Types of organisational structure
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People invest a lot of time in thinking about the most effective structure for their organisation. There are many options and the best way to start is to think about your strategy (where you are going) and your resources (how much time, money and people you have to work with).
Organisations can be structured in different ways:
- by function, for example, operations, marketing, finance, fundraising, etc
- by region
- by product, for example, books, support, consultancy, delivery
- in work teams, for example, client/customer groups.
Many organisations structure themselves in a traditional and recognisable way using a hierarchy. The dictionary definition of hierarchy is a series of ordered groupings of people or things within a system. Hierarchy describes reporting levels and the status of people in the structure.
Diagram of hierarchical structures
Description of the diagram
The hierarchical organisation structure is pyramid-shaped. At the top of the structure is a single person, who has a small number of people reporting directly to them. Each of these people has several people reporting into them and the number of people at each level increases as you move down the structure.
Advantages of hierarchical structures
- A hierarchical structure uses clear reporting lines. It is easy to see what each team is called, how many people there are in each team and how they relate to other people in the system.
Disadvantages of hierarchical structures
- People can feel stuck in a ‘silo’ and miss opportunities for co-operation, both for themselves and the organisation.
Taking out levels of hierarchy creates a flatter organisation structure.
Diagram of flat structures
Description of the diagram
There are fewer levels in the flat structure organisation. In this example structure, there is one person at the top with everyone else reporting into them on an equal level.
Advantages of flat structures
- people feel more involved and can take on more responsibility
- greater communication
- better team spirit
- less bureaucracy and easier decision making
- lower costs
Disadvantages of flat structures
- Decisions can get stuck as a result of consulting with many people.
- People may have 'matrix management', with more than one manager.
- Limited to smaller organisations.
- The function of each department gets blurred as roles merge.
Many organisations develop informal, sometimes invisible structures. These are based on the reality of day-to-day interactions at work. They are very important, as they can pass on communications (or rumours), they can be friendly and supportive (or form cliques). They can also influence decisions, as there is knowledge and discussion at an informal level. The influence of these networks is significant.
It is difficult to imagine any organisation without a structure. Even groups of young children start to establish a network or informal hierarchy. In the beginnings of a new organisation there may be no formal structure but often this changes over time. Example of an organisation with no structure.
If you are considering a structural change, you need to recognise that any formal change in the way an organisation operates will work only if consistent changes happen at the informal level of interpersonal relationships and social expectations. See organisational culture for more information.