![]() A functional structure facilitates specialization, scalability and accountability. This structure has centralized leadership and the vertical, hierarchical structure has clearly defined roles, job functions, chains of command and decision-making authority. Departments or teams within the organizationĪ functional-or role-based-structure is one of the most common organizational structures.Regardless of the special type of organizational structure you choose, it should have the following components: Clearly disseminating this information to employees:Įssential Elements of Clear Organizational Structure There are many benefits to creating an organizational structure that aligns with the company’s operations, goals and objectives. Benefits of Creating an Organizational Structure The matrix organizational structure described below is an example of a flat structure. With a flat organization structure, a person may report to more than one person and there may be cross-department responsibilities and decision-making authority. As discussed below, functional, product-based, market-based and geographical organizational structures are vertical structures. ![]() FlatĪ vertical organizational chart has a clear chain of command with a small group of leaders at the top-or in the center, in the case of a circular structure-and each subsequent tier has less authority and responsibility. Instead of information flowing down to the next “level,” information flows out to the next ring of management. On the other hand, a circular organization chart looks like concentric circles with company leadership in the center circle. There is one role at the top of the pyramid and the chain of command moves down, with each level decreasing in responsibilities and authority. CircularĪ hierarchical organization structure is the pyramid-shaped organization chart many people are used to seeing. Decentralized leadership can help companies remain agile and adapt to changing needs. With centralized leadership, there is a transparent chain of command and each role has well-defined responsibilities.Ĭonversely, with a decentralized organizational structure, teams have more autonomy to make decisions and there may be cross-collaboration between groups. Many companies use the traditional model of a centralized organizational structure. Organizational structures can be centralized or decentralized, hierarchical or circular, flat or vertical. An organizational structure creates this framework. ![]() Employees want to understand their job responsibilities, whom they report to, what decisions they can and should make and how they interact with other people and teams within the company.
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