The Organizational Structure of many companies is very triangular. A traditional “org chart” is like a pyramid, showing a few influential people at the top of the organization.
Your Organizational Structure doesn’t have to be the same.
What is Organizational Structure?
An Organizational Structure is a way a company or organization is built. These can be different management levels. Or you can do it by area, using different industries and departments. Every company and team has an organizational structure, even if it’s not formally defined. It is primarily about decision-making power, information flow, priorities, and resource allocation.
Key elements of Organizational Structure
Regardless of the size of your Startup, certain aspects of workplace decision-making and processes should be clarified. Each Startup must nominate at least the following:
- Work Specialisation – A clear job specialization allows you to make the most of your talents. It helps to clarify personal responsibilities and success criteria and prevent resource shortages.
- Chain of Command – This will give you a clear direction on who to ask for help. When employees in other departments need to check the status of cross-functional projects, they can easily find out who is driving the project.
- Sectorization and Compartmentalization – Dividing people into departments create teams of people organized around specific types of work. People in these departments often have common skills.
- Control Range – If a manager has many direct reports, the team is often split into smaller departments.
Importance of Organizational Structure in Startup
An Organizational structure provides a clear Organizational chart that helps companies track their human resources. If your business is small, it’s easy to lose track of what everyone is doing.
In addition, the Organizational Structure helps identify skill and support gaps within the organization. People’s roles are becoming more specialized and individual teams are getting bigger.
Rethinking work distribution eliminates duplication and reflects business priorities.
Type of Organizational Structures
There are many different types of organizational structures, each with advantages and disadvantages. The most common are:
- A Functional Organizational Structure is ideal for small businesses as it allows for a clear decision-making hierarchy.
- A Departmental Structure is ideal for large companies as it allows for greater specialization. For example, a global company may divide its operations into multiple regions.
- A Matrix Structure allows employees to work on both functional and project teams and be structured differently.
- Freelancers, various groups, or associations collaborate in a Network Structure. Each acts as a separate functional team but may share an overall organization.
Reconsider this before Choosing an Organizational Structure
The best way to choose an Organizational Structure for your business is to first assess your business needs and goals. From there, you can match these requirements to any of your common organizational structures.
When deciding on an Organizational Structure, it is important to keep in mind the following four factors:
- Service: The structure you choose depends on the type of business you run, based on what you do, and where you need to prioritize. To build an effective organization, you need to know which team members facilitate the work of those in the field and which employees support the leader.
- Size: Company size is very important in determining the formal organizational structure. Smaller companies often have a greater overlap of roles. They have a less formalized structure. This lack of standardization can create some challenges, but it also allows teams to grow rapidly. On the other hand, large organizations with more centralized and formal structures tend to grow faster. Why? It’s easy to know where to find information and who to talk to in turn.
- Stage: In the early stages, SMEs not only benefit from an informal structure, but they also don’t need it. As workflows emerge, patterns emerge, and problems arise, these insights can be reflected in formal processes. The need for reporting relationships and departmental structures arises from system needs.
- System: More staff means a clearer definition of when, how, and why teamwork happens. Building a healthy organization is about more than just working well for Startups. That means creating plans to support employee and workplace growth. Given the type of government that exists today, you can choose the appropriate organizational structure.