Six types of organizational structures for entrepreneurs to consider

Whether you are running a small business with a tightly-knit team or something a lot larger, every enterprise requires the right organizational structure to help it run smoothly and prosper.

When you have a strong organizational structure it helps ensure that there is a good level of teamwork, a reliable communication network, and increased productivity levels.

If you are trying to run a business that lacks this level of structure it is likely that there will be increased levels of conflict and business growth will likely be harder to achieve.

Here are some proven organizational structure blueprints to consider.

1) Functionality takes priority

A functional structure is primarily about arranging departments into distinct groups by work specialization.

When each specific department has a designated leader it encourages a so-called top-down decision-making process that is highly functional in its nature.

2) A structure designed around geography or product

A divisional structure is based on the idea that you organize employees in relation to their geographical location or by product.

In other words, if your business has specific brand identities within it that lend themselves to a divisional structure. The same applies if your business has different audiences across the globe and it makes sense to define a structure based on geographical location so that you meet unique demands for each area.

3) It’s all about teamwork

When you opt for a team organizational structure your focus is on creating a number of small teams that are tasked with specific goals such as delivering a certain product or performing a defined service.

Team-based structures are often characterized by a degree of informality and a higher level of flexibility compared to some other organizational structures.

4) Take a more holistic approach with a matrix structure

A key aspect of a matrix organizational structure is that team members are accountable to more than one manager at a time.

This encourages a wider level of interaction across the business and can often help deliver faster project results. Another advantage of this approach is it gives employees a higher level of work experience outside of their own team environment.

5) A structure that goes beyond the boundaries of your own business

A network organizational structure is all about joining forces with other businesses but with the common goal of achieving a specific ambition between you. That could be the launch and rolling out of a new product, for instance.

This collaborative approach with external resources reduces formality and encourages a higher level of business agility.

6) Having a chain of command is the most common approach

The most popular organizational structure is without doubt the hierarchical structure.

Most businesses have a chain of command. This is the default organizational structure option. The level of power and decision-making capabilities is often diluted as you work your way down from the top of the chain of command. This sort of structure has its pros and cons. 

On the plus side, it offers a defined career path that maps out how an employee can move up the ladder. One of the obvious negatives attached to a hierarchical structure is that employee morale can sometimes be harmed by the rigidity of the decision-making process.

Whichever organizational structure seems most suited to your business needs and aspirations, it is clear that at least having some sort of defined structure is far better than trying to operate without a blueprint and roadmap to follow.