Organizational structures define how employees work together to support a company’s mission. There are different types, including hierarchy, cross-functional, and matrix, each with its own benefits. A defined structure clarifies roles and responsibilities, making it easier to resolve problems. Companies can also use structures to manage subsidiaries in different industries.
An organizational structure is the term used to define how employees of a company work together to support their mission. There are different types of organizational structures, including hierarchy, cross-functional, and matrix. The number of managers in the organization usually depends on the number of employees and the type of structure adopted by the company.
The purpose of an organizational structure is to clearly define roles and responsibilities. Having a defined structure makes it easier to know who should do what and to whom to take problems for resolution when things don’t go as planned. While primarily used by businesses, an organizational structure can also be seen in other groups such as clubs and churches.
Structure can also refer to how companies work together. This is true when a large parent company has many subsidiaries in different industries. A well-known example of this is General Electric, which started with light bulbs but today is involved in electronics, finance, jet engines and media. Each of these areas is a subsidiary of the parent company, General Electric, and operates on its own as an independent company, but reports to the General Electric organizational structure.
A hierarchical structure is a type of organizational structure in which one person or main group manages everyone else. An example would be the Catholic Church, where the pope manages all other people and groups within this organization. This is also known as a superior organizational structure and when illustrated will resemble a pyramid. Small businesses also commonly use the hierarchical structure with a single owner who runs the business and employs others to report to him.
A cross-functional organizational structure instead focuses on a specific goal to form its structure. People from different areas come together to form a team or department outside of their normal hierarchical structure. Typically a cross-functional team is project-based, and once the project is complete, team members return to their traditional roles. This type of structure is particularly useful when working on projects that require specialized skills from different departments, such as engineering, sales and finance. Normally, those groups did not report to the same manager but instead reported to separate departments with managers reporting into a general manager or CEO.
Matrix organizations are a hybrid between a hierarchy and a cross-functional organizational structure. A matrix organization is generally run by managers who have responsibility for both projects and departments. A functional matrix is very similar to cross-functional organizational structure in that the organization is managed by a project manager who has authority over project details only, while individual department heads still maintain authority over project employees. A project matrix is also managed by a project manager. In this case, authority over all aspects of the project rests with the project manager and individual department heads are only called upon for technical questions and when additional staffing might be needed.
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