategy like this helps businesses respond rapidly to changes in the market and fill talent gaps.

When you bring in people who aren’t part of your established corporate culture, you may expect less rigidity and more flexibility.

Flat organization

When a company opts for this organizational structure, that means that the middle management in the company has been partly or completely eradicated.

So, the higher-ups in management will have direct contact with the frontline staff as well as the customers.

Smaller companies and businesses are most likely the ones to have this organizational structure as they have too few employees to have middle management, to begin with.

A big advantage of this structure is that decisions that affect the business are able to be made a lot quicker.

A disadvantage of this structure is that important decisions have to be trusted by the frontline staff, and if those employees don’t have enough skills to make a good decision, it could mean problems for the company.

Hierarchical structure

This structure is most commonly used by bigger organizations.

Opting in for this structure means that a clear supervisor for groups of employees will be appointed.

With this organizational structure, there is a very clear line of authority.

No one will be confused about the boundaries that are placed between different departments.

Employees will be managed closely which can boost productivity.

Teams are grouped together based on the job category so that the business’ resources are used efficiently.

An advantage to this is that the people within those groups will form close connections, but a disadvantage to this is the different departments not being able to communicate properly with each other.

Hope now you know all 7 types of organization structure. Thanks for reading.

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