Selecting Organizational Structure
A company's organizational structure serves as a map of its managerial hierarchy, flows of communication and physical grouping of employees. No single structure is inherently better than another. Rather, different structures are better suited to different types of businesses and managerial styles. Selecting the right organizational structure for your business can help to ensure that your company operates smoothly moving forward.
Other People Are Reading
Instructions
-
-
1
Select a functional organizational structure if you wish employees in individual departments to work in close proximity. Organizing your structure based on business functions, such as accounting, marketing and distribution, can help to improve efficiency in each department. Situating an entire department in a single office can help the employees work more effectively together as they gain experience working as a team.
-
2
Choose a product structure if you wish to organize your workforce around individual products or brands. Product structures place representatives from each department together to allow work processes centered around a single product line to flow more smoothly. Product structures allow a greater degree of control over financing, manufacturing, marketing and distribution of select product lines, allowing employees to focus their activities more acutely.
-
-
3
Structure your organization to be relatively flat if important decisions need to be made on the front line. Flatter structures contain fewer layers of management, allowing employees more freedom to choose how to accomplish their jobs and empowering them to provide better customer service.
-
4
Set up your organization to be taller if you want decisions to be made and communicated in a top-down fashion. Taller structures can be effective in organizations with high employee turnover rates on the front line since employees rarely have a chance to become experienced enough in the organization to make truly effective decisions in line with the company's philosophies and goals.
-
5
Select a centralized organizational structure if you have a single outlet or office, or a small number of outlets in close proximity. Under centralized structures, managerial authority is concentrated in a single place, such as the home office, with decisions being communicated outward to other outlets.
-
6
Choose a decentralized structure if your business has many outlets or a presence in more than one country. Decentralized structures create multiple, parallel lines of authority for distinct components of the business. For example, under a decentralized structure a company may have a Vice President of North American Operations and a Vice President of European Operations, both with identical job responsibilities but in different geographic locations.
-
1
References
Resources
- Photo Credit Ryan McVay/Photodisc/Getty Images
