Organizational structures

Organizational structures

Organisational Structures

Functional Structure

• Organised by area of specialisation, functions such as marketing, finance, human resources, operations.

• Each department is headed by a functional manager who reports to the CEO or Managing Director.

• Clear separation of responsibilities and allows for specialisation.

• However, may lead to communication barriers between different functions.

Divisional Structure

• Organised by products, markets or geography. Each division operates as a separate business entity under the umbrella of the organisation.

• Allows for a more focused approach towards different products, markets or regions.

• However, can lead to duplication of resources and tasks across divisions.

Matrix Structure

• Combines both functional and divisional structures. Employees have dual reporting relationships – to a functional manager and a divisional (product, market or region) manager.

• Effectively addresses multiple organisational objectives.

• Fosters inter-departmental collaboration and communication.

• However, may result in confused reporting lines and potential conflict.

Flat Structure

• Organisational structure with few or no levels of middle management between staff and executives.

• Promotes employee involvement and decision making.

• Enhances communication and coordination as it reduces the number of layers information must pass through.

• However, may result in heavier workloads and may not be effective for larger companies.

Hierarchical Structure

• Traditional organisational structure with a distinct chain of command through different levels of management.

• Clear delineation of responsibility and authority.

• Creates an environment of order and command that facilitates decision making.

• However, may cause slow decision making and communication gaps due to multiple layers.