Functional –This is the most common type of organizational structure.It divides departments by job functions, i.e. Sales, Marketing, IT etc. Functional organizations are so common because they are easy to work within and to apply to any company or industry, and it promotes working closely within your department. A potential downfall, though, may be that it can discourage interdepartmental communication. If each department has a different agenda that does not sync up with other departments, then you may lose the vision of the company.
Product-Based Divisional –This type of structure divides departments based on products. This may be beneficial for a company like Proctor & Gamble,which has several different products under one company name. This structure helps shorten product development cycles and encourages communication and focus within that product. Unfortunately, this division may prohibit groups from keeping the entire company in mind. Like functional, you could possiblyhave managers more focused on their own product or division rather than the company as a whole.
Market-Based Divisional –Market-based structures are likeproduct-based structures, but geared towards companies that cater to multiple markets or industries. For example, Microsoft is split into products for Consumers, B2B, and Government, as each customer segment needs something different. This has similar benefits and downfalls to product-based structures where the segment can strive further, but it may be at the cost of the company as a whole.
Processed-Based Divisional¬–This organizational structure is designed around the end-to-end flow of different processes such as R&D, order fulfillment, etc. It takes into consideration, not only activities performed, but also how those different activities interact with each other. This structure moves from left to right rather than top down like a normal functional structure. For example, the line may move from R&D, to customer interaction, and then lastly to order fulfillment. This is beneficial for speed and efficiency and is easily adaptable to multiple company types. A downfall of this type of structure may be that it can cause confusion when handing off work to the next in line.
Matrix– A matrix structure in an organization is very different from typical functional and divisional structures. Employees have dual reporting relationships; to their functional line manager and then to a product-based manager. In an organizational chart, a solid line would represent their typical functional line manager and a dotted line would represent their secondary product-based manager, where the functional manager takes precedence. The structure was created to provide flexibility, but many companies have been trying to get rid of this structure due to confusion and conflicting management decisions.
Each of these structures can be extremely beneficial or extremely detrimental depending on the company, industry, or even the application method. You may find that what you currently have isa structure that isnot working for your organization, so the company is faced with the daunting task of changing. This is a long and painful process but could lead to happier employees and a flourishing company.
The most important step in changing an organization is communication. There is no such thing as over communicating when things are shifting in an organization. Employees get very anxious when the word “change” comes up so clearly explaining, multiple times, the details around the change is the best approach. Employees on all levels need to understand why the company is changing, how the company is changing, and what that means for them on a structural level. By keeping employees in the loop about the change, they become more invested and comfortable with it, and therefore more open and willing to participate in the change.
Ashley Herbert
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