Would a hierarchical arrangement suit you, or do you want a less formal way of working? We consider types of structure and how to include staff and stakeholders in choosing the right one for your organisation.
What you do and how you do it
To an extent the type of structure you choose will be determined by what you do. Organisations can be structured in various ways:
- by function, such as operations, marketing, finance, fundraising
- by region
- by product, such as books, support, consultancy, delivery
- in work teams, such as client/customer groups.
Changing your structure
If you are considering altering the structure of your organisation, it may be helpful to:
- examine the way you do things at the moment. See our page on reviewing your structure
- discuss structural change with staff and stakeholders. Read five steps to successful change on how your might approach consultation and communication
- learn more about planning and implementing change. Read our tools to guide you
- explore your organisation’s structure. Learn how to identify and review the culture of your organisation.
Your strategy and legal form
When choosing or changing a structure you may want to think about making the decision in the context of:
- strategy. Read our Knowhow pages on your strategic planning. What will you be doing and how will your organisational structure help to achieve this?
- legal structure. Read our Knowhow pages on types of legal forms. Are you a charity, a limited company or a community interest company? And our page on choosing a legal form. Will you be incorporated or unincorporated, a sole trader or a partnership?
- resources. How much time, money and people do you have?
The Webster dictionary's definition of a hierarchy is, “a system in which people or things are placed in a series of levels with different importance or status”.
Hierarchy describes reporting levels and the status of people in the structure. See a diagram of a hierarchical structure.
The hierarchical organisation structure is pyramid-shaped. At the top of the pyramid is one person with a small number of people reporting to them. These staff members have others who report to them. The number of people at each level increases as you move down the structure.
Advantages of hierarchical structures
- A hierarchical structure has clear reporting lines. It is easy to see what each team is called, the size of the team, and how teams relate to each other.
Disadvantages of hierarchical structures
- People can feel stuck and miss opportunities for cooperation. This can limit individuals and the organisation.
Taking out levels of hierarchy creates a flatter organisation structure. In this structure, there is one person at the top who everyone reports to. See a diagram of a flat structure.
Advantages of flat structures
- Staff involvement where they feel they can take on more responsibility.
- Greater communication.
- Improved team spirit.
- Less bureaucracy and easier decision making.
- Lower costs.
- Decisions can get stuck as a result of consulting with many members of staff.
- Limited to smaller organisations.
- The function of each department becomes blurred as roles merge.
Disadvantages of flat structures
- Staff may be reporting to multiple managers. This is known as matrix management. It draws on employees from different disciplines without changing their roles. Skills and information flow horizontally and this type of management is used to coordinate large projects or development processes.
Some organisations develop informal or invisible structures that evolve around day to day interactions at work. They are important as invisible structures can feature:
- informal channels of communication - or sources of misinformation
- friendly and supportive groups - or unhelpful cliques.
Informal or invisible structures influence decisions. Information sharing and discussion at an informal level can both positively and negatively impact the performance and profile of an organisation.
When a new organisation starts there may be no formal structure. This may change over time. It is unusual for an organisation to have no formal structure. Groups of young children show us that we naturally lean towards establishing networks or informal hierarchies.
There are organisations, however, that work perfectly well without a formal structure. See our Knowhow case study about a meals on wheels service that works in this way.