How is organization structured

The chain of command defines the tasks that the management delegates to every employee within the organization. It also helps to know the ranks of leadership that every business department will need.

Generally, it helps employees understand how to communicate through the leadership ladder. The span of control in an organizational structure gives an understanding of the mangers and their management roles in the organization.

Centralization concerns the extent to which decision making is centralized in key figures or whether it is dispersed more broadly at various levels of the organization.

Functional structure, also known as bureaucratic structure, divides the company into departments according to the job functions of the employees. For example, a company that uses a functional structure will divide marketers, salespeople, auditors, and customer care into separate departments. A functional structure allows only specialized employees in the departments. In this case, the employees are not able to grow as they stay in one department forever.

When an employee is delegated certain tasks and responsibilities in a clear manner, they're able to perform well at their job. An organized structure provides employees with the guidance they need to perform at their best every day. An improvement in employee performance can also lead to greater employee morale and confidence.

When employees are divided into teams according to their skills and expertise, the risk of overlapping job duties is eliminated. For example, if a project is assigned to one team, the other teams know it's not their responsibility to take it on because they have their own tasks outlined as well.

Using organizational structures can potentially eliminate conflict between employees. While several factors can come into play in this regard, once an employee knows their duties, the more focused they'll be on their own work. For the most part, this is a great way to avoid any rising conflict between coworkers. While this will vary from company to company and depend on the specific organizational structure in place, an organizational hierarchy has the potential to foster healthy communication between different divisions and teams.

Once duties are delegated to various teams and individuals, others in the workplace will know who to turn to for certain matters. For example, if you're on a team with one manager, you'll know who to report to should issues arise. In a similar manner, if someone from marketing has a question about the design of the project, they know to contact the art department. Related: 10 Communication Skills for Career Success. There are four types of organizational structures. Understanding how they work and what their benefits and drawbacks are can help you make a more informed decision as to which to implement in your workplace.

The four types are:. In a functional structure, organizations are divided into specialized groups with specific roles and duties. A functional structure is also known as a bureaucratic organizational structure and is commonly found in small to medium-sized businesses. Most people in the workforce have experience working in this type of organizational structure. For example, many companies divide their organization into various departments such as finance, marketing and human resources.

Each of these departments then has a manager who oversees it. This manager is then supervised by an administrator or executive who oversees multiple departments. In a divisional structure, various teams work alongside each other toward a single, common goal. If anyone has an issue with a current process, they can raise and resolve them at regular group meetings. The aim of a holacracy is to distribute decision making while enabling everyone to work on what they do best.

Holacracies still possess some structure and hierarchy, but it's based more on circles and what people think of as departments rather than on people. Zappos and Medium have been two of the most visible adopters of the holacratic method.

Zappos was the largest company to switch to a holacratic structure when the online shoe and clothing retailer transitioned in January, Employees can resign from one circle and float around for a while until they join another.

Only about five people within the 1, employee company have the authority to fire someone. Emerging companies, which are not as bogged down by bureaucracy and tradition, have more leeway.

Companies that opened their doors 50 or years ago are more set in their ways, and for good reason. But some can benefit from slowly adopting certain elements of modern structures. Contemporary businesses are facing a new generation of workers who do not want to work in a hierarchy.

Companies worried about stagnation or looking to boost innovation do not have to completely restructure in order to incorporate the philosophies of these newer structures into their organization — they can cherry-pick elements of various structures that work best with them.

When an international energy and utilities company with almost 30, employees was struggling with with key business issues, including customer service, cutting costs, and building a stronger customer foundation to support growth, they turned to Lalwani's consultancy for help. This form of big-picture internal assessment often goes overlooked. Changing the tides is hard work. While the hierarchal model enabled industrial-age companies to thrive, the rise of the information economy has rendered this model harder to optimize.

In factories, knowledge and intellect is concentrated at the top. Actual production, in contrast, requires little thought and massive coordination and repetition. Knowledge-based organizations, by contrast, require each employee to be enabled to think, communicate, and work at their best.

Research shows that the high capacity of data processing and information in the typical modern company requires explorative and exploitative business models. While it was once sufficient for structure to follow strategy, now process follows proposition. Even some within the iron-clad structure of the military are rethinking its impenetrable framework.

Deibler wrote his doctoral dissertation on the underlying structural problems of the military after witnessing its shortcomings on tactical, operational, and strategic levels.

He says forces could incur significant losses on the battlefield and in the cyber arena if structural changes are not made to the current system. Changing structure is not easy for any organization. There is a lag between technical reality and culture. To catch culture up, we must reframe the challenges of adapting to the 21st century as an opportunity. A flat structure is common in incubators and startups where the focus is on product and services design, not production or top-down management structures.

All four types of organizational structures in business can work well in the right situations. While most companies will choose from the functional or divisional approaches, a flat approach is becoming increasingly popular with modern companies.

All Rights Reserved. Privacy Policy Terms and Conditions. All rights reserved. Search for:. Picking The Right Organizational Structure While there are variations, most companies are created based on one of the following four organizational structures.

Functional A functional structure is the most traditional approach.