Organizational structure is a less abstract and more important concept than it may seem . Determining how a company is organized means indicating how it should operate so that everything works well.
Is it possible for this structure to be designed gradually and spontaneously?
Yes, and this tends to happen with businesses that start without much planning and grow little by little.
However, even for this type of business, thinking about structure and organization as soon as possible can only be beneficial.
So, regardless of the size of your company, this post can be very useful.
What is organizational structure?
Based on the goals established for the company, the organizational structure shows how human capital is distributed within it.
This concerns the design of positions , functions and departments , as well as the relationship between leaders and their subordinates .
Something that also considers the company’s style , its field of activity and the business objectives.
Formal and informal organizational structure
Regarding understanding what the organizational structure of companies is, we still need to talk about the difference between formal and informal structure .
The formal structure is that which follows the organizational chart designed based on analyses and planning that consider hierarchy, needs and standards of conduct.
It is documented and is usually presented when hiring a new employee or in similar circumstances.
In turn, the informal organizational structure is one that arises spontaneously from the interaction between the workers who make up the company’s staff.
Even though it is possible to try to align them in the best way, both coexist, forming part of the reality of any organization.
What are the five types of organizational structure?
Below, we will present five that represent the main forms of structure and organization currently used. Follow along:
1. Linear structure
Also known as hierarchical, vertical or pyramidal , the linear structure is the most classic of all, precisely because it is the oldest.
It is based on the organization of ancient armies in which each person answers to another who is at a hierarchical level just above , without overlapping.
The design is of a well-structured hierarchy in which power tends to be more centralized . And it is true that this has positive and negative points.
Advantages
This framework is straightforward, affordable, and easy to comprehend. Everyone is aware of their accountability.
It is also quite common and accepted in most companies, including because it clearly indicates the possible growth path that an employee can follow.
It is important to highlight that this type of structure tends to work better in smaller companies.
Disadvantages
On the other hand, this is a more rigid structure that tends to increase the level of bureaucracy in processes .
This can slow down innovation advances and create a greater distance between departments.
A scenario like this can lead employees to think more about the sectors they work in than about the company as a whole. This is something that HR needs to monitor closely .
Furthermore, this type of organizational structure can lead to more communication failures and is detrimental to cooperation and team spirit.
2. Functional structure
Professionals are allocated according to their area of activity, and each department has a leader.
If your company talks about a marketing department, finance department and the like, it is likely that there is already a functional organizational structure there, even if it has not been consciously designed.
Advantages
This type of organizational structure ends up being an incentive for specialization because only those who work in one department work and, more importantly, only those who delve deeper into their area of knowledge grow in that department.
Furthermore, it contributes to a higher level of cooperation between team members and works well for larger companies.
Disadvantages
On the other hand, this type of structure can make communication between one department and another difficult , including due to the possibility of conflict or overlapping leadership.
In fact, this “departmentalization” tends to hinder synergy between departments, damaging the systemic vision.
Because it is based on a more complex form of division, this organizational structure does not work well in smaller companies .
3. Matrix structure
The matrix organizational structure is part of the classic types, like those presented previously, but it is the most modern of the three.
This is because it is organized based on the department (function) and the project to be executed.
In this type of structure, each employee has two leaders : one on the line, who is the “head” of the department, and another on the project, and the objective is to seek the highest possible performance.
In other words, companies that follow the matrix structure have multidisciplinary teams led by project managers. These teams, however, also report to senior management.
Advantages
Among the positive points of this type of structure and organization is the fact that multidisciplinary teams tend to be more adept at collaboration and can execute their processes and projects more quickly.
Since there are people from different areas of knowledge involved, it is natural for departments to be closer together. Furthermore, it is easier to control the results.
Disadvantages
Since not everything is perfect, dual leadership can open the door to problems in the decision-making process , as well as leaving employees confused about who to report each thing to.
Therefore, it is very important that the structure is well designed and explained to everyone to work well.
4. Divisional structure
In turn, the divisional organizational structure is used when there are different production fronts in the company separated according to their objective .
This form of organization applies to companies that work with different products, serving different audiences or regions.
It is understood that, in a scenario like this, the company is divided into independent and autonomous fronts , each responsible for the production of a product or a service.
An example is the beverage industry, which may have an entire division responsible for producing natural juices and another for producing soft drinks.
Advantages
The independence between divisions allows each one to focus on its market and its operations, which enables faster decision-making.
Another positive point is that it is possible to avoid strategic level overloads , allowing each division to adopt measures consistent with its audience and market without conflicts.
Disadvantages
On the other hand, there may be unnecessary competition between divisions . The company as a whole may find it difficult to maintain quality standards and distribute its budget appropriately.
5. Network structure
The network structure appears among the most modern, having gained strength and new forms thanks to situations such as the home office .
It is a form of organization in which the company hires professionals who are anywhere in the world to work remotely .
Thus, communication, interaction and delivery of results is done via the internet .
It is worth mentioning that the networked organizational structure already existed before remote work became common.
Companies that sell through catalogs with the support of consultants have been operating this way for many years, even before the internet became so present in our lives.
Advantages
Companies that follow this organizational structure have lower administrative costs and a broader range of possibilities , as they can have employees all over the world.
This way, they can become more competitive and expand their market more easily, something that tends to rely on the motivation of workers who respond well to the flexibility of remote work.
Disadvantages
Physical distance can become a challenge for people management , in addition to making the company highly dependent on systems and the internet in general.
Another negative point is that this type of structure can make it difficult for workers to get closer to the employer brand , creating an emotional distance that can impact the relationship and results.
