Business efficiency is an important part of any company. Good efficiency can improve a business by the conversion of hard work into assets that generate revenue such as services and products. In order to clarify the efficiency of the business, it is important to know the level of each employee in the company. This will give an idea of how tasks and responsibilities are assigned within the company as well as who has decision-making authority for their accomplishment. To achieve this companies need organizational structure.
What is organizational structure?
The organizational structure defines how roles and responsibilities are assigned within the company. In order for the company to effectively manage its tasks and achieve its goals, it is necessary to have an effective organizational structure. For an organizational structure to be effective it needs to clarify each employee’s role and how it interacts with the rest of the team. To make it easier for every employee in the company to learn their roles, responsibilities, and supervisors there are so-called organizational charts.
An organizational chart also known as an organogram or org chart is a diagram that gives a graphical representation of the internal structure within the company.
Businesses of all shapes and sizes use organizational structures. Based on their goals and the size of the team, companies must decide which organizational type is ideal for their business. Therefore, there are many organizational structures with a variety of organizational chart types.
What are the types of organizational structures?
Hierarchical organizational structure
This is a typical organizational chart that looks like a pyramid. It is represented as the superior or CEO in the company at the top of the pyramid, staff-level employees are at the bottom, and in the middle is the supervisor of each employee.
Functional structure
The functional structure separates the employees into different departments based on their areas of expertise. Each department has a highly experienced assigned leader who supervises their sector. In this type of structure, only team leaders coordinate their strategies with each other. While lower-level employees have little insight into the processes that are taking place outside their department.
Divisional structure
Within the divisional structure, the segmentation of the company’s employees is not based on their positions, but according to products, services, or geographical locations. This means that the teams of divisional organizations are focused on a specific market or product line.
Matrix structure
Within the matrix structure company teams report to multiple leaders. That’s because the members of the team report not only to the head of the department but also to the project members. This might seem complicated but it does promote some benefits for team building and communication between teams from different departments.
Flat organizational structure
A flat organizational structure is a company with just a few hierarchical levels between the employees or none at all. Due to the small size of the organizations, this structure is most common in start-ups and small businesses.
Team-Based structure
In team-based structures, employees come together in groups with specific projects, with each employee having to perform a specialized task. Often, teams do not have supervisors, which means they must establish trust with each other to achieve their goals.
Conclusion
Organizational structure helps define how companies operate. Since different departments have certain roles in the company, organizational structure defines how information flows and how the decision-making is done. This can lead to companies running smoothly as the employees can better communicate and collaborate.
