Choosing an organisational structure for your business without accessing your team’s needs can do more harm than good.
The wrong organisational structure leaves you in an endless maze of communication mishaps, bottlenecked workflows, and a general sense of disarray within your team.
In this article, you’ll find ways to structure your organisation and make your team more efficient.
We’ll discuss a step-by-step guide to help you pick a structure for your organisation based on your needs. Then, we’ll create a tailored approach to implementing it.
What is organisational structure?
An organisational structure specifies tasks and how to complete tasks. It also defines the roles and responsibilities of each team member.
But why does your organisation need a structure?
With an organisational structure, you can control the exchange of information between employees from different departments.
For example, your manager will make decisions for your team if you have a centralised structure. But in a decentralised structure, any team member can make decisions.
Importance of a clear organisational structure
With a clear organisation structure, you can implement a proper decision-making process.
With a proper decision-making process, you can assign roles and responsibilities according to specialisation.
When you define the hierarchy, your team can make decisions faster. Following are the four reasons you need a clear organisational structure:
- Enhance productivity
- Clear goals
- Identify roles and responsibilities
- Makes individual efficient
What are the four elements of organisational structure?
After knowing the importance of clear organisational structure, let’s discover the four elements of organisational structure.
Regardless of your organisation’s nature, you must keep four elements of organisational structure in mind.
Below we discuss four elements of organisation structure.
1. Specialisation
While allocating tasks to a particular department, assign a manager too. You can have a business manager who supervises your team or a functional manager.
A functional manager oversees your team’s productivity and time management.
2. Standardisation
Standardisation is the precise definition of the different levels of management. In standardisation, you change the manager’s title and department.
But the level of management remains the same in every department.
3. Coordination
In coordination, you have both formal and informal processes. You can integrate every employee or team’s activity and performance in both processes.
You can coordinate with other team members and tasks as per project requirements. With coordination, you’ll have better performance and achieve your organisation’s goal more efficiently.
And if there’s no coordination in your organisation, you’re more likely to end up with delays and frustration.
4. Authority
The fourth element of an organisational structure is authority, which gives you the right to act, decide, and make decisions.
But when you give authority to your employees, you’re giving them accountability and responsibility.
Now that you have a good grasp on four critical elements of organisational structures, let’s look at its 10 different types.
What are the 10 types of organisational structure?
Below, we’ve listed 10 types of organisational structures with pros and cons.
1. Hierarchical organisational structure
A hierarchical organisational structure allows you to assign supervisors to each team.
You organise teams according to their roles, responsibilities, and projects in a hierarchical organisational structure.
There are multiple levels in the hierarchy. At the top level, you’ll start with leadership and add direct employees below the leaders.
For example, Amazon works as an internet retail company. Millions of people around the world work for Amazon. And all of them report to Amazon’s founder and CEO.
But what makes a hierarchical structure unique? Well, the fact is that in the hierarchical structure, you have different levels of authority.
Due to the levels of authority and multiple management, the decision-making process goes from top to bottom.
Pros
Find some of the advantages of the hierarchical structure below:
- Establishes the level of authority
- Promotes teamwork
- Enhances promotion opportunities
Cons
Find some of the disadvantages of the hierarchical structure below:
- Limited team communication
- Less innovation
2. Functional organisational structure
Functional organisational structure allows you to divide your organisation into groups.
You can divide your organisation group according to specialities, roles, and responsibilities.
Airtel is a multinational communication service provider that uses this structure.
Each department at Airtel has a director who oversees all the functions in their designated department.
Functional structure helps you organise and manage your departments.
But what’s so unique about a functional organisational structure? You can access this by accessing the pros of this structure.
Pros
The advantages of a functional organisational structure are:
- Enhances overall performance
- Undertakes roles and responsibility
- Better accountability
Cons
The downside to this organisational structure are:
- Leads to conflicts
- Limited collaboration
3. Matrix organisational structure
A matrix organisational structure is a combination of two or more organisational structures. In a matrix, you can arrange reporting relationships between team members as a matrix.
You can add a functional manager in your matrix structure to oversee project progress. Also, add a product manager who can focus on your company’s product growth.
For example, Starbucks uses a matrix organisational structure which contains multiple reporting and overlapping structures.
As per the matrix, you’ll need an engineer for technical work and a design specialist for user experience.
Pros
The benefits of the Matrix organisational structure are:
- Flexible work schedule
- Balanced decision-making
- Open communication
- Shared resources
Cons
The downside to this organisational structure is that:
- It is challenging to track budget and resources
4. Flat organisational structure
In a flat organisational structure, you’ll find few levels of management. Sometimes, you’ll only see leaders and employees with no middle management.
The flat structure is also known as a horizontal structure. A flat structure gives your employees more decision-making power and responsibility.
For example, Google employees from any department can work in other departments with different responsibilities.
And you know what’s unique about a flat structure?
Your employees have the power of decision-making and own their work like bosses. As a result, you’ll see a more positive attitude among your employees.
Pros
The advantages of the flat organisational structure include:
- Reduce of cost
- Better relationships between team members
- Increase sense of responsibility
Cons
The disadvantages of the flat organisational structure are:
- Requires wide-range plan
- Chance to have more conflicts
5. Divisional organisational structure
The divisional organisational structure allows you to split your team members into divisions. All the divisions are set according to services, products, and geographical locations.
So, how do things work in a divisional structure?
Every division has an executive leader, staff members, and departments.
For example, McDonald’s utilises a divisional organisational structure. Each McDonald’s branch makes an organisational structure strategy according to the location and audience.
Once you separate divisions according to your products, you’ll have to allocate different staff members and leaders.
But why a divisional organisational structure?
Divisional organisational structure lets your team focus on one product at a time.
Pros
The benefits of using the divisional structure include:
- Independence
- Individual needs are met quicker
- More focus on product
Cons
The disadvantages include:
- Scale limitations
- Duplication of resources
6. Network organisational structure
Network organisational structure works around one manager. Or, in some cases, one supervisor.
One manager works as a middleman who coordinates with internal and external entities throughout the project development.
This means one person with authority is at the centre of all the activities. For example, the production and process of the famous clothing brand H&M goods come from Asia and South East Asia.
In network structure, you can focus on open communication. Also, you can have collaborative relationships with managers.
Pros
The network organisational structure has these benefits:
- More flexibility and agility
- Control on budget
Cons
The network organisational structure becomes too complex in the long run.
7. Line organisational structure
The line organisational structure is simple. In line structure, your authority level starts from the top and ends on the bottom level staff.
There’s no specialist or supportive employee in the line structure.
Typically, organisations are divided into departments, and each department has a manager and general managers. But not in the line structure.
In line structure, you’ll find one supervisor who supervises other employees.
For example, your supervisor coordinates with you and other subordinates in the military. And the authority level flows from top to bottom level.
The unique part of line organisational structure is the direct vertical relation. Direct relations of managers with employees make workflow efficient.
Pros
Line organisational structure promotes:
- Stable work environment
- Effective team collaboration
- Quick work adaptation
Cons
Line organisational structure has these downsides:
- The structure becomes inflexible
- The manager possesses too much power
8. Team-based organisational structure
Every company employee works towards a common goal in a team-based organisational structure. But each employee works on different tasks.
The flexible team-based structure focuses on improving decision-making, problem-solving, and teamwork processes.
For example, Uber is a well-known transportation company. In Uber, there are only three levels of managers: community, city general, and driver operations.
All these three managers work in different departments, but their goal is one. And that’s to make Uber the world’s top-rated transportation service app.
You must be thinking, why team-based?
A team-based structure is simple. It helps increase responsiveness among your team members.
Pros
Advantages of the team-based organisational structure:
- Streamlines organisational processes
- Enables decision-making power
- Increases flexibility
Cons
Disadvantages of the team-based organisational structure:
- Decreases consistency
- Increase chances of conflicts
9. Circular organisational structure
A circular organisational structure that works in a circle means the hierarchy begins and ends simultaneously.
The circular structure works in a ring form. In the outer ring, you’ll see lower-level and high-level employees on the inner level.
So, each ring ends where it began, and every employee on that ring will have the same responsibility and authority.
For example, in a restaurant chain, you’ll see waiters have the same level of authority. And managers of each branch have the same level of authority.
The unique part about circular structure is that all departments are part of the same project.
Pros
The circular structure:
- Encourages the sharing of information
- Enhances team collaboration.
Cons
The circular structure:
- Causes confusion
- Slows decision-making process
10. Process-based organisational structure
Process-based organisational structure workflows from left to right. The process-based structure highlights employee activities and how employees will interact with each other.
The manager in the top position in a process-based structure oversees lower-level work processes. But every department will have its manager.
And they must ensure that the second activity starts only when the first activity is finished.
For example, you cannot start the customer acquisition process until you complete the product development.
What’s different about process-based structure?
A process-based organisational structure is best for companies looking for rapid changes. It allows you to improve the efficiency and speed of your company.
Pros
The process-based organisational structure:
- Improves the organisation’s speed and efficiency
- Encourages teamwork
- Quickens adaptation
Cons
The process-based organisational structure also:
- Builds barriers between departments
- Decreases team collaboration
Factors to consider in choosing the best organisational structure for your company
Although there can be multiple factors that can affect your choice of the best organisational structure, very few are essential to keep in consideration.
Below, we’ve listed 3 factors to consider in choosing the best organisational structure for your company.
1. Strategy
Your strategy to structure your organisation directly impacts your company’s activities. Through strategy, you can make coordination between all the employees efficient.
Before implementing the best organisational structure, you must strategise the implementation process. Why?
Because strategy helps you understand the weaknesses and strengths of your company.
2. Technology
As we know, new technology demands new talent, skills, and structure. When your company manufactures products in huge bulk, you need a high level of specialisation and standardisation.
But if your company is manufacturing on a trim level, you need a structure that can handle low-level specialisation and standards.
3. People
The best organisational structure for your company defines roles and responsibilities. The allocation is based on employees and the requirements of a department.
However, you must ensure the people you’re allocating have the required skills, talent, and knowledge.
4. Environment
We must change ourselves according to the environment. If your customer requires more advancement in your product, you need to start working on that requirement.
So, choose an organisational structure to help you adapt and change your work according to the environment.
After the factors, let’s now see how you can choose the best organisational structure for your company.
How to choose the best structure for your organisation
Below are brief steps you need to know for choosing the best organisational structure:
- Check and review all the organisational structures.
- Work on implementation strategy for your organisation’s structure.
- Review the information you’ve from the company (size, environment, and people)
- Create a demo and make your decision
Implement your organisational structure with Talk Magnet
Now you know everything you need to structure your organisation.
Once you make your choice of an organisational structure for your business, you next need to implement it, ensuring accountability and transparency.
For this, you’ll need advanced tools like Talk Magnet to make your organisation’s structure more effective.
You can know more about these tools by reading our articles on the best team communication app for enterprises and for SMEs.
Talk Magnet is the best collaboration tool to make your organisation’s structure a success.
It’s an efficient tool for instant messages and team collaboration. So, schedule a free demo or sign up for free now.
