5 Types of Business Organizational Structures

An organizational structure is a method of distribution of responsibilities for each post (department) directly. It implies fixing clear boundaries for each employee where everyone performs their own duties. And it also defines the interaction between individual niches of the organization (enterprise). The structure of the company should be built in such a way as to contribute to the achievement of its goals and objectives in the short and most easy way.

5 Common Organizational Structures in Business

Let’s consider five main types of organizational structure:

  • Line organizational;

The advantage is the concreteness of the assigned tasks, the performers of these tasks. Line organization is considered as the simple type of organization and a relatively old type.

Main disadvantages of that type is a high requirement for the qualifications of managers and a large amount of work that is intended for one employee. The line structure is applied and is most effective in small enterprises with simple technology and narrow specialization.

  • Functional organizational;

In the functional structure, the organization has a few elements, where everyone has his own function and tasks. It is most effective for companies with narrow specialization. The employees have to do the limited number of duties which are initially assigned specifically to them. This greatly reduces the workload and allows the employee to perform his work as efficiently as possible. It is considered as a flexible structure of an organization. The main drawback is that this structure has several leaders. This can lead to conflict and confusion in the minds of workers, in questions of to whom they must obey and whom they can ignore.

  • Divisional organizational;

A divisional organizational structure consists of few teams. They are solving a single task simultaneously. Divisions work well because it allows a team to focus at the one point, with a structure that supports their major strategic objectives. A divisional structure has a weakness as well. Companies that have competing divisions can bring compartmentalization that can lead to conflicts. Not infrequently one division takes acts in such a way as to harm another unit. The growth of expenses for management personnel is also considered as a disadvantage.

  • Matrix organizational;

The advantage of a matrix organizational structure is the creation of temporary working groups in the operating structures. Under the matrix management structure, temporary groups implement targeted projects. These groups have double subordination that achieves a flexible allocation of personnel because matrix structures contain some of the divisional and functional types that allow creating of large structures that consist of many members of the organization's functional structure without destroying the structure during the working. In perfect structures based on the matrix, two structures share resources between each other evenly. But the main disadvantages are the complexity of the organization and the high risk of conflicts.

  • Circular organizational;

The order is built on hierarchical subordination: internal rings are occupied by management, on the outside are ordinary employees. Thus, managers are not located over the whole structure; they are placed in the center, and from there spread out their vision of development.

Mechanistic vs. Organic Structures

There are two completely different types of organizational structures.

  1. The mechanistic structure is characterized by hardworking and well-established methods of work. It is absolutely not a flexible model of mutual subordination and relationships within the structure. All decisions in the company of this type structure are taken by a specifically established, narrow circle of people (or one person). Such a structure is most effective when performing routine, monotonous work, which does not require the adoption of instant decisions during the process. Not always a clearly designed, exceptionally logical and clear structure works well.
  2. The organic structure is completely different. It is similar to the news flow, which is aimed at dynamic development and decision-making in the course of resolving tasks and set goals. It is a flexible system, which based on cooperation. In the course of exploring problems of different levels of complexity, the final decision is taken with all persons who participate in the process, in contrast to the mechanical structure, where the decision is made by a superior leader.

Choosing the right organizational structure, you need to determine the amount of work that your employees will perform. How many people would be in your staff? Do you agree to listen and take into account competent employees or you want to take decisions independently and undeniably? Weigh the pros and cons of each type and found the one that meets your requirements.