What is the most common form of organizational structure?

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Organizational structure defines the roles, responsibilities, and levels of authority within the company. It identifies who supervisors and direct reports. 

There are many ways to design an organizations structure. Each organizational structure has its distinct advantages and disadvantages.

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Some common approaches to organizational structure include:

What is a Line Organization?

Line organization is the oldest and simplest pattern of organization, wherein the supervisor has outright supervision over the subordinate. The flow of authority is from the top-level executive to the person at the lowest level of the organizations echelon.

What is a Functional Organization?

As the name suggests, the functional organization structure is one in which the thorough task of managing and directing the employees, is grouped as per the functions or type of work involved.

What is a Line and Staff Organization?

This type of organization structure is an improvement over the traditional line organization. With line and staff organization primary and supportive activities are related to the line of supervision by appointing a supervisor and a specialist, who are linked to line authority.

What is a Project Management Organization?

Project Organization is not an independent organization, like the organization structure discussed above. Instead, it is a set up within an organization, so as to accomplish a project or firms objectives. It is led by a project manager, who is responsible for project objectives.

What is a Mechanistic Structure?

Mechanistic structures are designed to be very formalized, hierarchical, centralized, and specialized. They closely resemble the ideal of a bureaucracy. 

Communication tends to flow down from the top. The chain of reporting and authority is very rigid. For this reason, this organizational structure is most appropriate in very stable markets. 

The formalized structure and excessive rules allow for efficiency and predictability. As you might imagine, it is less appropriate in turbulent markets that require a company to be creative and move quickly to adapt to change. 

They also tend to result in lower employee job satisfaction and a reduced sense of motivation.

What is an Organic Structure?

Organic structures are quite different from mechanistic ones. They form naturally through human interaction. They tend to have less-complex structures with decentralized decision making. 

The lack of formalization means that they rely on personal or social interactions rather than procedures for decision-making situations. 

These types of organizations are far more effective in rapidly-changing environments that require creativity and adaptability.

What is a Matrix Organization?

Matrix organization is a mix between a functional and organic organizational structure. Generally, it involves employees grouped into functional specialties but cross-assignment to other managers based upon specific projects. 

The functional organizational elements are vertical in nature. The assignment to cross-functional teams for specific projects is vertical in nature. Thus, it gives rise to a matrix structure. 

Because the organizational structure incorporate cross-disciplinary team, it tends to be more flexible and innovative than a traditional functional organization. 

The primary difficulty arises in the reporting structure. There is very little Unity of Command in a matrix structure.

What is a Flat Organization?

In a flat organizational structure, there is little or no traditional chain of authority. The traditional vertical chain of authority is reduced while the horizontal elements of the structure are increased. 

An extremely flat structure will place all employees on the same level without seniority in their positions. There is a singular line of authority - if any is present at all. 

One version of the flat structure is the Holocracy. This structure maintains hierarchical levels but with circles or groups of equal authority working at each level. It removes the single supervisor from the equation.

The objective of a flat structure generally is to increase communication that breaks down with a hierarchy. 

Generally, the organization functions as a group or groups - all with decision-making authority. 

These organizations generally have organic methods of decision making built into the relationship between employees. 

Flat structures lend themselves to rapid responses to changing environments and a creative, innovative atmosphere. They are most common in small or mid-sized organizations.

What is a Boundaryless Organization?

This type of organization attempts to break down barriers within the organization and between the organization and the external environment. 

The concept was developed by the CEO of General Electric, Jack Welch. The basic form of boundaryless organization seeks to break down the barriers that exist between employees. 

It generally means removing social, organizational, and physical barriers. 

It generally results in self-directed work teams that establish their own integrated functions or roles within the team. 

There are multiple types of boundaryless organization, including:

• Modular Organization - In this type of organization, all of the non-essential, non-strategic functions of the organization are outsourced to third parties. The idea behind this format is to retain only the value-generating and strategic functions in-house, while the rest of the operations are outsourced to many suppliers.
• Strategic Alliances - This structure seeks to break down barriers between the organization and another market participant. It generally results in the two organizations creating a joint venture in which the organizations work together for the benefit of both.
• Virtual Organizations - An increasingly common organizational structure is one that is completely virtual. This means that employees work remotely from a central office or other employees. This method relies on electronic communication to facilitation the workflow. This type of organization may be beneficial when employees live in diverse locations or when some factor bars employees from congregating together in a single location.

In one of our previous articles, we discussed organizational chart best practices. Now let’s take a look at types of organizational chart structures which can be used in different scenarios. And you don’t have to worry about creating them too. Our organizational chart software supports all the types mentioned below.

Organizational Structure Types

1) Hierarchical Structure

The hierarchical model is the most popular organizational chart type. There are a few models that are derived from this model.

In a hierarchical organization structure, employees are grouped with every employee having one clear supervisor. The grouping is done based on a few factors, hence many models are derived from this. Below are a few of those factors

• Function – employees are grouped according to the function they provide. The below image shows a functional org chart with finance, technical, HR, and admin groups.
• Geography – employees are grouped based on their region. For example, in the USA employees might be grouped according to the state. If it’s a global company the grouping could be done according to countries.
• Product – If a company is producing multiple products or offering different services it can be grouped according to the product or service.

These are some of the most common factors, but there are many more factors. You can find org chart examples for most of these types in our diagramming community.

This is the dominant mode of organization among large organizations. For example Corporations, Governments, and organized religions are hierarchical organizations with different levels of management, power or authority. 

2) Matrix Structure

In a Matrix organizational structure, the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. It is a type of organizational management in which people with similar skills are pooled for work assignments, resulting in more than one manager to report to (sometimes referred to as solid line and dotted line reports, in reference to traditional business organization charts).

For example, all engineers may be in one engineering department and report to an engineering manager. But these same engineers may be assigned to different projects and might be reporting to those project managers as well. Therefore some engineers might have to work with multiple managers in their job roles.

This is an organizational chart type mostly adopted by small companies and start-ups in their early stage. It’s almost impossible to use this model for larger companies with many projects and employees.

The most important thing about this structure is that many levels of middle management are eliminated. This enables employees to make decisions quickly and independently. Thus a well-trained workforce can be more productive by directly getting involved in the decision-making process.

This works well for small companies because work and effort in a small company are relatively transparent. This does not mean that employees don’t have superiors and people to report to. Just that decision-making power is shared and employees are held accountable for their decisions.

So in summary, when deciding on a suitable organizational chart, it is important to have an understanding of the current organizational structure of your company.

4) Network Structure

Network organizational structure helps visualize both internal and external relationships between managers and top-level management. They are not only less hierarchical but are also more decentralized and more flexible than other structures.

The idea behind the network structure is based on social networks. Its structure relies on open communication and reliable partners; both internal and external. The network structure is viewed as agiler than other structures because it has few tires, more control, and a bottom flow of decision making.

Using a Network organizational structure is sometimes a disadvantage because of its complexity. The below example of a network org chart shows the rapid communication between entities.

Divisional types of organizational charts have their own division which corresponds to either products or geographies. Each division contains the necessary resources and functions needed to support the product line and geography.

Another form of divisional org chart structure is the multi-divisional structure. It’s also known as M-form. It’s a legit structure in which one parent company owns several subsidiary companies, each of which uses the parent company’s brand and name.

The main advantage of the divisional structure is the independent operational flow, that failure of one company does not threaten the existence of the others.

It’s not perfect either. There can be operational inefficiencies from separating specialized functions. An increase in accounting taxes can be seen as another disadvantage.

Creating org chart with pictures using Creately

6) Line Organizational Structure

Line organizational structure is one of the simplest types of organizational structures. Its authority flows from top to bottom.  Unlike other structures, specialized and supportive services do not take place in these organizations.

The chain of command and each department head has control over their departments. The self-contained department structure can be seen as its main characteristic. Independent decisions can be taken by line officers because of its unified structure.

The main advantage of a line organizational structure can be identified as effective communication that brings stability to the organization.

Team-based organizational structures are made of teams working towards a common goal while working on their individual tasks. They are less hierarchical and they have flexible structures that reinforce problem-solving, decision-making, and teamwork.

Team organization structures have changed the way many industries work. Globalization has allowed people in all industries around the world to produce goods and services cooperatively. Especially, manufacturing companies must work together with suppliers around the globe while keeping the cost to a minimum while producing high-quality products.

Other Types of Organizational Charts

The ones shown above are the most commonly used types of Organizational Charts or organogram structure types as some call them. But there are plenty more models which have various advantages and disadvantages based on the situation and organization. You can easily experiment with different models using our org chart software.

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