What Is Organizational Structure In Management?

What Is Organizational Structure In Management?
what is organizational structure in management? A pyramid style leadership embraces many layers, and makes for cool use of mayan pyramids in WIRL's blog

Organizational structure is what we use to define the modes which an organization operates and performs.

It can do a great job of identifying what a person’s job function is and who they report to. The leadership structure that a company chooses is developed to decide how the organization operates.

There are several types of structures that a company can select, a lot of them make diversity a point, and are set up to have different levels of power and leadership.

Although there are many types of organizational structures that meet a company’s needs, there are some that work better than others.

The Meaning Of Organizational Structure In Management

For management, it’s vital to have a sound structure throughout the company. It will determine how job functions will be developed to not only meet goals but also to help individuals grow within the organization.

If we were to define organizational culture in a sentence: it is the centralized view of how the company operates to accomplish its goals and continually grow. The structure that your company chooses will determine all the different interactions as well as things such as salary, power, and most importantly, how the departments (in different locations, or in a headquarters) will function.

It will also show the ways a person can expand their skill set in order for them to move up to a managerial position. This is usually more prevalent within companies that have a pyramid/hierarchal organizational structure.

There are more positions that are attainable within companies that have a pyramid/hierarchal organizational structure. Due to all the intricacies and sophistication within the leadership system.

If you’re looking for a type of organizational structure that is more democratic and empowers everyone with a voice, there are styles that promote this kind of communication.

It is all a matter of choosing what kind of leadership style suits the culture of your company, once you find one that is sufficient for you keep building off of it and make sure your employees go all in.

Types Of Structures In Management

Being that an organizational structure will determine how an organization delegates tasks and responsibilities, it is only right to pick the one that is specific to your office size, needs, and location.

It’s vital to pick the right kind of structure that fits your industry and your culture. Here are some examples of certain organizational structures:

Flat Organizational Structure

One example of a flat organizational structure that we’ve alluded to in the past is Holacracy. Holacracy provides everyone with a say on how the company operates and empowers everyone to make their own decisions as long as they’re aligned with the organization’s goals. Holacracy can be the ideal structure for small to midsize companies or startups.

The beauty of this is that it makes the decision-making process faster and makes companies more agile by trusting everyone involved.

Functional Organizational Structure

A functional organizational structure is the go-to management structure that small to large sized companies use. The functional structure wants to make sure that there are different leadership positions available per department.

Larger companies use functional organizational structures to help simplify all of the different positions that they have throughout the company spanning various offices. It makes it easier for organizations to control what is going on within different regions, or areas of operation.

Product Organizational Structure

A product organization structure has managers reporting directly to the president or CEO of the company by product.

This kind of structure can be used specifically for retail companies that have stores throughout different cities. However, it makes it very difficult for companies to establish a leadership position within the offices or stores, as a product manager of a region will make business decisions.

There are a lot of intricacies that go with this leadership style, so if you are doing the research to develop a product-based structure; you can get deeper into it by looking at an e-commerce site, outlets, department stores, and see how they work.

The best example of this structure that I’ve seen done is with construction equipment, as they have to manage certain products to go out to certain regions. The managers set the quota of how many machines go to certain regions and have to report to high-level management to finalize decisions.

Geographical Organizational Structure

A geographical organizational structure is perfect for small businesses or large enterprises. It still entails something similar to a functional organizational structure, however, it enables companies to attack local markets easier.

If a company wants to tap into a new market and work out of a specific location it can do so by starting off small and establish a product and local market fit.

Example, if a company seeks to get ‘boots on the ground’ in a city like New York, it will have a local sales or marketing team operate there just so they can learn what trends work on their customers for competitors in the market.

Whatever works best for you, just make sure that you back the decision up with data, and make sure your leadership style fits with your mission, culture, and people.

Picking The Best Leadership Structure For Your Company

Organizational culture is something that’s grown organically.

The one thing that you can have set up from the early phases is how the company is going to operate. If you are an up-and-coming startup that wants to continually grow, get a feel for the kind of people that you have already and determine who the real leaders are or if the whole community/team can contribute with new ideas that will help shape the company.

For larger organizations that already have a culture of their own, you can still change one office at a time.

Set up the key performance indicators that will allow your company to have individual goals and team goals that will help people reach new heights. Have data determine if the goals reached by individuals, and teams, allow people to succeed with leaders or in an autonomous, results-oriented fashion.

Having a data-driven company allows managers to see the aspects that they can improve from a team, individual and leadership effort on a high-level perspective.

So whether it is a geographical structure, a product structure, a flat structure, find what works and use data to back any improvements, or flaws, that your organization may have. If you go by the numbers instead of opinions your company will continually grow. Use data and goals to see how you improve, week by week, year by year, and keep on getting better and better.

What kind of organizational structure do you think is best for your team?

Though it is difficult for organizations to find out what works best all it takes is one person to start planting the seeds of change. Let us know if you’ve begun trying to change the culture at your office and how it’s gone.

Jeffrey Fermin is a leader in the HR Tech industry, he spends his collaborating with multiple companies to help come up with solutions that will improve the modern-day workplace.


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