Just as a human body relies on its skeleton for support and function, your enterprise depends on an organisational structure for effective operation.
A human skeleton moves best when you place all its organs at their proper joints. Your organisation’s employees are similar.
They deliver their best work when you position them according to the organisational structure best fit for your enterprise’s requirements.
So how do you choose the right organisational structure for your enterprise?
This article shares the various organisational structures for enterprises and how to deploy them, according to experts.
Let’s begin by understanding the everyday challenges your enterprises can face with structuring their teams.
What are the common challenges enterprises face with structuring their teams?
If the critical positions in your organisation are not clearly defined and an organisational structure is not in place, no one will know which decision-maker to look towards in crises.
This will cause delays in mandatory action-taking, leading to catastrophic losses.
Here is a list of challenges that you can face when creating organisational structures:
- Lack of clarity: The authority of the top management and the roles/responsibilities of the employees are not clearly defined.
- Lack of communication: Your top management finds communicating the roles in your enterprise’s organisational structure difficult.
- Lack of coordination: The teamwork and chemistry between members are not optimal – leading to complacency when creating your organisational structure.
- Lack of internal expertise: Your organisation lacks an internal expert who can gauge the capabilities of the employees and structure teams accordingly.
- Lack of trust: Your top leadership doesn’t trust the process of testing new waters and wants to stick to their legacy systems.
Once you overcome these challenges, your organisation faces a more critical question. Which organisational structure best suits your enterprise?
Which is the best organisational structure for enterprises?
To equip you with the best answer to this question, we researched and analysed the organisational structure of top companies worldwide.
We also analysed the opinions of different experts to find out if there’s a dominant structure that every enterprise can use.
We concluded that there is no one-size-fits-all approach to creating an organisational structure.
David Wilkinson’s expert opinion on this stands out in the Oxford Review. David’s opinion is based on research conducted by Fred Lunenburg from Houston State University.
“There isn’t a ‘best’ organisational structure without a context. Most structures lie in between a mechanistic-organic organisational structure continuum,” says David.
“The mechanistic structures are rigid and optimised for efficiency, where operations are standardised and decision-making is central. On the other hand, organic structures are based on flexibility, creativity and team-based decision-making,” says David.
Taking David’s views into account, your enterprise’s organisational structure must lie between the following two extremes:
- Mechanistic structures
- Organic structures
This means that your next job is to choose between a mechanistic and an organic structure for your enterprise.
Figure out your enterprise’s nature and determine which of the best suits your enterprise.
If your organisation is the type that needs efficient work down with standardised work operations and decisions that need to be central, you are better off building a mechanistic structure.
If your organisation needs creative work done where ideas must pop from the bottom up, and decisions aren’t centralised, you should choose an organic structure.
With that in mind, we took two of the top mechanistic and organic structures and broke them down – so you can understand precisely how they work.
1. Functional organisational structure
The most common mechanistic organisational structure you can use is a functional one.
It is a structure where each function within the business has its manager, so there’s no confusion about who does what and how things get done.
This structure is perfect for you if you have a large enterprise or a business with specialised products or services.
The structure divides your company into departments based on their functions– marketing, sales, finance, etc.
Here’s how the structure looks.
The structure can be used on small to large scales effectively.
One of the most renowned companies that use this structure is Alphabet, Google’s parent company.
To implement this structure into your enterprise, divide your employees based on their skills and create a custom organisational chart for your teams.
Below are the pros of the functional organisational structure:
- Lines of management are clear
- Employees skills are enhanced rapidly
- Employee roles are clearly defined.
Below are the cons of the functional organisational structure:
- Collaboration between departments is weak
- Departments are short-visioned
- Territorial disputes can occur often
2. Divisional organisational structure
A divisional organisational structure is also a mechanistic type of organisation, but the division of employees is based on the product, market, or geography instead of their job roles.
There are some obvious advantages and disadvantages to using this structure.
Here’s what an expert academic researcher had to say about the divisional structure.
“A divisional organisation can produce agile responses to certain initiatives but poses difficulties in coordinating across multiple divisions,” says Kent D. Fairfield, Fairleigh Dickinson University, USA
Some of the world’s top companies, like McDonald’s and Disney, use a similar structure.
You can take inspiration from the same companies to implement a divisional structure in your enterprise.
Below are the pros of the functional organisational structure:
- Divisional performance is easily tracked
- Decision-making is fast and easy
- Responsibilities are easily assigned
Below are the pros of the functional organisational structure:
- Incompatibility between different divisions
- The organisation’s broader vision is compromised
- Strategic Growth is slow and hard to achieve
3. Matrix organisational structure
A matrix organisational structure is a mix of mechanistic and organic structures having more than one line of reporting managers.
Here’s how this structure is different from others.
It combines the efficiency of functional structure – and the flexibility of divisional structure – to create a hybrid structure that best optimises results.
Famous companies like Phillips and Caterpillar use a similar structure in their organisations.
You should hire multiple project managers to implement a matrix structure in your organisation.
This shows managers can manage specific projects while your function managers control functional performance.
Let’s look at some pros and cons of a matrix structure.
The pros of the functional organisational structure:
- Optimised for efficiency and flexibility
- Simple and fast performance tracking
- Effective sharing of resources
The cons of the functional organisational structure:
- The power struggle between managers
- Complicated reporting procedures
- Slowness in critical decision-making
4. Flat organisational structure
A flat organisational structure appears at the end of the organic structures. It stands against the common hierarchy-based structures and emphasises decentralised decision-making.
Although these structures are quite common, they might not always be practical for enterprises.
Jo Freeman, a scholar and author, says in their article, “There is no such thing as a structureless group. Any group of people of any nature that comes together for any period for any purpose will naturally structure itself in some fashion.”
But, apart from Jo’s views on the topic, there’s no doubt that creativity from the ground up is a huge plus point of flat structures.
Valve, the infamous game development company, relies on their developers to actively participate in the idea-sharing and decision-making process – hence follows a flat structure.
Check out the pros of the flat organisational structure:
- High motivation among employees
- Free of excess management layers
- Enhanced product development creativity
Check out the cons of the flat organisational structure:
- Lack of authoritative decision-making
- Lack of accountability of employees
- Lack of responsibility in critical situations
Optimise your organisational structure performance with Talk Magnet
There you have it.
You learned about the challenges of enterprise team structuring and the experts’ opinions on the best structure for your enterprises and how they work.
However, for smooth implementation of organisational structure, your business needs the best communication tool made for enterprises.
Talk Magnet is a powerful team communication tool built for enterprises with text, voice, and video capabilities.
Regardless of your chosen organisational structure, Talk Magnet will elevate your team’s communication and productivity.
Schedule a demo today or opt for TalkMagnet’s free trial to see how we can improve your organisation’s productivity through communication.
