types of organizational structures

The importance of an organizational structure

Businesses need structure in order to function and grow. Without structure, there’s very little clarity and focus; nobody knows whom to report to and responsibilities are passed around like a hot potato.

Structure is the reason why we refer to businesses as “organizations.” There’s an organized flow of leadership and authority in which every individual is supposed to have a clear idea of what they do, whom they supervise, and whom they ultimately report to.

If your business doesn’t have a formal organizational structure, you’re asking for trouble. However, the good news is that it’s simpler than ever to create organizational charts that can be shared and viewed for enhanced clarity throughout the company. But before you do so, you need to carefully analyze your business and consider where you stand.

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common types of organizational structures

There are many different kinds of organizational structures found in companies.

Organizational structures can be tall, in the sense that there are a number of tiers between entry-level employees and the leaders of the company. Organizational structures can also be fairly flat, in the sense that there are only a couple of levels separating the bottom from the top. Depending on your goals, pay structure, and division of work, you may relate more to one structure than another.

While you don’t necessarily have to use an organizational structure that currently exists, it helps to be aware of what other companies are using. Here are a few of the most common structures in modern businesses: