An organizational structure is the way that a business is set up to provide a hierarchy and a specified line of reporting. The type of structure that is used varies from one company to another, but its main purpose is internal organization. There are three basic types of structures: divisional, traditional and matrix. The goal is to increase communication and delegate authority on a level that is suitable for the size and needs of the company.
This is a way of grouping employees according to either geography, internal marketing responsibilities, or the product that the particular employee is involved with. The geographic structure simply differentiates employees according to what geographic area they are in. The marketing division identifies employees by the market they service within the company. The attorneys would be identified with the legal department, purchasers would be identified with the purchasing department, and so on. The third area of division is centered on the particular commercial product that an employee handles, and this would include as many products as the company makes or offers.
This is the structure with a strict hierarchy that sets one person as superior to another and spells out exactly who reports to whom. There are three forms of this structural models, but they are all very similar. One is called the line structure where authority is clearly described and is most useful in smaller organizations where quick decision-making is important. The second structure is called the line and staff model, where authority is more spread out, as between middle management and forepersons who must eventually seek final approval from higher management. This produces slower decision-making and is more common in medium-sized organizations. Thirdly, there is the functional model where the individual 's department is the main feature of descriptive importance. This would include departments such as accounting and human resources.
This is the most involved of the three models in that it combines the features of both function and product and designates employees accordingly. For example, employee A who is in geographic area C is head of the sales department for product Q. Thus, instead of a single identifier for a particular employee he now has three as does all of the other employees in the organization. The benefits of the matrix model is that it allows for better coordination, communication and a higher degree of specialization because of the characteristics that had been pinpointed as those needed to work on the particular project at hand.
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