Types of Organisational Structure You Can Use in Your Business.
Types of Organisational StructureYou Can Use in Your Business.
Selecting the best organisational structure for your business, teamor department is like selecting a new car. Just like you look for something worthy for the road, something that canhelp you to take from one place to another without any problem and there are alot more to that.
The same way, in the world of organisational structure there aremany options for you. For example, do you want a short or long chain ofcommand, you require a wide or narrow span of control or you want centralizedor decentralized decision-making structure and many more.
What is an OrganisationalStructure?
An organisational structure is a visual representation of a businessthat shows what employees has to do, to whom they have to report and it also affectthe decision making across the company. It can use markets, geographies,functions, products or processes as their guide and handle business of any sizeand industry.
To make it easier to understand, it is a chart like a map thatexplains how the company is going to work and how roles are organised. Well,there are two kinds of organisational structure:
- Mechanistic Structure
- Organic Structure
Now, let's uncover morespecific types of organizational structures that every business can use intheir company:
- Functional Organisational structure
This is the most common typeof structure. In this business structure, there is a separate department forevery group like salespeople have their department so does the people who arehandling customer services and so on.
In this institutional framework, there is a need for highlyspecialized persons and it is easily scalable as well. As his structure ismechanistic in nature, it has the potential to hold back the growth of anemployee but by putting a person in a particular skill department can help thatindividual to be the master in that field.
- Product-BasedDivisional Structure
This type of divisional structure consists of many smallerfunctional structures, for example, every division within the structure mayhave their own sales team, designing team and so on. In a product-baseddivisional structure, there is a dedicated department for each product.
Company having multiple products or services can get benefits fromthis organisational structure as it helps to shorten the product developmentcycle and allows small businesses to offer new products faster to the market.
- Market-BasedDivisional Structure
Market-based structure is one of the variations of divisionalorganisational structure where departments are formed around the various market,industries or types of customers.
The market-based organisational structure is best for a companyhaving products or services that work differently in different markets, and ifthat segment has advanced knowledge of that field then it can be very effective. This institutional structure also helps abusiness to stay aware of the changing demands of the customers.
- GeographicalDivisional Structure
This organisational structure is based on geography; the division ofgeo structure involves territories, districts, regions, state and even country.This structure is best suited for companies who require being close to sourcesof supply or customers. It also allows the divisions to take decisions frommore diverse point of view.
This business structure is designed keeping in mind the end-to-endflow of different processes like customer acquisition, R&D and Orderfulfilment. This process is very different from functional structure as itconsiders the performance of employees and the way they are interacting withone another as well. Process-based organizational structure is best forenhancing the speed and efficiency of the company and those who are working ina rapidly changing industry can also adopt this structure.
This organisational structure is unique as it does not follow thetraditional model. In this, all employees have dual reporting relations liketheir functional reporting line and product-based reporting line.
The main aim of a matrix organisational structure is to allow thecompany to make more balance as well as flexible decision making. When a singleproject is given to two different companies then it creates opportunities toshare their resources and communicate more often which they might not do regularly.
Navigating Organisational Structure
These are the different types of organisational structures that canbe used in any company. Well, all of the structure that is mentioned above arejust archetypes but in the real world companies usually uses hybrid structureswhich are formed by taking a few features of multiple structure types.