Types of Organizational Structure in Management

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Choosing the optimal organizational structure for your company is key to your success. Whether you choose a democratic organizational structure in which decisions are made by consensus or you use an autocratic leadership style or other management type, your employees should understand and accept who makes decisions and how if you want them to do their best work.

The proper structure also can help you make better decisions and to do so efficiently by providing the correct people with the necessary information at the right time. Pick an organizational structure that suits your company and your leadership style.

Structure for Autocratic Leadership Style

Autocrats decide what they want to be done. Then they make people do it. They don’t consider the input of others before assigning them tasks or their willingness to do the work.

Employees often resent autocrats because they don’t feel valued. They also may fear punishment if they don’t do their work correctly. Setting a structure, autocratic leadership style can be effective when employees need direction and the decision-maker(s) have the responsibilities and experience required to help. It also is good for acting quickly, especially when debates among team members could delay decisions and prolong work. An autocratic structure is particularly beneficial in emergencies.

Democratic Organizational Structure

Organizational democracy gives the power to the people. Employees participate in decisions and influence their outcomes, often with little accounting for their job titles or seniority. A democratic company structure has several common traits.

  • It is transparent.
  • People know who they report to and for what.
  • Every level of the organization has leaders.
  • Initiative and innovation are encouraged.
  • Meaningful work motivates employees.

Employees often like a democratic structure because they feel like their opinions are wanted and that their efforts are appreciated.

Laissez-Faire Management Style

Some leaders completely delegate decisions and actions to employees. Though the leader is still responsible for the results of the decisions, they trust their employees to make the right choices. This structure could help you if your employees know more about their work than you do, like if they specialize in a trade or technology. Delegating decisions empowers your employees to work more efficiently while freeing up your time as well.

Functional Organizational Structure

You could organize your business around departments with specific responsibilities, like sales, marketing and production. This clarifies who is responsible for what. It also establishes who makes decisions. For example, a team leader in marketing might report to their department head, who in turn works for an executive.

Divisional Management Structure

You might want to break your company into divisions if you provide more than one product or service. In this way, if an employee works on Product A, then they can take orders from, and perhaps give input to, the manager for that particular product. Having multiple divisions can help when you are a large company because you can ensure that each product gets the attention it needs.

Matrix Organizational Structure

Employees may work across departments in a matrixed organization. This can help you maximize the talents and contributions of each employee. But it may cause confusion among them and make it difficult for them to prioritize their work.

Flattened Organizational Structure

A flattened organizational structure is devoid of job titles and managers. Everyone has the same power to choose their work. This could work when your company is starting out. But it would be difficult to remain a self-managed organization as you grow because work must be done and some people may not do it otherwise. Employees also might stick together in small groups rather than collaborating with one another more broadly, thereby stifling productivity.

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About the Author

Jim Molis has more than 20 years of experience writing for and about businesses. He has been a business reporter for the Columbus (Ga.) Ledger-Enquirer, a managing editor of the Atlanta Business Chronicle and an editor of the Jacksonville Business Journal. He also has written for management consultants, professional services firms and numerous publications as a freelancer.