Which organisational structure

Each comes with its own set of advantages and disadvantages. Choosing the right one for your business is imperative because poor organizational structure leads to confusion among employees, poor decision-making among managers and, ultimately, less than ideal results for a business. While there are variations, most companies are created based on one of the following four organizational structures.

The goal for business leaders is picking the structure that works best for their particular situation. A functional structure is the most traditional approach. It calls for grouping together people who do similar tasks based on their area of specialty.

Managers led each area and report up to a director or executive who may oversee multiple departments. The advantage here is clear: it provides those with similar abilities the ability to easily communicate and work on projects together. In a divisional structure, people are grouped together based on the product or service they provide, not the work they do. For example, a large corporation such as General Electric has divisions for electronics, transportation, and aviation, each with its own team of accountants, marketers, etc.

Global corporations may have divisions based on different geographic areas. On a smaller scale, a restaurant that also provides catering services may have separate divisions to oversee weddings, corporate events and business within the main restaurant.

This will then lead to quicker decision-making. In other words, the flow of information with an organizational structure can be used to promote faster decision-making. If you're a business owner, having an organizational structure helps to ensure all of your locations are operating in a similar manner and are abiding by the same procedures. Because it's not possible for owners to be at every location, an organized structure can provide you some peace of mind.

This is particularly the case when your company begins to grow in size. Because organizational structures divide companies into various teams or branches, they're helping to ensure that all tasks and responsibilities specific to those divisions are met more easily. When an employee knows what they should be working on, they're able to operate quickly and more efficiently.

In essence, an organized structure creates an efficient and streamlined system that helps improve company operations overall. When an employee is delegated certain tasks and responsibilities in a clear manner, they're able to perform well at their job. An organized structure provides employees with the guidance they need to perform at their best every day. An improvement in employee performance can also lead to greater employee morale and confidence.

When employees are divided into teams according to their skills and expertise, the risk of overlapping job duties is eliminated.

For example, if a project is assigned to one team, the other teams know it's not their responsibility to take it on because they have their own tasks outlined as well. Using organizational structures can potentially eliminate conflict between employees. While several factors can come into play in this regard, once an employee knows their duties, the more focused they'll be on their own work. For the most part, this is a great way to avoid any rising conflict between coworkers.

While this will vary from company to company and depend on the specific organizational structure in place, an organizational hierarchy has the potential to foster healthy communication between different divisions and teams. Once duties are delegated to various teams and individuals, others in the workplace will know who to turn to for certain matters.

For example, if you're on a team with one manager, you'll know who to report to should issues arise. In a similar manner, if someone from marketing has a question about the design of the project, they know to contact the art department.

Related: 10 Communication Skills for Career Success. There are four types of organizational structures. Understanding how they work and what their benefits and drawbacks are can help you make a more informed decision as to which to implement in your workplace. The four types are:. In a functional structure, organizations are divided into specialized groups with specific roles and duties. A functional structure is also known as a bureaucratic organizational structure and is commonly found in small to medium-sized businesses.

Most people in the workforce have experience working in this type of organizational structure. For example, many companies divide their organization into various departments such as finance, marketing and human resources.

Each of these departments then has a manager who oversees it. This manager is then supervised by an administrator or executive who oversees multiple departments. Mechanistic structures, also called bureaucratic structures , are known for having narrow spans of control, as well as high centralization, specialization, and formalization. They're also quite rigid in what specific departments are designed and permitted to do for the company. This organizational structure is much more formal than organic structure, using specific standards and practices to govern every decision the business makes.

And while this model does hold staff more accountable for their work, it can become a hindrance to the creativity and agility the organization needs to keep up with random changes in its market.

As daunting and inflexible as mechanistic structure sounds, the chain of command, whether long or short, is always clear under this model. As a company grows, it needs to make sure everyone and every team knows what's expected of them. Teams collaborating with other teams as needed might help get a business off the ground in its early stages, but sustaining that growth -- with more people and projects to keep track of -- will eventually require some policymaking.

In other words, keep mechanistic structure in your back pocket Organic structures also known as "flat" structures are known for their wide spans of control, decentralization, low specialization, and loose departmentalization. What's that all mean? This model might have multiple teams answering to one person and taking on projects based on their importance and what the team is capable of -- rather than what the team is designed to do.

As you can probably tell, this organizational structure is much less formal than mechanistic, and takes a bit of an ad-hoc approach to business needs. This can sometimes make the chain of command, whether long or short, difficult to decipher. And as a result, leaders might give certain projects the green light more quickly but cause confusion in a project's division of labor. Nonetheless, the flexibility that an organic structure allows for can be extremely helpful to a business that's navigating a fast-moving industry, or simply trying to stabilize itself after a rough quarter.

It also empowers employees to try new things and develop as professionals, making the organization's workforce more powerful in the long run. Bottom line? Startups are often perfect for organic structure, since they're simply trying to gain brand recognition and get their wheels off the ground. Now, let's uncover more specific types of organizational structures, most of which fall on the more traditional, mechanistic side of the spectrum.

One of the most common types of organizational structures, the functional structure departmentalizes an organization based on common job functions. An organization with a functional org structure, for instance, would group all of the marketers together in one department, group all of the salespeople together in a separate department, and group all of the customer service people together in a third department.

Download this Template. The functional structure allows for a high degree of specialization for employees, and is easily scalable should the organization grow.

Also this structure is mechanistic in nature -- which has the potential to inhibit an employee's growth -- putting staff in skill-based departments can still allow them to delve deep into their field and find out what they're good at. Functional structure also has the potential to create barriers between different functions -- and it can be inefficient if the organization has a variety of different products or target markets.

The barriers created between departments can also limit peoples' knowledge of and communication with other departments, especially those that depend on other departments to succeed. A divisional organizational structure is comprised of multiple, smaller functional structures i. In this case -- a product-based divisional structure -- each division within the organization is dedicated to a particular product line. This type of structure is ideal for organizations with multiple products and can help shorten product development cycles.

This allows small businesses to go to market with new offerings fast. It can be difficult to scale under a product-based divisional structure, and the organization could end up with duplicate resources as different divisions strive to develop new offerings. Another variety of the divisional organizational structure is the market-based structure, wherein the divisions of an organization are based around markets, industries, or customer types.

The market-based structure is ideal for an organization that has products or services that are unique to specific market segments, and is particularly effective if that organization has advanced knowledge of those segments.

This organizational structure also keeps the business constantly aware of demand changes among its different audience segments. Too much autonomy within each market-based team can lead to divisions developing systems that are incompatible with one another.

Divisions might also end up inadvertently duplicating activities that other divisions are already handling. The geographical organizational structure establishes its divisions based on -- you guessed it -- geography. More specifically, the divisions of a geographical structure can include territories, regions, or districts.

It also brings together many forms of business expertise, allowing each geographical division to make decisions from more diverse points of view. The main downside of a geographical org structure: It can be easy for decision- making to become decentralized, as geographic divisions which can be hundreds, if not thousands of miles away from corporate headquarters often have a great deal of autonomy. And when you have more than one marketing department -- one for each region -- you run the risk of creating campaigns that compete with and weaken other divisions across your digital channels.

In order to fully understand the diagram below, you need to look at it from left to right: The customer acquisition process can't start until you have a fully developed product to sell.

By the same token, the order fulfillment process can't start until customers have been acquired and there are product orders to fill. Download the Template. Process-based organizational structure is ideal for improving the speed and efficiency of a business, and is best-suited for those in rapidly changing industries, as it is easily adaptable.

Similar to a few other structures on this list, process-based structure can erect barriers between the different process groups. This leads to problems communicating and handing off work to other teams and employees.

Unlike the other structures we've looked at so far, a matrix organizational structure doesn't follow the traditional, hierarchical model. Instead, all employees represented by the green boxes have dual reporting relationships.

Typically, there is a functional reporting line shown in blue as well as a product- based reporting line shown in yellow. When looking at a matrix structure org chart, solid lines represent strong, direct-reporting relationships, whereas dotted lines indicate that the relationship is secondary, or not as strong. In our example below, it's clear that functional reporting takes precedence over product-based reporting.