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There are many types of companies structure

By Lea Remini 1 April, 2023 4 mins read

There are many types of organizational structures that a company could adopt. There are three basic types: hierarchical, functional, and matrix. These structures are useful, depending on what the business goals are. These structures can help the company determine which areas it should focus on and what steps to take next. A company's structure can help it decide how to allocate its resources.

Functional structure

A functional structure can be a great way of organizing a company. This structure allows employees to be more focused on their own areas of expertise. This can help create a more productive work environment as employees are more willing to take risks and work together. It is the most widely used organizational structure. This allows employees to specialize and work in a similar role with others. It can also be scaled, meaning it can work with any size company. It does have its challenges.

A functional structure has the greatest advantage: it creates a stable working environment and a job scope. This structure promotes efficiency and stability within the organization. It has been adopted in large companies because it allows employees to work independently and reduces company bottlenecks. Because employees are working on projects related to their expertise, this structure has many other benefits.

Hierarchical structure

A hierarchical structure describes how a company is organized. It is used to help the management manage the business effectively. The manager is responsible for the management of each department. They manage the daily operations. It allows the managers to move people up from the lower levels if they feel it is necessary. The hierarchy can become more complex as a company grows.

Many companies employ a pyramid-like structure with a small leadership team at its top, many employees at its base and different levels in the middle. Modern workers are becoming dissatisfied in their hierarchy. Some companies have attempted to restructure their hierarchies. One leading software company's employee handbook eliminates managers in favour of teams of employees.

Matrix structure

A matrix structure can be described as a company's organizational layout that is divided into different units or reporting relationships. This type is ideal for companies with high potential growth and who need to quickly develop new products or service. It can be problematic when it comes managing existing units or creating priorities.

Your organization may have a matrix structure. You should ensure that your managers are able to communicate effectively with one another. It will help them set clear expectations. You can also help them to get along with one another if there is conflict. You can help them get along if there are conflicts. For example, a project leader may view execution as his responsibility. A product manager or customer support manager may see execution his responsibility. You need to find the balance between these responsibilities to ensure that your team is able achieve your company’s objectives. You should teach your managers how to navigate the matrix structure.

Multidivisional structure

A multidivisional structure in a company allows it to diversify, increase profitability, and minimize the risks associated with concentration. Multidivisional businesses can reap the rewards of the combined success and diversification of their various businesses. In contrast, companies that operate as one single entity will have more complexity in their operations, a heavier workload, and less time to focus on different business strategies.

Large companies with multiple business units often have a multidivisional structure. These companies usually have a leadership structure that is based upon products, subsidiaries, projects or other business units. Johnson & Johnson, a global company, has many product divisions that each operate as a separate company. Sometimes the divisions can even be geographically named. One example is a global corporation that has a North American division and one for Europe.

Holacracy structure

In addition to its ability to improve organizational agility, Holacracy can also make companies more resilient to change. Holacracy is built upon principles of collaboration and selforganization. This structure allows an organization to capitalize on both opportunities and challenges. It eliminates the need to have heroic managers, which allows members of the organization to discuss ongoing appointments and take informed decisions.

In a Holacracy, each person is responsible for decisions involving people and resources. The person who takes on these decisions must be able to fill their circle with other people and find resources to bring to the project. This structure has drawn criticism from some organizations, however. Steve Denning, an author for Forbes, addresses some common misconceptions about this structure in an article. Oliver Compagne countered that the differences between the structure and its counterparts are not as stark as Denning claimed.

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