assignment org structure

4.3 Organizational Designs and Structures

• Identify different types of organizational structures and their strengths and weaknesses.

A 2017 Deloitte source asked, before answering, “Why has organizational design zoomed to the top of the list as the most important trend in the Global Human Capital Trends survey for two years in a row ?” 19 The source continued, “The answer is simple: The way high-performing organizations operate today is radically different from how they operated 10 years ago. Yet many other organizations continue to operate according to industrial-age models that are 100 years old or more.” 20

Early organizational theorists broadly categorized organizational structures and systems as either mechanistic or organic. 21 This broad, generalized characterization of organizations remains relevant. Mechanistic organizational structures ( Exhibit 4.5 ) are best suited for environments that range from stable and simple to low-moderate uncertainty ( Exhibit 4.4 ) and are characterized by top-down hierarchies of control that are rule-based. The chain of command is highly centralized and uses formal authority; tasks are clearly defined and differentiated to be executed by specific specialized experts. Bosses and supervisors have fewer people working directly under them (i.e., a narrow span of control), and the organization is governed by rigid departmentalization (i.e., an organization is divided into different departments that perform specialized tasks according to the departments’ expertise). This form of organization represents a traditional type of structure that evolved in environments that were, as noted above, stable with low complexity. Historically, the U.S. Postal Service and other manufacturing types of industries ( Exhibit 4.4 ) were mechanistic. Again, this type of organizational design may still be relevant, as Exhibit 4.4 suggests, in simple, stable, low-uncertainty environments.

Organic organizational structures and systems, however, have opposite characteristics from mechanistic ones. As Exhibit 4.4 shows, these organizational forms work best in unstable, complex, changing environments. Their structures are flatter, with participatory communication and decision-making flowing in different directions. There is more fluidity and less-rigid ways of performing tasks; there may also be fewer rules. Tasks are more generalized and shared; there is a wider span of control (i.e., more people reporting to managers). Exhibit 4.5 offers examples of organically structured industries, such as high tech, computer, aerospace, and telecommunications industries, that must deal with change and uncertainty. Contemporary corporations and firms engaged in fast-paced, highly competitive, rapidly changing, and turbulent environments are becoming more organic in different ways, as we will discuss in this chapter. However, not every organization or every part of most organizations may require an organic type of structure. Understanding different organizational designs and structures is important to discern when, where, and under what circumstances a type of mechanistic system or part of an organization would be needed. The following section discusses five types of structures with variations.

Types of Organizational Structures

Within the context of mechanistic versus organic structures, specific types of organizational structures in the United States historically evolved over at least three eras, as we discuss here before explaining types of organizational designs. During the first era, the mid-1800s to the late 1970s, organizations were mechanistic self-contained, top-down pyramids. 22 Emphasis was placed on internal organizational processes of taking in raw materials, transforming those into products, and turning them out to customers.

Early organizational structures were focused on internal hierarchical control and separate functional specializations in order to adapt to external environments. Structures during this era grouped people into functions or departments, specified reporting relationships among those people and departments, and developed systems to coordinate and integrate work horizontally and vertically. As will be explained, the functional structure evolved first, followed by the divisional structure and then the matrix structured.

The second era started in the 1980s and extended through the mid-1990s. More-complex environments, markets, and technologies strained mechanistic organizational structures. Competition from Japan in the auto industry and complex transactions in the banking, insurance, and other industries that emphasized customer value, demand and faster interactions, quality, and results issued the need for more organic organizational designs and structures.

Communication and coordination between and among internal organizational units and external customers, suppliers, and other stakeholders required higher levels of integration and speed of informational processing. Personal computers and networks had also entered the scene. In effect, the so-called “horizontal organization” was born, which emphasized “reengineering along workflow processes that link organizational capabilities to customers and suppliers.” 23 Ford, Xerox Corp., Lexmark, and Eastman Kodak Company are examples of early adopters of the horizontal organizational design , which, unlike the top-down pyramid structures in the first era, brought flattened hierarchical, hybrid structures and cross-functional teams.

The third era started in the mid-1990s and extends to the present. Several factors contributed to the rise of this era: the Internet; global competition—particularly from China and India with low-cost labor; automation of supply chains; and outsourcing of expertise to speed up production and delivery of products and services. The so-called silos and walls of organizations opened up; everything could not be or did not have to be produced within the confines of an organization, especially if corporations were cutting costs and outsourcing different functions of products to save costs. During this period, further extensions of the horizontal and organic types of structures evolved: the divisional, matrix, global geographic, modular, team-based, and virtual structures were created.

In the following discussion, we identify major types of structures mentioned above and discuss the advantages and disadvantages of each, referenced in Exhibit 4.6 . Note that in many larger national and international corporations, there is a mix and match among different structures used. There are also advantages and disadvantages of each structure. Again, organizational structures are designed to fit with external environments. Depending on the type of environments from our earlier discussion in which a company operates, the structure should facilitate that organization’s capability to achieve its vision, mission, and goals.

Exhibit 4.6 offers a profile of different structures that evolved in our discussion above.

Note the continuum in Exhibit 4.6 , showing the earliest form of organizational structure, functional, evolving with more complex environments to divisional, matrix, team-based, and then virtual. This evolution, as discussed above, is presented as a continuum from mechanistic to organic structures—moving from more simple, stable environments to complex, changing ones, as illustrated in Exhibit 4.6 . The six types of organizational structures discussed here include functional, divisional, geographic, matrix, networked/team, and virtual. 24

The functional structure, shown in Exhibit 4.7 , is among the earliest and most used organizational designs. This structure is organized by departments and expertise areas, such as R&D (research & development), production, accounting, and human resources. Functional organizations are referred to as pyramid structures since they are governed as a hierarchical, top-down control system.

Small companies, start-ups, and organizations working in simple, stable environments use this structure, as do many large government organizations and divisions of large companies for certain tasks.

The functional structure excels in providing for a high degree of specialization and a simple and straightforward reporting system within departments, offers economies of scale, and is not difficult to scale if and when the organization grows. Disadvantages of this structure include isolation of departments from each other since they tend to form “silos,” which are characterized by closed mindsets that are not open to communicating across departments, lack of quick decision-making and coordination of tasks across departments, and competition for power and resources.

Divisional structures , see Exhibit 4.8 , are, in effect, many functional departments grouped under a division head. Each functional group in a division has its own marketing, sales, accounting, manufacturing, and production team. This structure resembles a product structure that also has profit centers. These smaller functional areas or departments can also be grouped by different markets, geographies, products, services, or other whatever is required by the company’s business. The market-based structure is ideal for an organization that has products or services that are unique to specific market segments and is particularly effective if that organization has advanced knowledge of those segments.

The advantages of a divisional structure include the following: each specialty area can be more focused on the business segment and budget that it manages; everyone can more easily know their responsibilities and accountability expectations; customer contact and service can be quicker; and coordination within a divisional grouping is easier, since all the functions are accessible. The divisional structure is also helpful for large companies since decentralized decision-making means that headquarters does not have to micromanage all the divisions. The disadvantages of this structure from a headquarters perspective are that divisions can easily become isolated and insular from one another and that different systems, such as accounting, finance, sales, and so on, may suffer from poor and infrequent communication and coordination of enterprise mission, direction, and values. Moreover, incompatibility of systems (technology, accounting, advertising, budgets) can occur, which creates a strain on company strategic goals and objectives.

A geographic structure , Exhibit 4.9 , is another option aimed at moving from a mechanistic to more organic design to serve customers faster and with relevant products and services; as such, this structure is organized by locations of customers that a company serves. This structure evolved as companies became more national, international, and global. Geographic structures resemble and are extensions of the divisional structure.

Organizing geographically enables each geographic organizational unit (like a division) the ability to understand, research, and design products and/or services with the knowledge of customer needs, tastes, and cultural differences. The advantages and disadvantages of the geographic structure are similar to those of the divisional structure. Headquarters must ensure effective coordination and control over each somewhat autonomous geographically self-contained structure.

The main downside of a geographical organizational structure is that it can be easy for decision-making to become decentralized, as geographic divisions (which can be hundreds if not thousands of miles away from corporate headquarters) often have a great deal of autonomy.

Matrix structures , illustrated in Exhibit 4.6 and depicted in Exhibit 4.11 , move closer to organic systems in an attempt to respond to environmental uncertainty, complexity, and instability. The matrix structure actually originated at a time in the 1960s when U.S. aerospace firms contracted with the government. Aerospace firms were required to “develop charts showing the structure of the project management team that would be executing the contract and how this team was related to the overall management structure of the organization.” As such, employees would be required to have dual reporting relationships—with the government and the aerospace company. 25 Since that time, this structure has been imitated and used by other industries and companies since it provides flexibility and helps integrate decision-making in functionally organized companies.

Matrix designs use teams to combine vertical with horizontal structures. The traditional functional or vertical structure and chain of command maintains control over employees who work on teams that cut across functional areas, creating horizontal coordination that focuses projects that have deadlines and goals to meet within and often times in addition to those of departments. In effect, matrix structures initiated horizontal team-based structures that provided faster information sharing, coordination, and integration between the formal organization and profit-oriented projects and programs.

As Exhibit 4.11 illustrates, this structure has lines of formal authority along two dimensions: employees report to a functional, departmental boss and simultaneously to a product or project team boss. One of the weaknesses of matrix structures is the confusion and conflicts employees experience in reporting to two bosses. To work effectively, employees (including their bosses and project leaders) who work in dual-authority matrix structures require good interpersonal communication, conflict management, and political skills to manage up and down the organization.

Different types of matrix structures, some resembling virtual team designs, are used in more complex environments. 26 For example, there are cross-functional matrix teams in which team members from other organizational departments report to an “activity leader” who is not their formal supervisor or boss. There are also functional matrix teams where employees from the same department coordinate across another internal matrix team consisting of, for example, HR or other functional area specialists, who come together to develop a limited but focused common short-term goal. There are also global matrix teams consisting of employees from different regions, countries, time zones, and cultures who are assembled to achieve a short-term project goal of a particular customer. Matrix team members have been and are a growing part of horizontal organizations that cut across geographies, time zones, skills, and traditional authority structures to solve customer and even enterprise organizational needs and demands.

As part of the next discussed organizational type of structure, networked teams, organizational members in matrix structures must “learn how to collaborate with colleagues across distance, cultures and other barriers. Matrix team members often suffer from the problem of divided loyalties where they have both team and functional goals that compete for their time and attention, they have multiple bosses and often work on multiple teams at the same time. For some matrix team members this may be the first time they have been given accountability for results that are broader than delivery of their functional goals. Some individuals relish the breath and development that the matrix team offers and others feel exposed and out of control.” To succeed in these types of horizontal organizational structures, organizational members “should focus less on the structure and more on behaviors.” 27

Networked team structures are another form of the horizontal organization. Moving beyond the matrix structure, networked teams are more informal and flexible. “[N]etworks have two salient characteristics: clustering and path length. Clustering refers to the degree to which a network is made up of tightly knit groups while path lengths is a measure of distance—the average number of links separating any two nodes in the network.” 28 A more technical explanation can be found in this footnote source. 29 For our purposes here, a networked organizational structure is one that naturally forms after being initially assigned. Based on the vision, mission, and needs of a problem or opportunity, team members will find others who can help—if the larger organization and leaders do not prevent or obstruct that process.

There is not one classical depiction of this structure, since different companies initially design teams to solve problems, find opportunities, and discover resources to do so. Stated another way, “The networked organization is one that is connected together by informal networks and the demands of the task, rather than a formal organizational structure. The network organization prioritizes its ‘soft structure’ of relationships, networks, teams, groups and communities rather than reporting lines.” 30 Exhibit 4.12 is a suggested illustration of this structure.

A Deloitte source based on the 2017 Global Human Capital Trend study stated that as organizations continue to transition from vertical structures to more organic ones, networked global designs are being adapted to larger companies that require more reach and scope and quicker response time with customers: “Research shows that we spend two orders of magnitude more time with people near our desk than with those more than 50 meters away. Whatever a hierarchical organization chart says, real, day-to-day work gets done in networks. This is why the organization of the future is a ‘network of teams.’” 31

Advantages of networked organizations are similar to those stated earlier with regard to organic, horizontal, and matrix structures. Weaknesses of the networked structure include the following: (1) Establishing clear lines of communication to produce project assignments and due dates to employees is needed. (2) Dependence on technology—Internet connections and phone lines in particular—is necessary. Delays in communication result from computer crashes, network traffic errors and problems; electronic information sharing across country borders can also be difficult. (3) Not having a central physical location where all employees work, or can assemble occasionally to have face-to-face meetings and check results, can result in errors, strained relationships, and lack of on-time project deliverables. 32

Virtual structures and organizations emerged in the 1990s as a response to requiring more flexibility, solution-based tasks on demand, fewer geographical constraints, and accessibility to dispersed expertise. 33 Virtual structures are depicted in Exhibit 4.13 . Related to so-called modular and digital organizations, virtual structures are dependent on information communication technologies (ICTs).

These organizations move beyond network team structures in that the headquarters or home base may be the only or part of part of a stable organizational base. Otherwise, this is a “boundaryless organization.” Examples of organizations that use virtual teams are Uber, Airbnb, Amazon, Reebok, Nike, Puma, and Dell. Increasingly, organizations are using different variations of virtual structures with call centers and other outsourced tasks, positions, and even projects.

Advantages of virtual teams and organizations include cost savings, decreased response time to customers, greater access to a diverse labor force not encumbered by 8-hour workdays, and less harmful effects on the environment. “The telecommuting policies of Dell, Aetna, and Xerox cumulatively saved 95,294 metric tons of greenhouse gas emissions last year, which is the equivalent of taking 20,000 passenger vehicles off of the road.” 34 Disadvantages are social isolation of employees who work virtually, potential for lack of trust among employees and between the company and employees when communication is limited, and reduced collaboration among separated employees and the organization’s officers due to lack of social interaction.

In the following section, we turn to internal organizational dimensions that complement structure and are affected by and affect external environments.

Concept Check

• Why does the matrix structure have a dual chain of command?
• How does a matrix structure increase power struggles or reduce accountability?
• What are the advantages of committees?

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Understanding Organizational Structures

Organizational structure aligns and relates parts of an organization, so it can achieve its maximum performance. The structure chosen affects an organization's success in carrying out its strategy and objectives. Leadership should understand the characteristics, benefits and limitations of various organizational structures to assist in this strategic alignment.

Overview Background Business Case Key Elements of Organizational Structures Types of Organizational Structures

Vertical structures (functional and divisional)

Matrix organizational structures, open boundary structures (hollow, modular virtual and learning).

The Impact of Growth Stages on Organizational Structure Metrics Communications and Technology Global Issues Legal Issues

This article addresses the following topics related to organizational structure:

• The case for aligning organizational structure with the enterprise's business strategy.
• Key elements of organizational structure.
• Types of organizational structures and the possible benefits and limitations of each.
• The impact of an organization's stage of development on its structure.
• Communications, technology, metrics, global and legal issues.

Organizational structure is the method by which work flows through an organization. It allows groups to work together within their individual functions to manage tasks. Traditional organizational structures tend to be more formalized—with employees grouped by function (such as finance or operations), region or product line. Less traditional structures are more loosely woven and flexible, with the ability to respond quickly to changing business environments.

Organizational structures have evolved since the 1800s. In the Industrial Revolution, individuals were organized to add parts to the manufacture of the product moving down the assembly line. Frederick Taylor's scientific management theory optimized the way tasks were performed, so workers performed only one task in the most efficient way. In the 20th century, General Motors pioneered a revolutionary organizational design in which each major division made its own cars.

Today, organizational structures are changing swiftly—from virtual organizations to other flexible structures. As companies continue to evolve and increase their global presence, future organizations may embody a fluid, free-forming organization, member ownership and an entrepreneurial approach among all members. See  Inside Day 1: How Amazon Uses Agile Team Structures and Adaptive Practices to Innovate on Behalf of Customers .

Business Case

A hallmark of a well-aligned organization is its ability to adapt and realign as needed. To ensure long-term viability, an organization must adjust its structure to fit new economic realities without diminishing core capabilities and competitive differentiation. Organizational realignment involves closing the structural gaps impeding organizational performance.

Problems created by a misaligned organizational structure

Rapid reorganization of business units, divisions or functions can lead to ineffective, misaligned organizational structures that do not support the business. Poorly conceived reorganizations may create significant problems, including the following:

• Structural gaps in roles, work processes, accountabilities and critical information flows can occur when companies eliminate middle management levels without eliminating the work, forcing employees to take on additional responsibilities.
• Diminished capacity, capability and agility issues can arise when a) lower-level employees who step in when middle management is eliminated are ill-equipped to perform the required duties and b) when higher-level executives must take on more tactical responsibilities, minimizing the value of their leadership skills.
• Disorganization and improper staffing can affect a company's cost structure, cash flow and ability to deliver goods or services. Agile organizations can rapidly deploy people to address shifting business needs. With resources cut to the bone, however, most organizations' staff members can focus only on their immediate responsibilities, leaving little time, energy or desire to work outside their current job scope. Ultimately, diminished capacity and lagging response times affect an organization's ability to remain competitive.
• Declining workforce engagement can reduce retention, decrease customer loyalty and limit organizational performance and stakeholder value.

The importance of aligning the structure with the business strategy

The key to profitable performance is the extent to which four business elements are aligned:

Leadership. The individuals responsible for developing and deploying the strategy and monitoring results.

Organization. The structure, processes and operations by which the strategy is deployed.

Jobs. The necessary roles and responsibilities.

People. The experience, skills and competencies needed to execute the strategy.

An understanding of the interdependencies of these business elements and the need for them to adapt to change quickly and strategically are essential for success in the high-performance organization. When these four elements are in sync, outstanding performance is more likely.

Achieving alignment and sustaining organizational capacity requires time and critical thinking. Organizations must identify outcomes the new structure or process is intended to produce. This typically requires recalibrating the following:

• Which work is mission-critical, can be scaled back or should be eliminated.
• Existing role requirements, while identifying necessary new or modified roles.
• Key metrics and accountabilities.
• Critical information flows.
• Decision-making authority by organization level.

See  Meeting the Challenges of Developing Collaborative Teams for Future Success.

Key Elements of Organizational Structures

Five elements create an organizational structure: job design, departmentation, delegation, span of control and chain of command. These elements comprise an organizational chart and create the organizational structure itself. "Departmentation" refers to the way an organization structures its jobs to coordinate work. "Span of control" means the number of individuals who report to a manager. "Chain of command" refers to a line of authority.

The company's strategy of managerial centralization or decentralization also influences organizational structures. "Centralization," the degree to which decision-making authority is restricted to higher levels of management, typically leads to a pyramid structure. Centralization is generally recommended when conflicting goals and strategies among operating units create a need for a uniform policy. "Decentralization," the degree to which lower levels of the hierarchy have decision-making authority, typically leads to a leaner, flatter organization. Decentralization is recommended when conflicting strategies, uncertainty or complexity require local adaptability and decision-making.

Types of Organizational Structures

Organizational structures have evolved from rigid, vertically integrated, hierarchical, autocratic structures to relatively boundary-less, empowered, networked organizations designed to respond quickly to customer needs with customized products and services.

Today, organizations are usually structured vertically, vertically and horizontally, or with open boundaries. Specific types of structures within each of these categories are the following:

• Vertical — functional and divisional.
• Vertical and horizontal — matrix.
• Boundary-less (also referred to as "open boundary")—modular, virtual and cellular.

See  What are commonly-used organization structures?

Two main types of vertical structure exist, functional and divisional. The functional structure divides work and employees by specialization. It is a hierarchical, usually vertically integrated, structure. It emphasizes standardization in organization and processes for specialized employees in relatively narrow jobs.

This traditional type of organization forms departments such as production, sales, research and development, accounting, HR, and marketing. Each department has a separate function and specializes in that area. For example, all HR professionals are part of the same function and report to a senior leader of HR. The same reporting process would be true for other functions, such as finance or operations.

In functional structures, employees report directly to managers within their functional areas who in turn report to a chief officer of the organization. Management from above must centrally coordinate the specialized departments. 

A functional organizational chart might look something like this: 

Advantages of a functional structure include the following:

• The organization develops experts in its respective areas.
• Individuals perform only tasks in which they are most proficient.
• This form is logical and easy to understand.

Disadvantages center on coordination or lack thereof:

• People are in specialized "silos" and often fail to coordinate or communicate with other departments.
• Cross-functional activity is more difficult to promote.
• The structure tends to be resistant to change.

This structure works best for organizations that remain centralized (i.e., a majority of the decision-making occurs at higher levels of the organization) because there are few shared concerns or objectives between functional areas (e.g., marketing, production, purchasing, IT). Given the centralized decision-making, the organization can take advantage of economies of scale in that there are likely centralized purchasing functions.

An appropriate management system to coordinate the departments is essential. The management system may be a special leader, like a vice president, a computer system or some other format.

Also a vertical arrangement, a divisional structure most often divides work and employees by output, although a divisional structure could be divided by another variable such as market or region. For example, a business that sells men's, women's and children's clothing through retail, e-commerce and catalog sales in the Northeast, Southeast and Southwest could be using a divisional structure in one of three ways:

• Product—men's wear, women's wear and children's clothing.
• Market—retail store, e-commerce and catalog.
• Region—Northeast, Southeast and Southwest.

A divisional organizational structure might look like this:

The advantages of this type of structure are the following:

• It provides more focus and flexibility on each division's core competency.
• It allows the divisions to focus on producing specialized products while also using knowledge gained from related divisions.
• It allows for more coordination than the functional structure.
• Decision-making authority pushed to lower levels of the organization enables faster, customized decisions.

The disadvantages of this structure include the following:

• It can result in a loss of efficiency and a duplication of effort because each division needs to acquire the same resources.
• Each division often has its own research and development, marketing, and other units that could otherwise be helping each other.
• Employees with similar technical career paths have less interaction.
• Divisions may be competing for the same customers.
• Each division often buys similar supplies in smaller quantities and may pay more per item.

This type of structure is helpful when the product base expands in quantity or complexity. But when competition among divisions becomes significant, the organization is not adapting quickly enough, or when economies of scale are lacking, the organization may require a more sophisticated matrix structure.

A matrix structure combines the functional and divisional structures to create a dual-command situation. In a matrix structure, an employee reports to two managers who are jointly responsible for the employee's performance. Typically, one manager works in an administrative function, such as finance, HR, information technology, sales or marketing, and the other works in a business unit related to a product, service, customer or geography.

A typical matrix organizational structure might look like this:

Advantages of the matrix structure include the following:

• It creates a functional and divisional partnership and focuses on the work more than on the people.
• It minimizes costs by sharing key people.
• It creates a better balance between time of completion and cost.
• It provides a better overview of a product that is manufactured in several areas or sold by various subsidiaries in different markets.

Disadvantages of matrix organizations include the following:

• Responsibilities may be unclear, thus complicating governance and control.
• Reporting to more than one manager at a time can be confusing for the employee and supervisors.
• The dual chain of command requires cooperation between two direct supervisors to determine an employee's work priorities, work assignments and performance standards.
• When the function leader and the product leader make conflicting demands on the employee, the employee's stress level increases, and performance may decrease.
• Employees spend more time in meetings and coordinating with other employees.

These disadvantages can be exacerbated if the matrix goes beyond two-dimensional (e.g., employees report to two managers) to multidimensional (e.g., employees report to three or more managers).

Matrix structures are common in heavily project-driven organizations, such as construction companies. These structures have grown out of project structures in which employees from different functions formed teams until completing a project, and then reverted to their own functions. In a matrix organization, each project manager reports directly to the vice president and the general manager. Each project is, in essence, a mini profit center, and therefore, general managers usually make business decisions.

The matrix-structured organization also provides greater visibility, stronger governance and more control in large, complex companies. It is also well suited for development of business areas and coordination of complex processes with strong dependencies.

Matrix structures pose difficult challenges for professionals charged with ensuring equity and fairness across the organization. Managers working in matrix structures should be prepared to intervene via communication and training if the structure compromises these objectives. Furthermore, leadership should monitor relationships between managers who share direct reports. These relationships between an employee's managers are crucial to the success of a matrix structure.

More recent trends in structural forms remove the traditional boundaries of an organization. Typical internal and external barriers and organizational boxes are eliminated, and all organizational units are effectively and flexibly connected. Teams replace departments, and the organization and suppliers work as closely together as parts of one company. The hierarchy is flat; status and rank are minimal. Everyone—including top management, managers and employees—participates in the decision-making process. The use of 360-degree feedback performance appraisals is common as well.

Advantages of boundary-less organizations include the following:

• Ability to leverage all employees' talents.
• Faster response to market changes.
• Enhanced cooperation and information sharing among functions, divisions and staff.

Disadvantages include the following:

• Difficulty in overcoming silos inside the organization.
• Lack of strong leadership and common vision.
• Time-consuming processes.
• The possibility of employees being adversely affected by efficiency efforts.
• The possibility of organizations abandoning change if restructuring does not improve effectiveness quickly.

Boundary-less organizational structures can be created in varied forms, including hollow, modular and virtual organizations.

Hollow organizations. Hollow structures divide work and employees by core and noncore competencies. Hollow structures are an outsourcing model in which the organization maintains its core processes internally but outsources noncore processes. Hollow structures are most effective when the industry is price competitive and choices for outsourcing exist. An example of a hollow structure is a sports organization that has its HR functions (e.g., payroll and benefits) handled by outside organizations.

Advantages of this type of structure include the following:

• Minimizing overhead.
• Enabling the organization to focus on its core product and eliminating the need to develop expertise in noncore functions.

Disadvantages include:

• Loss of control over functions that affect employees regularly.
• Restriction by certain industries (e.g., health care) on the extent of outsourcing.
• Lack of competitive outsourcing options.

Modular organizations. Modular structures differ from hollow organizations in that components of a product are outsourced. Modular structures may keep a core part of the product in-house and outsource noncore portions of the product. Networks are added or subtracted as needs change. For a modular structure to be an option, the product must be able to be broken into chunks. For example, computer manufacturer Dell buys parts from various suppliers and assembles them at one central location. Suppliers at one end and customers at the other become part of the organization; the organization shares information and innovations with all. Customization of products and services results from flexibility, creativity, teamwork and responsiveness. Business decisions are made at corporate, divisional, project and individual team member levels.

Advantages include the following:

• Minimizing the specialization and specialists needed.
• Enabling the company to outsource parts supply and coordinate the assembly of quality products.

Disadvantages include concerns about the actions of suppliers outside the control of the core management company. Risk occurs if the partner organization removes itself form the quality check on the end product or if the outsourced organization uses a second outsourced organization. Examples of supplier concerns include the following:

• Suppliers, or subcontractors, must have access to—and safeguard—most, if not all, of the core company's data and trade secrets.
• Suppliers could suddenly raise prices on or cease production of key parts.
• Knowing where one organization ends and another begins may become difficult.

Virtual organizations. A virtual organization (sometimes called a network structure) is cooperation among companies, institutions or individuals delivering a product or service under a common business understanding. Organizations form partnerships with others—often competitors—that complement each other. The collaborating units present themselves as a unified organization.

The advantages of virtual structures include the following:

• Contributions from each part of the unit.
• Elimination of physical boundaries.
• Responsiveness to a rapidly changing environment.
• Lower or nonexistent organizational overhead.
• Allows companies to be more flexible and agile.
• Give more power to all employees to collaborate, take initiative, and make decisions.
• Helps employees and stakeholders understand workflows and processes.

The disadvantages of virtual organizations include the following:

• Potential lack of trust between organizations.
• Potential lack of organizational identification among employees.
• Need for increased communication.
• Can quickly become overly complex when dealing with lots of offsite processes.
• Can make it more difficult for employees to know who has final say.

Virtual structures are collaborative and created to respond to an exceptional and often temporary marketing opportunity. An example of a virtual structure is an environmental conservancy in which multiple organizations supply a virtual organization with employees to save, for example, a historic site, possibly with the intent of economic gain for the partners.

Understanding the organizational environment is crucial in open boundary models. For example, some industries cannot outsource noncore processes due to government regulation. (For example, health insurance organizations may be unable to outsource Medicare processes). Or, in some cases, outsourcing may have to be negotiated with a union.

The key to effective boundary-less organizations is placing adaptable employees at all levels. Management must give up traditional autocratic control to coach employees toward creativity and the achievement of organizational goals. Employees must apply initiative and creativity to benefit the organization, and reward systems should recognize such employees.

Learning organizations. A learning organization is one whose design actively seeks to acquire knowledge and change behavior as a result of the newly acquired knowledge. In learning organizations, experimenting, learning new things, and reflecting on new knowledge are the norms. At the same time, there are many procedures and systems in place that facilitate learning at all organization levels.

The advantages of learning organizations include the following:

• Open communication and information sharing.
• Innovativeness
• Ability to adapt to rapid change.
• Strong organizational performance.
• Competitive advantage.

The disadvantages of learning organizations include the following:

• Power difference is ignored.
• Process of implementing will be complicated and take longer.
• Fear of employee participation in organizational decisions.
• Breaking of existing organizational rules.

The Impact of Growth Stages on Organizational Structure

Organizations typically mature in a consistent and predictable manner. As they move through various stages of growth, they must address various problems. This process creates the need for different structures, management skills and priorities.

The four stages of development in an organization's life cycle include the following:

The beginning stage of development is characterized by an inconsistent growth rate, a simple structure and informal systems. At this stage the organization is typically highly centralized. "Dotcom" companies are a good example of startup companies.

The expansion stage is evidenced by rapid, positive growth and the emergence of formal systems. Organizations at this stage typically focus on centralization with limited delegation.

Consolidation

The consolidation stage is characterized by slower growth, departmentalization, formalized systems and moderate centralization.

Diversification

The diversification stage occurs when older, larger organizations experience rapid growth, bureaucracy and decentralization.

As an organization grows or passes from one stage of development to another, carefully planned and well-conceived changes in practices and strategies may be necessary to maximize effectiveness. There are no guarantees that an organization will make it from one stage to the next. In fact, a key opportunity for leadership is to recognize indicators that suggest an organization is in a risky or unhealthy stage and to make appropriate structural adjustments.

The art of organizational design is assessing the environment's essential aspects and their meaning for the organization's future. Translating those characteristics into the right structure is critical to increasing efficiency and controlling costs. When selecting the best structure for the organization, company leaders should examine and evaluate current key structural dimensions and contextual factors. See  How do I determine which HR metrics to measure and report?

Structural dimensions

Leaders can develop an understanding of the organization's internal environment through measurement and analysis of its structural dimensions. Key dimensions, which are usually measured through a survey, include:

Specialization. The extent to which an organization's activities are divided into specialized roles.

Standardization. The degree to which an organization operates under standard rules or procedures.

Formalization. The extent to which instructions and procedures are documented.

Centralization. The degree to which leaders at the top of the management hierarchy have authority to make certain decisions.

Configuration. The shape of the organization's role structure, which includes:

• Chain of command. The number of vertical levels or layers on the organizational chart.
• Span of control. The number of direct reports per manager or the number of horizontal levels or layers on the organizational chart.

Contextual factors

A review of contextual factors will provide a better understanding of the external environment and the relationship between the internal and external environment. Some of the significant contextual factors to consider in this review include:

Origin and history. Was the organization privately founded? What changes have occurred in ownership or location?

Ownership and control. Is the organization private or public? Is control divided among a few individuals or many?

Size. How many employees does the organization have? What are its net assets? What is its market position?

Location. How many operating sites does the organization maintain?

Productsand services. What types of goods and services does the organization manufacture and provide?

Technology. Are the organization's work processes effectively integrated?

Interdependence. What is the degree to which the organization depends on customers, suppliers, trade unions or other related entities?

After examining the structural dimensions and contextual factors and developing an understanding of the connection between an organization's structure and strategy, organization leaders can consider alternative structures. They may use diagnostic models and tools to guide the design process.

Communications and Technology

The last few years have seen an unprecedented expansion and improvement of online communication. Software has pushed the boundaries of workplace communication beyond e-mail into collaborative social media platforms and innovative intranets. The decline in traditional communication methods and the dramatic increase in cyber communication has had a major impact on the workplace and is leading to restructuring.

As organizations continue to restructure to remain competitive, communications can drive the transition to an effective new organizational structure. Research suggests that companies can positively affect their credibility with employees through various organizational communication programs.

In establishing internal communication channels, leadership must be aware of the advantages and shortcomings of communication technologies and match them to the organization's needs, strategic goals and structure. Employers should also be cognizant of, and be prepared to deal with, the common communication challenges in various organizational structures. For example, communications technology has enabled organizations to create virtual workplaces and teams. In a virtual team, members from various geographical locations work together on a task, communicating via e-mail, instant messaging, teleconferencing, videoconferencing and web-based workspaces. Although virtual teams have significant advantages—most notably reduced travel costs and flexibility in staffing and work schedules—they also pose challenges. Virtual teams often find coordinating team logistics and mastering new technologies difficult. Communication is also a major challenge because of the absence of visual (body language) and verbal (intonation) clues. Research suggests that organizations can overcome these challenges through effective support and training.

Global Issues

Organizational structures often need to change as companies expand around the globe. An organization's leaders should plan carefully before opening offices in another country.

Many issues arise when an employer plans to open an international branch, hire international workers and formulate a globalized strategy. Among the questions that must be answered are:

• How do human resource legal requirements and practices vary from country to country?
• Should HR officials at headquarters do the work, or should a company open HR offices in the other country?
• Should an organization hire consultants to handle local hiring and personnel services?

Unless employers have a sound HR strategy ready before leaping into another country, they could fail.

When an organization opens international offices, HR professionals and other business leaders should be able to communicate as effectively with workers across the globe as around the corner. That can be a challenge. Having a robust intranet and using videoconferencing are alternatives to face-to-face communication.

As rapid changes in technology affect global communication, employees must be aware of linguistic, cultural, religious and social differences among colleagues and business contacts. The organization should train all employees (not just managers and CEOs who travel) in cultural literacy.

Moreover, employers should be aware that language difficulties, time‐and‐distance challenges, the absence of face‐to‐face contact, and, above all, the barriers posed by cultural differences and personal communication styles make global virtual work far more complex than local structures. These practices can enhance global virtual team relationships:

• Using online chats, video- and audioconferencing in addition to one-on-one conversations and e-mail.
• Posting profiles of team members that outline their expertise and roles in the organization.
• Being sensitive to the level of engagement team members are likely to deliver if they must meet at inconvenient hours across multiple time zones.

Legal Issues

Regardless of the type of structure, employers must ensure compliance with legal requirements in the countries where their organizations operate. Some of those requirements will be quite extensive (for example, public companies must ensure compliance with the Sarbanes-Oxley Act, and most organizations must ensure compliance with the Fair Labor Standards Act and its related state laws). When organizational structures change, or if the chain of command is weak or fails to keep up-to-date with changes in the business, a company may have compliance problems because the structure has not been evaluated with regard to these laws. Imagine, for example, a restructuring that reduces the number of direct reports for an entire layer of management, which perhaps leads to those individuals no longer being exempt.

As an organization moves internationally, laws in the host countries must also be evaluated and a plan put in place for compliance before the expansion occurs. Employers must anticipate and plan for laws affecting all aspects of the employee experience, including hiring, benefits, leaves and termination.

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• Section 1. Organizational Structure: An Overview

Chapter 9 Sections

• Section 2. Creating and Gathering a Group to Guide Your Initiative
• Section 3. Developing Multisector Task Forces or Action Committees for the Initiative
• Section 4. Developing an Ongoing Board of Directors
• Section 5. Welcoming and Training New Members to a Board of Directors
• Section 6. Maintaining a Board of Directors
• Section 7. Writing Bylaws
• Section 8. Including Youth on Your Board, Commission, or Committee
• Section 9. Understanding and Writing Contracts and Memoranda of Agreement
• Main Section

What is organizational structure?

Why should you develop a structure for your organization, when should you develop a structure for your organization.

By structure, we mean the framework around which the group is organized, the underpinnings which keep the coalition functioning. It's the operating manual that tells members how the organization is put together and how it works. More specifically, structure describes how members are accepted, how leadership is chosen, and how decisions are made.

• Structure gives members clear guidelines for how to proceed. A clearly-established structure gives the group a means to maintain order and resolve disagreements.
• Structure binds members together. It gives meaning and identity to the people who join the group, as well as to the group itself.
• Structure in any organization is inevitable -- an organization, by definition , implies a structure. Your group is going to have some structure whether it chooses to or not. It might as well be the structure which best matches up with what kind of organization you have, what kind of people are in it, and what you see yourself doing.

It is important to deal with structure early in the organization's development. Structural development can occur in proportion to other work the organization is doing, so that it does not crowd out that work. And it can occur in parallel with, at the same time as, your organization's growing accomplishments, so they take place in tandem, side by side. This means that you should think about structure from the beginning of your organization's life. As your group grows and changes, so should your thinking on the group's structure.

Elements of Structure

While the need for structure is clear, the best structure for a particular coalition is harder to determine. The best structure for any organization will depend upon who its members are, what the setting is, and how far the organization has come in its development.

Regardless of what type of structure your organization decides upon, three elements will always be there. They are inherent in the very idea of an organizational structure.

• Some kind of governance

Rules by which the organization operates

• A distribution of work

The first element of structure is governance - some person or group has to make the decisions within the organization.

Another important part of structure is having rules by which the organization operates. Many of these rules may be explicitly stated, while others may be implicit and unstated, though not necessarily any less powerful.

Distribution of work

Inherent in any organizational structure also is a distribution of work. The distribution can be formal or informal, temporary or enduring, but every organization will have some type of division of labor.

There are four tasks that are key to any group:

• Envisioning desired changes . The group needs someone who looks at the world in a slightly different way and believes he or she can make others look at things from the same point of view.
• Transforming the community . The group needs people who will go out and do the work that has been envisioned.
• Planning for integration . Someone needs to take the vision and figure out how to accomplish it by breaking it up into strategies and goals.
• Supporting the efforts of those working to promote change . The group needs support from the community to raise money for the organization, champion the initiative in the state legislature, and ensure that they continue working towards their vision.

Common Roles

Every group is different, and so each will have slightly different terms for the roles individuals play in their organization, but below are some common terms, along with definitions and their typical functions.

• An initial steering committee is the group of people who get things started. Often, this group will create plans for funding, and organizational and board development. It may also generate by-laws, and then dissolve. If they continue to meet after approximately the first six months, we might say they have metamorphosed into a coordinating council .
• A coordinating council (also referred to as a coordinating committee, executive committee , and executive council ), modifies broad, organization-wide objectives and strategies in response to input from individuals or committees.
• Often, one person will take the place of the coordinating council, or may serve as its head. Such a person may be known as the Executive Director, Project Coordinator, Program Director, or President . He or she sometimes has a paid position, and may coordinate, manage, inspire, supervise, and support the work of other members of the organization.
• Task forces are made up of members who work together around broad objectives. Task forces integrate the ideas set forward with the community work being done.

For example, from the director of a coalition to reduce violence in a medium-sized city: "Currently, we have three operational task forces. Members of each have an ongoing dialogue with members of the coordinating council, and also with their action committees. The oldest was formed with the goal of eliminating domestic violence about fifteen years ago, when a local woman was killed by her husband. Then, after several outbreaks of violence in the schools a few years back, our group offered to help, and a second task force sprung up around reducing youth violence. We've just started a third, with the goal of increasing gun safety. "All of it is interrelated, and all of it applies to our mission of increasing the safety of residents of South Haven, as well as that of our visitors. But each task force is contributing to that mission in vastly different ways, with different objectives, and using different strategies. 'Cause, you know, the strategies you use to stop a ninth grader from bringing a gun to school just aren't the same as the ones you use to stop a 40-year-old man on unemployment from beating his wife."

•   Action committees bring about specific changes in programs, policies, and practices in the sectors in which they work.

For example, the task force on domestic violence mentioned above has the following action committees: A government and law enforcement committee . Members include police officers, lawyers, a judge, and a state representative. Currently, they are trying to pass laws with stronger penalties for those convicted of domestic violence, especially repeat offenders. They are also training officers to be better able to spot an abusive relationship, and better able to inform a victim of his or her options. A social services committee . Members (who include representatives from most of the service agencies in town) work to assure that staff members know where to send someone for the resources he or she needs. They are also trying to increase the number of trained volunteer counselors who work at the battered women's shelter. A media committee . Members include local journalists, writers, and graphic designers. They keep the project and the issue in the public's minds as much as possible with editorials, articles and news clips of events, as well as advertisements and public service announcements.

•   Support committees are groups that help ensure that action committees or other individuals will have the resources and opportunities necessary to realize their vision. Financial and media committees are examples of committees formed to help support or facilitate your work.
• Community trustees , also known as the board of trustees or as the board of directors , provide overall support, advice, and resources to members of the action groups. They are often either people who are directly affected by the issue or have stature in the community. That way, they are able to make contacts, network with other community leaders, and generally remove or weaken barriers to meeting organizational objectives.
• Grantmakers are another part of the picture. Grantmakers exist on an international, national, state, and local level and may be private companies and foundations, or local, county, state, or federal government organizations (for example, block grants given by the city would fall into this category).
• Support organizations (not to be confused with the support committees listed above) are groups that can give your organization the technical assistance it needs.
• Partner organizations are other groups working on some of the same issues as your organization.

Although this list is pretty extensive, your organization may only use two or three of the above mentioned roles, especially at the beginning. It's not uncommon for a group to start with a steering committee, ask others to serve as board members, and then recruit volunteers who will serve as members of action committees. In this broad spectrum of possibilities, consider: Where does your organization fit in? Where do you want to be?

Examples of Structure

So how can all of these pieces be put together? Again, the form a community group takes should be based on what it does , and not the other way around. The structures given are simply meant to serve as examples that have been found to be effective for some community-based organizations; they can and should be adapted and modified for your own group's purposes.

  A relatively complex structure

Example - The Ste. Genevieve's Children's Coalition The Ste. Genevieve's Children's Coalition is a relatively large community-based group. They have a coordinating council, a media committee, and three task forces, dealing with adolescent pregnancy, immunization, and child hunger. Each of the task forces has action committees as well. For example, the adolescent pregnancy reduction task force has a schools committee that focuses on keeping teen parents in school and modifying the human sexuality curriculum. A health organizations committee focuses on increasing access and use of the youth clinic. The media committee works to keep children's issues in the news, and includes professionals from the local television stations, radio stations, newspaper, and a marketing professional. The coordinating council is composed of the executive director, her assistant, the media committee chair, and the chairs of each of the three task forces. A board of directors has been invaluable in helping keep the coalition financially viable.

In diagram form, a complex organization might look like this:

And in diagram form:

As smaller size means fewer people, these groups are usually less complex, as they have less need for a formal hierarchy and instead have governance that is consensus-based. A diagram of such a small group might look something like this, with each of the circles representing an individual member:

What type of structure should you choose?

First, decide upon the formality your organization will have. The following table, adapted from The Spirit of Coalition Building can help you make this first decision.

Organizational structure is something that is best decided upon internally, through a process of critical thinking and discussion by members of the group.

In your discussions, your answers to the following list of questions may guide your decisions.

• What is your common purpose? How broad is it? Groups with broader purposes often have more complicated structures, complete with many layers and parts, than do groups with more narrow purposes.
• Is your group advocacy oriented or service oriented? Service organizations use "top down," one-person-in-charge structure much more often than do advocacy based groups.
• Is your organization more centralized (e.g., through the work of a specific agency ) or decentralized (e.g., different neighborhoods working independently on the same problem)? A decentralized group might find a "top-down" structure inappropriate, as such a group often has several peers working together on an issue.
• How large is your organization? How large do you envision it becoming? A very small organization may wish to remain relatively informal, while a community-wide group might require a more formal structure. A related question, with similar consequences, is:
• How large is the community in which you work?
• How old is your organization? How long do you envision it lasting? A group formed to resolve a single issue might not need a formal structure at all, while an organization with long-term goals may want something more concrete, with clearer divisional responsibilities and authority.
• Is the organization entirely volunteer, or are there (or will there be) paid staff? How many? An organization with many paid staff members may find it more necessary to have people "in charge," as there are generally more rules and responsibilities for paid staff members, and thus, there must be more supervision in carrying out these roles.
• Should yours be a new organization, or part of an existing structure? Do you really need to form a new structure, or would it be better to work within existing structures? Sometimes, your goals may be better met if you are part of (or linked with) another organization.

Structure is what ensures that your organization will function smoothly and as you intended. You should think about structure early in the development of your organization, but be aware that the type that fits best may change as your organization grows.

Online Resources

How to Develop an Organization Structure , by Tara Duggan, Demand Media, is an informational article on how to develop organization structure with a short step-by-step analysis.

It's All About the Base: A Guide to Building a Grassroots Organizing Program   from Community Catalyst.

Module 2: Organizational Structure , by Pathfinder International, is a concise manual describing pros and cons, together with suggestions for how one might change the organizational structure one has.

Print Resources

Berkowitz, W., & Wolff, T. (1999). The spirit of coalition building. Washington , DC: American Public Health Association.

Unterman, I. & Davis, R. (1984). Strategic management of not-for-profit organizations: From survival to success . New York, NY: Praeger.

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How to make an effective organizational chart

No matter what design challenge you're taking on, your team needs context—starting with organizational structure. Once you understand organizational roles and responsibilities, you can achieve efficient workflow, clear communication, and informed decision-making. But with many companies shifting to hybrid remote and in-person teams, it's not always easy to tell who's doing what on a project.

Organizational charts can help dynamic teams flex roles and navigate responsibilities. Read on to find out:

• What is an organizational chart and when to use one
• Key benefits of organizational charts
• How to make your own with FigJam's organizational chart templates

What is an organizational chart?

An organizational chart (also known as an org chart, organogram, or organigram) is a visual representation of a company's internal structure. At a glance, you can see roles, responsibilities, and relationships across an organization.

Org charts came into use during the industrial revolution, and they're still evolving to reflect new types of organizational structures. Picture a startup where everyone pitches in when needed, no matter their rank. A flat organizational chart sharing team roles can boost collaboration and prevent overlap.

Design your organizational chart in FigJam

FigJam's free org chart template makes it easy to get started.

4 key benefits of organizational charts

Getting a bird's eye view of your company structure helps you understand the chain of command for decision-making. That way, you can involve key players and communicate across different departments. Updated organizational charts help capture changing players and roles in real time, helping your team in four key ways.

• Clarify the chain of command: Hierarchical structures aren't always obvious in modern organizations. But to get approvals, you need to know who's in charge of what. Org charts get everyone on the same page, in large organizations and small startups alike.
• Promote communication: With teams spread out across offices and time zones, you might not know who to go to for what. Org charts capture names, roles, and contact information, facilitating effective communication.
• Aid decision-making: Leaders can consult org charts to make informed choices when delegating work, distributing resources, and managing performance.
• Capture changes in reporting relationships: When a company is restructuring or expanding, org charts can capture how these changes impact employee roles and responsibilities. Clear, updated org charts help make transitions smoother and more transparent.

When to use organizational charts

Organizational charts make team planning and collaboration easier, especially at four crucial moments.

• For budgeting: Say your team takes on a new project. Who on your team has bandwidth for extra work? Do you need to hire contractors or outsource work? A glance at an org chart can help you see who you need to fill key roles, so you can allocate resources to meet project goals.
• During hiring and onboarding: An organizational chart helps human resources teams spot staffing gaps and hire new employees to meet changing needs. During onboarding, these visual aids help new hires understand their responsibilities, meet their teams, and settle into their roles.
• In project management: Project managers use organizational charts to manage resources across projects. Org charts help managers figure out who's the best fit for tasks, who reports to whom, and who grants approvals.
• In company restructuring: Updated organizational charts are crucial to guide teams through major changes. Teams rely on them to grasp their changing responsibilities, new reporting relationships, and how they fit into the big picture.

4 key types of organizational charts for modern organizations

What type of org chart is the best fit for your organizational structure? That depends on your company’s size, goals, and culture. Try on the four popular org chart examples below, and you may find a close fit.

1. Hierarchical org chart

Hierarchical organizational charts are especially common in large companies and government departments. Here the flow of authority and responsibility is often top-down—from the C-suite to the most junior employees, and from the presidential cabinet to aides. Leaders sit at the top, with support staff ranked in tiers below.

2. Flat org chart

Flat or horizontal organizations typically have fewer layers of middle management, so their charts have fewer layers and employees have more autonomy. Flat org charts are popular among startups and small businesses for tight teamwork and quick pivots. Entry-level employees may report directly to top management and have direct relationships with vendors.

3. Matrix org chart

A matrix organizational chart groups employees into departments by skill and role. A matrix structure makes sense for many creative teams, who handle multiple projects simultaneously for different teams and project managers. In these cases, rank and title are less relevant than skillsets and assignments. For example, a designer’s time may be allocated by a creative director to projects across departments, from product to marketing.

4. Divisional org chart

A divisional structure (or multi-divisional form ) is often divided into geographic regions or product lines. Each division has autonomy, while still working towards shared organizational goals. For example, a global brand could have international divisions with unique org charts, while maintaining global brand standards and company values.

How to make an organizational chart in 5 steps

Create an organizational chart to understand roles and manage resources with this step-by-step guide.

Step 1: Define the purpose of your org chart.

Is your goal to improve communication, streamline decision-making, or manage organizational change? Jot down your goal as a reminder of what you're trying to capture and why.

Step 2: Choose the appropriate org chart type.

Browse org chart templates to find the best fit for your project purpose and organization's structure. Choose from hierarchical, flat, matrix, or divisional structures.

Step 3: Collect organizational data.

Gather names, job titles, and reporting relationships to fill in your template with key details. Job descriptions, the employee directory, and previous organizational charts can help.

Step 4: Get creative with online tools.

Make your org chart modern and memorable with online tools, including this popular org chart widget .

Step 5: Update regularly.

Keep your org chart current to reflect changes in your organization. An outdated chart can lead to confusion, while an updated one promotes transparency.

Pro tips for an effective organizational chart

Apply these tips to excel at org charts:

• Incorporate handy details. Boost transparency and usability with useful employee info, such as contact information, photos, and department functions.
• Use color coding. This simple trick makes departments and roles easy to tell apart at a glance—and makes your chart more memorable and appealing.
• Make it easy to find. Upload your org chart to a shared drive, intranet, or a tool like FigJam .

Jumpstart your organizational chart with FigJam

Boost transparency and collaboration with compelling, accurate organizational charts created with FigJam's online collaborative whiteboard . Use it to:

• Brainstorm , design, and chart reporting structures
• Guide project team members to success with clear roles and reporting lines
• Explore design options to add brand elements to your organizational chart
• Browse org chart examples from the Figma community

Ready to design clearer roles and responsibilities?

7 Types of Organizational Structures (Organizational Chart Types) for Different Scenarios

Updated on: 20 March 2023

In one of our previous articles, we discussed organizational chart best practices . Now let’s take a look at types of organizational chart structures which can be used in different scenarios. And you don’t have to worry about creating them too. Our organizational chart software supports all the types mentioned below.

Organizational Structure Types

1) hierarchical structure.

The hierarchical model is the most popular organizational chart type. There are a few models that are derived from this model.

In a hierarchical organization structure,  employees are grouped with every employee having one clear supervisor . The grouping is done based on a few factors, hence many models are derived from this. Below are a few of those factors

• Function – employees are grouped according to the function they provide. The below image shows a functional org chart with finance, technical, HR, and admin groups.
• Geography – employees are grouped based on their region. For example, in the USA employees might be grouped according to the state. If it’s a global company the grouping could be done according to countries.
• Product – If a company is producing multiple products or offering different services it can be grouped according to the product or service.

These are some of the most common factors, but there are many more factors. You can find org chart examples  for most of these types in our diagramming community.

This is the dominant mode of organization among large organizations. For example Corporations, Governments, and organized religions are hierarchical organizations with different levels of management, power or authority. 

• Helps establish a clear line of authority and reporting within the organization
• Clarifies employee roles and responsibilities
• Establishes a clear career path for employees which can in turn keep them motivated
• Allows employees to be in-depth specialists as they are more likely to have niche positions
• Slow decision-making due to the complicated chains of command
• A disconnect of lower-level employees from those of the top-level management
• Inconsistencies in communication due to the vertical and horizontal levels between teams
• Restricted information due to the very little downward flow of information to the lower-level employees

2) Matrix Structure

In a  Matrix organizational structure, the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. It is a type of organizational management in which people with similar skills are pooled for work assignments, resulting in more than one manager to report to (sometimes referred to as solid line and dotted line reports, in reference to traditional business organization charts).

For example, all engineers may be in one engineering department and report to an engineering manager. But these same engineers may be assigned to different projects and might be reporting to those project managers as well. Therefore some engineers might have to work with multiple managers in their job roles.

Pros: 

• Helps eliminate traditional siloed communications barriers
• Improved decision-making due to the availability of two chains of command
• Allows employees to use their skills in different roles 
• Better use of resources which leads to increased efficiency

Cons: 

• May result in confusion regarding roles, responsibilities, and priorities 
• Conflict of power between the project manager and the functional manager
• Blurred lines of accountability
• Large overhead costs due to employing several managers

3) Horizontal/Flat Structure

This is an organizational chart type mostly adopted by small companies and start-ups in their early stage. It’s almost impossible to use this model for larger companies with many projects and employees.

The most important thing about this structure is that many levels of middle management are eliminated . This enables employees to make decisions quickly and independently. Thus a well-trained workforce can be more productive by directly getting involved in the decision-making process.

This works well for small companies because work and effort in a small company are relatively transparent. This does not mean that employees don’t have superiors and people to report to. Just that decision-making power is shared and employees are held accountable for their decisions.

So in summary, when deciding on a suitable organizational chart, it is important to have an understanding of the current organizational structure of your company.

• Fosters better communication and collaboration between team members
• More autonomy and responsibility to employees 
• More transparency due to limited bureaucracy
• Because the chain of command is shorter, it allows for faster decision-making
• Lack of opportunities for employee progression 
• Risk of power struggles arising due to the lack of a formal system  
• Employees may have a lower sense of accountability because they have one lead
• Risk of confusion because employees don’t have a clear supervisor

4) Network Structure

Network organizational structure helps visualize both internal and external relationships between managers and top-level management. They are not only less hierarchical but are also more decentralized and more flexible than other structures.

The idea behind the network structure is based on social networks. Its structure relies on open communication and reliable partners; both internal and external. The network structure is viewed as agiler than other structures because it has few tires, more control, and a bottom flow of decision making.

Using a Network organizational structure is sometimes a disadvantage because of its complexity. The below example of a network org chart shows the rapid communication between entities.

• Promotes healthy competition, innovation, and collaboration
• Allows organizations to adapt quickly to changes in their environment
• Paves way for an environment that fosters healthy competition, innovation, and collaboration
• Smaller, streamlined teams help save costs and contribute to improved efficiency
• Due to teams being independent and small, large-scale tasks may prove difficult to accomplish
• Without immediate supervision, network organizations may struggle with control over employees
• Can create an environment where employees compete in an unhealthy manner with each other to perform tasks 
• When work is outsourced, secret information about the organization may get breached

5) Divisional Structure

Divisional types of organizational charts have their own division which corresponds to either products or geographies. Each division contains the necessary resources and functions needed to support the product line and geography.

Another form of divisional org chart structure is the multi-divisional structure. It’s also known as M-form. It’s a legit structure in which one parent company owns several subsidiary companies, each of which uses the parent company’s brand and name.

The main advantage of the divisional structure is the independent operational flow, that failure of one company does not threaten the existence of the others.

It’s not perfect either. There can be operational inefficiencies from separating specialized functions. An increase in accounting taxes can be seen as another disadvantage.

Creating org chart with pictures using Creately

• Makes it much easier to assign responsibility for actions and results
• Works well in markets where there is high competition as local managers can quickly respond to changes in local conditions
• Tends to yield faster responses to local market conditions
• Helps build a culture that contributes both to higher morale and a better knowledge of the division’s portfolio
• Multiple divisions add more overhead costs to the organization
• When a number of functional areas are spread among many divisions, it might lead to inefficiencies 
• With skills being compartmentalized by division, it can be difficult to transfer skills or best practices across the organization
• Since each division may have its own strategic goal, it might not always align with the overall company strategy.

6) Line Organizational Structure

Line organizational structure is one of the simplest types of organizational structures . Its authority flows from top to bottom.  Unlike other structures, specialized and supportive services do not take place in these organizations.

The chain of command and each department head has control over their departments. The self-contained department structure can be seen as its main characteristic. Independent decisions can be taken by line officers because of its unified structure.

The main advantage of a line organizational structure can be identified as effective communication that brings stability to the organization.

• It is the simplest method of administration and is easy to understand and manage
• Since it’s easy to add or remove levels of management, this approach can be beneficial to companies that are constantly growing and changing
• Since the decision-making authority is concentrated at the top, it allows for faster decisions
• Ensures that everyone is well-aligned with formalized rules and procedures within a line organization
• Being overly reliant on line officials may become an issue in instances where they aren’t available
• Line organizational structures are rigid and inflexible, as such they maintain discipline so rigorously that they can rarely change
• Might create a culture of favoritism based on relationships or friendship
• Since the department manager is concerned only with the activities of his own department, employees are only skilled in tasks of their own departments

7) Team-based Organizational Structure

Team-based organizational structures are made of teams working towards a common goal while working on their individual tasks. They are less hierarchical and they have flexible structures that reinforce problem-solving, decision-making, and teamwork.

Team organization structures have changed the way many industries work. Globalization has allowed people in all industries around the world to produce goods and services cooperatively. Especially, manufacturing companies must work together with suppliers around the globe while keeping the cost to a minimum while producing high-quality products.

• Communication between employees is much more free-flowing and effective
• Since communication is more efficient, information flows faster leading to quicker problem-solving
• Allows employees from different backgrounds and different skillsets to come together and learn from each other
• With higher flexibility, team-based organizations find it easier to adapt to a fast-changing industry environment
• Personality conflicts within the team can negatively impact efficiency and group harmony
• Have less clear promotional paths for employees
• Since team accomplishments are rewarded rather than individual achievements, it might prove difficult to keep individual employees motivated
• Underperforming employees may hide behind those who are working hard and reap the benefits

Other Types of Organizational Charts

The ones shown above are the most commonly used types of Organizational Charts or organogram structure types as some call them. But there are plenty more models which have various advantages and disadvantages based on the situation and organization. You can easily experiment with different models using our org chart software .

Have questions? Feel free to ask them in the comments or you can reach to us via our social media channels.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

More Related Articles

it is very helpful.

Which of the organizational type does Toyota belong to?

limitations of organisation charts

Hi which type of the mentioned organization charts is useful for an eCommerce business?

eCommerce are typically smaller operations as opposed to ‘brick and mortar’ businesses, so they will be more likely to have Horizontal/Flat organisational structure

Im doing MBA in HR. Can someone share the organizational structure of HR department of a large IT Company.

the organizational structure of an IT company is basically Flat!

Back in the day (yep, I am showing my age) I used to dread creating organisational charts. With the technology available now, it’s so much easier to create even the most complex of charts, no matter which of the above options best suits your business.

Is there a post on the advantages and disadvantages of using the above mentioned organizational charts ? Please direct me to it, THanks.

You can check advantages and disadvantages of org charts here https://creately.com/blog/diagrams/advantages-disadvantages-organizational-charts/

your chart is very helpfull for students,and your article with helping material for every professional person.

What factors determine the type of organization chart to use???

Iam doing distance MBA from NMIMS

I have to solve an assignment where the question is:

Study organization structure of two IT companies and prepare a report comprising of the type of chart, positions, levels, functions, process and qualities in the organization.

Can you please help me about the type of content that should be covered in this?

Leave a comment Cancel reply

Please enter an answer in digits: 1 × 2 =

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6.2: Assignment- An Organizational Structure for Sun City Boards

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• Page ID 47674
• Lumen Learning

Preparation

With your advice, Tom has continued to make strategic planning progress at Sun City Boards, but you and Tom realize that a new organizational structure is needed for the company to grow as you envision. Plans include expanding beyond a single store/manufacturing shop and reaching new markets via an Internet presence and e-commerce. The following is a summary of the current staff and loose descriptions of job functions:

• Owner/CEO: Tom Wilson (Designs the boards, sets their selling price, and establishes sales channels with local surf shops)
• Bookkeeper: Verónica Ramírez (Verónica also doubles as order-taking clerk, cash register attendant, and customer support)
• Board Maker: Lloyd Greene (If Tom invents it, Lloyd can make it!)
• Board Making Assistants: Mariann Lee, Sam Kahele, and Romy Philliips (Assignments change almost daily as Lloyd decides what needs to be done next)
• Sales Associate: Kelly Pace (Named after famed surfer Kelly Slater and a business icon for Sun City Boards; visits surf shops and occasionally closes a sale)
• Part-time Associates: Hired as needed for inventory management (cleanup), promotional events, etc.

The Organizational Structures module of your text provides numerous examples and illustrations of organizational structures. As Tom’s advisor, your assignment now is to select one of the organizational structures presented in the reading, describe how it works, chart the future structure for Sun City, and explain why you prescribe it. The following steps will help you prepare for your written assignment:

• Carefully consider the various organizational structures, their key structural components, and organizational timing relevant for Sun City.
• Consider the internal and external environmental factors, as well as current trends.
• Select one of the Organizational Structures from your reading for Sun City.
• Create a Future State Organizational Chart for Sun City. You may use a presentation tool of your choice. There are numerous organizational chart format inserts available in popular software. Microsoft Word and PowerPoint have Hierarchy charts found on the Insert tab under SmartArt. Your org chart should contain the title of the job function, even if no Sun City employee currently fills that role. You may also recommend a reporting structure for the existing employees within the new structure.
• Write at least two paragraphs describing your chosen structure and why you selected it. Your written explanation must include three properly referenced and defined terms from the module reading. For example, if you select a functional structure, explain each relevant function.

In addition to the text, you are encouraged to research your organizational structure using reliable and properly cited Internet resources. You may also draw from your personal work experience with appropriate examples to support your references.

Contributors and Attributions

• Assignment: An Organizational Structure for Sun City Boards. Authored by : Betty Fitte and Lumen Learning. License : CC BY: Attribution

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Module 6 assignment: an organizational structure for sun city boards, preparation.

With your advice, Tom has continued to make strategic planning progress at Sun City Boards, but you and Tom realize that a new organizational structure is needed for the company to grow as you envision. Plans include expanding beyond a single store/manufacturing shop and reaching new markets via an Internet presence and e-commerce. The following is a summary of the current staff and loose descriptions of job functions:

• Owner/CEO: Tom Wilson (Designs the boards, sets their selling price, and establishes sales channels with local surf shops)
• Bookkeeper: Verónica Ramírez (Verónica also doubles as order-taking clerk, cash register attendant, and customer support)
• Board Maker: Lloyd Greene (If Tom invents it, Lloyd can make it!)
• Board Making Assistants: Mariann Lee, Sam Kahele, and Ibrahim Khakwani (Assignments change almost daily as Lloyd decides what needs to be done next)
• Sales Associate: Kelly Pace (Named after famed surfer Kelly Slater and a business icon for Sun City Boards; visits surf shops and occasionally closes a sale)
• Part-time Associates: Hired as needed for inventory management (cleanup), promotional events, etc.

The Organizational Structures module of your text provides numerous examples and illustrations of organizational structures. As Tom’s advisor, your assignment now is to select one of the organizational structures presented in the reading, describe how it works, chart the future structure for Sun City, and explain why you prescribe it. The following steps will help you prepare for your written assignment:

• Carefully consider the various organizational structures, their key structural components, and organizational timing relevant for Sun City.
• Consider the internal and external environmental factors, as well as current trends.
• Select one of the Organizational Structures from your reading for Sun City.
• Create a Future State Organizational Chart for Sun City. You may use a presentation tool of your choice. There are numerous organizational chart format inserts available in popular software. Microsoft Word and PowerPoint have Hierarchy charts found on the Insert tab under SmartArt. Your org chart should contain the title of the job function, even if no Sun City employee currently fills that role. You may also recommend a reporting structure for the existing employees within the new structure.
• Write at least two paragraphs describing your chosen structure and why you selected it. Your written explanation must include three properly referenced and defined terms from the module reading. For example, if you select a functional structure, explain each relevant function.

In addition to the text, you are encouraged to research your organizational structure using reliable and properly cited Internet resources. You may also draw from your personal work experience with appropriate examples to support your references.

• Assignment: An Organizational Structure for Sun City Boards. Authored by : Betty Fitte and Lumen Learning. License : CC BY: Attribution

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How Burnout Became Normal — and How to Push Back Against It

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Seven strategies to get back to a healthy baseline.

Slowly but steadily, while we’ve been preoccupied with trying to meet demands that outstrip our resources, grappling with unfair treatment, or watching our working hours encroach upon our downtime, burnout has become the new baseline in many work environments. From the 40% of Gen Z workers who believe burnout is an inevitable part of success, to executives who believe high-pressure, “trial-by-fire” assignments are a required rite of passage, to toxic hustle culture that pushes busyness as a badge of honor, too many of us now expect to feel overwhelmed, over-stressed, and eventually burned out at work. When pressures are mounting and your work environment continues to be stressful, it’s all the more important to take proactive steps to return to your personal sweet spot of stress and remain there as long as you can. The author presents several strategies.

If we’re exposed to something repeatedly, it seems we can become desensitized to almost anything. An event that once evoked shock can come to seem routine; what once prompted alarm can eventually inspire no more than a shrug.

• Kandi Wiens , EdD, is a senior fellow at the University of Pennsylvania Graduate School of Education and the author of the book Burnout Immunity : How Emotional Intelligence Can Help You Build Resilience and Heal Your Relationship with Work (HarperCollins, 2024). A nationally known researcher and speaker on burnout, emotional intelligence, and resilience, she developed the Burnout Quiz to help people understand if they’re at risk of burning out.

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Unv youth advocates programme: applications now open, the talent programme by unicef and unv aims at empowering young people, including youth with disabilities, to become agents of change.

UNICEF has launched the UNV Youth Advocates programme , an initiative to recruit talent in partnership with United Nations Volunteers  (UNV) . We aim at empowering young people , including youth with disabilities, to become agents of change and champion children's rights.

Click here to go to the video | Click here to go to the assignments

The UNV Youth Advocates

After the success of the first initiative in 2018 - 2019, which mobilized 42 Youth Advocates (18-24 years old) in 27 countries, UNICEF, in partnership with UNV, is now looking for the second cohort.  We are searching for 20 young, passionate, and skilled advocates to join us and become agents of change advocating for the protection of children’s rights.

The UNV Youth Advocates Programme offers young people the chance to gain one-year professional experience through a National UN Volunteer (UNV) assignment with UNICEF , while also imparting their valuable insights into the organization's work for children and young people.

The recruited UNV Youth Advocates will have access to learning and professional development opportunities, including a suite of online learning programmes.

Young professionals with disabilities and from under-represented groups are especially encouraged to apply.

If you are 18-35 years of age and passionate about children´s rights, check out the assignment opportunities listed below.

Click here to go to the assignments

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Title: st-mambasync: the confluence of mamba structure and spatio-temporal transformers for precipitous traffic prediction.

Abstract: Balancing accuracy with computational efficiency is paramount in machine learning, particularly when dealing with high-dimensional data, such as spatial-temporal datasets. This study introduces ST-MambaSync, an innovative framework that integrates a streamlined attention layer with a simplified state-space layer. The model achieves competitive accuracy in spatial-temporal prediction tasks. We delve into the relationship between attention mechanisms and the Mamba component, revealing that Mamba functions akin to attention within a residual network structure. This comparative analysis underpins the efficiency of state-space models, elucidating their capability to deliver superior performance at reduced computational costs.

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The world’s electric car fleet continues to grow strongly, with 2024 sales set to reach 17 million

News 23 April 2024

Despite near-term challenges in some markets, based on today's policy settings, almost 1 in 3 cars on the roads in China by 2030 is set to be electric, and almost 1 in 5 in both United States and European Union

More than one in five cars sold worldwide this year is expected to be electric, with surging demand projected over the next decade set to remake the global auto industry and significantly reduce oil consumption for road transport, according to the new edition of the IEA’s annual Global EV Outlook .

The latest Outlook , published today, finds that global electric car sales are set to remain robust in 2024, reaching around 17 million by the end of the year. In the first quarter, sales grew by about 25% compared with the same period in 2023 – similar to the growth rate seen in the same period a year earlier, but from a larger base. The number of electric cars sold globally in the first three months of this year is roughly equivalent to the number sold in all of 2020.

In 2024, electric cars sales in China are projected to leap to about 10 million, accounting for about 45% of all car sales in the country. In the United States, roughly one in nine cars sold are projected to be electric – while in Europe, despite a generally weak outlook for passenger car sales and the phase-out of subsidies in some countries, electric cars are still set to represent about one in four cars sold.

This growth builds on a record-breaking 2023. Last year, global electric car sales soared by 35% to almost 14 million. While demand remained largely concentrated in China, Europe and the United States, growth also picked up in some emerging markets such as Viet Nam and Thailand, where electric cars accounted for 15% and 10%, respectively, of all cars sold.

Substantial investment in the electric vehicle supply chain, ongoing policy support, and declines in the price of EVs and their batteries are expected to produce even more significant changes in the years to come. The Outlook finds that under today’s policy settings, every other car sold globally is set to be electric by 2035. Meanwhile, if countries’ announced energy and climate pledges are met in full and on time, two in three cars sold would be electric by 2035. In this scenario, the rapid uptake of electric vehicles – from cars to vans, trucks, buses, and two- and three-wheelers –  avoids the need for around 12 million barrels of oil per day, on a par with current demand from road transport in China and Europe combined.

“The continued momentum behind electric cars is clear in our data, although it is stronger in some markets than others,” said IEA Executive Director Fatih Birol . “Rather than tapering off, the global EV revolution appears to be gearing up for a new phase of growth. The wave of investment in battery manufacturing suggests the EV supply chain is advancing to meet automakers’ ambitious plans for expansion. As a result, the share of EVs on the roads is expected to continue to climb rapidly. Based on today’s policy settings alone, almost one in three cars on the roads in China by 2030 is set to be electric, and almost one in five in both the United States and European Union. This shift will have major ramifications for both the auto industry and the energy sector.”

The report finds that manufacturers have taken major steps to deliver on the strengthening EV ambitions of governments, including by making significant financial commitments. Thanks to high levels of investment over the past five years, the world’s capacity to produce batteries for EVs is well positioned to keep up with demand, even as it rises sharply over the next decade. The pace of the transition to EVs may not be consistent and will hinge on affordability, the report emphasises.

In China, more than 60% of electric cars sold in 2023 were already less expensive to buy than their conventional equivalents. However, in Europe and the United States, the purchase prices for cars with internal combustion engines remained cheaper on average, though intensifying market competition and improving battery technologies are expected to reduce prices in the coming years. Even where upfront prices are high, the lower operating costs of EVs mean the initial investment pays back over time.

Growing electric car exports from Chinese automakers, which accounted for more than half of all electric car sales in 2023, could add to downward pressure on purchase prices. Chinese companies, which are also setting up production facilities abroad, have already seen strong sales of more affordable models launched in 2022 and 2023 in overseas markets. This highlights that the composition of the main EV-producing economies is diverging considerably from the traditional auto industry.

Ensuring that the availability of public charging keeps pace with electric vehicle sales is crucial for continued growth, according to the report. The number of public charging points installed globally was up 40% in 2023 relative to 2022, and growth for fast chargers outpaced that of slower ones. However, to meet a level of electric vehicle deployment in line with the pledges made by governments, charging networks need to grow sixfold by 2035. At the same time, policy support and careful planning are essential to make sure greater demand for electricity from charging does not overstretch electricity grids.

Accompanying the Global EV Outlook 2024 are the Global EV Data Explorer and the Global EV Policy Explorer . These online tools allow users to interactively explore EV statistics, projections and policy measures worldwide. 

Global EV Data Explorer

Explore historical and projected data on electric vehicles sales, stock, charging infrastructure and oil displacement.

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Dalton Transactions

Theoretical prediction of the electronic structure, optical properties and contact characteristics of type-i mos2/moge2n4 heterostructure towards optoelectronic devices.

Recently, the combination between two different two-dimensional (2D) semiconductors to generate van der Waals (vdW) heterostructures has emerged as an effective strategy to tailor the physical properties, paving the way for the development of next-generation devices with improved performance and functionality. In this work, we design the MoS$_2$/MoGe$_2$N$_4$ heterostructure and explore its electronic structures, optical properties and contact characteristics using first-principles calculations. The MoS$_2$/MoGe$_2$N$_4$ heterostructure predicted to be energetically, thermally and dynamically stable, indicating its feasibility for experimental synthesis in the future. The MoS$_2$/MoGe$_2$N$_4$ heterostructure forms type-I band alignment, suggesting that it can be considered as a promising material for optoelectronic devices, such as light-emitting diodes and laser applications. Furthermore, the formation of type-I MoS$_2$/MoGe$_2$N$_4$ heterostructure enhances the optical absorption in both the visible and ultraviolet regions. More interestingly, the electronic properties and contact characteristics of the MoS$_2$/MoGe$_2$N$_4$ heterostructure can be tailored by applying in-plane biaxial strain. Under the application of compressive and tensile strains, the transformation between type-I and type-II and semiconductor to metal can be achieved in the MoS$_2$/MoGe$_2$N$_4$ heterostructure. Our findings could provide an useful guidance for experimental synthesis of electronic and optoelectronic applications based on the MoS$_2$/MoGe$_2$N$_4$ heterostructure.

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S. Nguyen and K. D. Pham, Dalton Trans. , 2024, Accepted Manuscript , DOI: 10.1039/D4DT00829D

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