Several organizational structures exist to help companies deploy their employees in ways that support a company’s needs and objectives. These structures can be grouped under three major categories according to their layers of hierarchy: tall, flat and hybrid. Flat structures have few hierarchical levels. Tall structures, on the other hand, are characterized by their management layers. The hybrid structure combines the other two types, seeking their benefits while working to mitigate their drawbacks.
The tall organizational structure is vertically oriented, with several narrowing management layers that terminate in a central power controlling the company from the top. This set-up forms a triangle with a wide base of employees at its bottom. The person holding the reins at the top might be a CEO, president or owner. The tall organizational structure has two main subtypes, the functional and divisional structures.
The functional structure organizes employees according to the kinds of jobs they do, groups similar jobs together into departments -- a process called "departmentalization" -- and then establishes different management levels to manage employees and departments. The functional organizational structure is the most traditional, and the one most commonly favored among small- to medium-sized companies. The divisional structure first groups employees according to some niche before further departmentalizing. For example, a company might create divisions based on a product or by a certain process to create that product. A company might also departmentalize employees into divisions based on geographical location or groups of customers.
Tall organizations feature bureaucracy. Decisions must defer to the chain of command, so employees can’t adapt as situations arise. Businesses in dynamic environments will find this presents competitive problems, and so may flatten their organizational structures by slashing management layers. Power then moves down into employees’ hands. A team organizational structure is flat; management creates groups that aim to fulfill some organizational goal. Team members contribute different talents, and decisions are made according to expertise. One manager oversees several groups, which can be dissolved and reformed according to need. By empowering employees, flat structures breed innovation and resourcefulness.
With power in the hands of teams, the flat structure offers less control than tall types. Organizations wishing to give management more control, yet also empower employees, might turn to the third type of structure, the hybrid set-up. Teams and a functional hierarchy are combined, giving each employee two bosses: the functional supervisor and the team to which the employee belongs. Creating an organizational chart to graphically represent the hybrid structure results in a matrix. The hybrid structural type is therefore called the matrix structure. Though the matrix does combine the advantages of both the flat and tall structures, having two lines of command can create conflicts of interest.