Organization structure is defined as a system of ranking order according to relative status or authority in the business. It helps to identify jobs and functions and where employees need to report within the organization. Business needs to adopt this kind of structure for effective operation and also assists business in obtaining their goals for future growth. Business follows a certain type of chat for an effective operation that will help in the best work and management process. There are several types of organizational structure adopted by the business that is discussed in this guide.
Different types of organizational structure
Organizational structures are mainly classified into seven types. However, adopting the particular structure varies from business to business. Let’s go through all the seven types of structures of organization for a better understanding and analysis of why you might consider each of them important.
Hierarchical organizational structure
Hierarchical organizational structure was earlier defined as the pyramid shape of an organization. It is the most common type of organizational structure that follows the ranking order from top to the bottom such as starting with the manager or CEO of the business to the low level of employees, and each employee needs to report to their superior. There are a lot of pros and cons of the hierarchical organizational structure.
- This structure allows a better definition of authority and responsibility.
- This structure clears each person reports to who to talk to about specific projects.
- Superior needs to motivate employees to best work, clear the career path, and work hard for promotion.
- Create a good bond among employees in the department.
- Give work according to the ability of employees.
- This is a very traditional structure of the organization that can slow down innovation.
- Employees are bound to act in the interest of the department, not for the company or business.
- The ranking system of authority can make the low-level employees feel like they have a low level of authority and have not expressed their ideas or opinion in the company.
The organizational structure of functional
Functional structure is very similar to the hierarchical structure. Functional structure refers to a structure that starts with the position of the highest levels of duties distribute to the top and go down to the low level of duties. This structure follows for giving certain positions and functions in the company according to the skills and qualifications. The specialty of this structure is each department has the right to work and manage independently. There are several advantages and disadvantages of this structure that are highlighted below.
- The functional structure allows employees to focus on their self-growth as well as their role.
- This structure is focused on specialization.
- It can help scale the size of the business.
- This structure does not apply to all types of business. Sometimes it will obscure the process and strategies of the market and product of the company.
Horizontal organizational structure
Horizontal structure refers to structure; there are few levels between the upper management and low-level staff or employees. Several businesses use this structure for low-level management until they grow enough for different departments structure. However, several businesses follow this structure for maintaining innovation in the business. There are many pros and cons of the horizontal organizational structure that are listed below.
- This structure allows employees to be more responsible and makes them more efficient.
- Horizontal structure promotes more open communication in business.
- It improves coordination and speed of achieving the goals of the business.
- This structure can create confusion among employees because there is a lack of clarity for reporting to superiority.
- It is very difficult to maintain this structure once the company or business growth beyond start-up status.
Division structure refers to structure; the company delegates its responsibility and control within the organization. In division, methods can adopt by the large business for effective use of resources. The company makes different departments within the organization and all departments have their marketing, sales team, it teams, and many more required teams. It works effectively for large businesses as it empowers businesses to quick decisions by reporting a few executives. There are several pros and cons of divisions that are following.
- Division structure is very useful for large companies for maintaining flexibility.
- It allows for quick decisions for taking advantage of the opportunity for the growth of the business.
- This structure is very important for promoting independence, autonomy, and a customization approach.
- This structure became very expensive for small businesses along with large businesses.
- Divisional structure leads to a lack of communication between the headquarter and divisional departmental.
Matrix structure refers to cross-functional teams that adopt for special projects. In this structure, employees follow a dual reporting system. Generally, employees report to their functional department along with the project manager. There are many upper hand and limitations of the matrix structure.
- This structure allows superiors to choose employees according to the requirement of the project.
- It gives a broad perspective to the organization.
- Gives employees them to opportunity use their capability in various ways rather than their original roles.
- There is a lot of confusion and conflicts created between the department manager and project manager.
- Employees are struggling between their original roles and other work also.
- This structure takes time decision-making process because managers need to report to the dual department.