Organizational Structure

By John Dudovskiy
December 16, 2022

Organizational structure can be defined as a system for outlining management roles and responsibilities to achieve organizational goals. Organizational structure also determines the pattern of information flow within the organization. For instance, in highly hierarchical structures decisions are communicated from top to down, whereas in flat structures the power for decision making is distributed among various levels.

Organizational Structure

Organizational structure aims to provide efficiency and focus to operations. Appropriate structure should illustrate how the roles and responsibilities of each employee fit within the overall system.

Organizational structure has the following four main elements:

  • Chain of command. Illustrating who reports to whom via an organizational chart.
  • Defining departments. Clustering tasks, roles and responsibilities into groups and defining connections between various groups.
  • Extend of control. Categorizing each and every task into departments to avoid a situation where two or more people do the same task.
  • Centralization. Identifying the levels where decisions are made.

There are four main types of organizational structures – functional, divisional, flat and matrix.

Functional Structure

Functional structure is based on specialization of employees and it is the most common organizational structure. It is also referred to as bureaucratic structure and divides company into various departments such as procurement, operations, marketing , finance etc.

Divisional Structure

Divisional structure is also popular and it divides to company into various divisions on the basis of products, projects or subsidiaries.

Flat Structure

Flat structure, also referred to as horizontal structure aims to minimize the chain of command providing employees with autonomy in decision making.  This pattern is popular among startups.

Matrix Organizational Structure

Matrix structure is the most complex and accordingly, the least popular. Matrix structure assigns employees across various divisions and supervisors. Employees in such a structure may belong to more than one divisions and report to several superiors.

In this portal you can find analysis of organizational structure of major international companies.

Category: Management