Selecting the best organizational structure for your business, or team department is like selecting a new car. Just like you look for something worthy for the road, something that can help you to take from one place to another without any problem and there is a lot more to that.
In the same way, in the world of organizational structure, there are many options for you. For example, do you want a short or long chain of command, do you require a wide or narrow span of control or do you want a centralized or decentralized decision-making structure and many more?
An organizational structure is a visual representation of a business that shows what employees have to do, and to whom they have to report, and it also affects decision-making across the company.
It can use markets, geographies, functions, products, or processes as its guide and handle businesses of any size and industry.
To make it easier to understand, it is a chart like a map that explains how the company is going to work and how roles are organized. Well, there are two kinds of organizational structure:
Mechanistic Structure
Organic Structure
Functional Organisational structure
This is the most common type of structure. In this business structure, there is a separate department for every group salespeople have their department so do the people who are handling customer services, and so on.
In this institutional framework, there is a need for highly specialized persons and it is easily scalable as well.
As his structure is mechanistic, it has the potential to hold back the growth of an employee but putting a person in a particular skill department can help that individual to be the master in that field.
Product-BasedDivisional Structure
This type of divisional structure consists of many smaller functional structures, for example, every division within the structure may have its own sales team, design team, and so on. In a product-based divisional structure, there is a dedicated department for each product.
A company having multiple products or services can get benefits from this organizational structure as it helps to shorten the product development cycle and allows small businesses to offer new products faster to the market.
Market-BasedDivisional Structure
The market-based structure is one of the variations of divisional organizational structure where departments are formed around the various market, industries, or types of customers.
The market-based organizational structure is best for a company having products or services that work differently in different markets, and if that segment has advanced knowledge of that field then it can be very effective.
This institutional structure also helps a business to stay aware of the changing demands of the customers.
GeographicalDivisional Structure
This organizational structure is based on geography; the division of structure involves territories, districts, regions, states, and even countries.
This structure is best suited for companies that require being close to sources of supply or customers. It also allows the divisions to take decisions from more diverse points of view.
Process-BasedStructure
This business structure is designed keeping in mind the end-to-end flow of different processes like customer acquisition, R&D, and Order fulfilment.
This process is very different from the functional structure as it considers the performance of employees and the way they are interacting with one another as well.
Process-based organizational structure is best for enhancing the speed and efficiency of the company and those who are working in a rapidly changing industry can also adopt this structure.
MatrixStructure
This organizational structure is unique as it does not follow the traditional model. In this, all employees have dual reporting relations like their functional reporting line and product-based reporting line.
The main aim of a matrix organizational structure is to allow the company to make more balance as well as flexible decision making.
When a single project is given to two different companies then it creates opportunities to share their resources and communicate more often which they might not do regularly.
These are the different types of organizational structures that can be used in any company. Well, all of the structure that is mentioned above are just archetypes but in the real world companies usually uses hybrid structures which are formed by taking a few features of multiple structure types.
