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02.10.2013
Every company that is built, whether big or small, have different organizational structure types. Regardless of what organizational structure types a company chooses to employ, the most important thing is that it uses the one that will prove to be most useful for the group. In a hierarchical organization structure, employees are grouped with every employee having one clear supervisor. Product – If a company is producing multiple products or offering different services it can be grouped according to the product or service. In a Matrix organizational structure, the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. For example, all engineers may be in one engineering department and report to an engineering manager. This is an organizational chart type mostly adopted by small companies and start-ups in their early stage.
This works well for small companies because work and effort in a small company is relatively transparent. So in summary, when deciding the suitable organizational chart, it is important to have an understanding of the current organizational structure of your company. In a future article we’re hoping to talk about the advantages and disadvantages of using organizational charts. Is there a post on the advantages and disadvantages of using the above mentioned organizational charts ? Notify me of replies to my commentThis blog uses premium CommentLuv which allows you to put your keywords with your name if you have had 9 approved comments. An organizational chart helps to explain the structure of the organization in the form of diagrams.
The projectized hierarchical chart is created normally for organizations where the teams are often juxtaposed. Trying to maintain a classic org chart—or, heaven-forbid, to redesign your business based on one—causes much more harm than good. It should be intuitive that, in order to manage and scale your business, you need a sound organizational design. Changing an organizational structure can be very challenging because there’s a lot of inertia tied up in the status quo. Organizational structure defines the purpose, accountabilities, and key performance indicators (KPIs) for each business function and role. An org chart shows each person’s job title and may include HR stuff like job requirements.
Once correctly defined, a structure changes infrequently—for example, when there’s a change in strategy like a new product initiative or a move up to a new stage in the execution lifecycle.
To repeat, you don’t need an org chart to scale your business, but you do need a well-designed organizational structure. Prior to this organizational redesign, the company had stalled out in its growth trajectory and the culture was deteriorating. In the structure above, each large grey box represents the major functions of the business.
Only after the design is set up correctly for the chosen strategy—again, independently of the individuals involved—should you assign accountability for each function. It doesn’t matter how many staff a given organizational function has, whether 1 or 1000+. While there is an art form in facilitating a process to help the team opt into their new roles in the structure, the first step is always to create teamwide recognition and commitment to the right strategy and structural design before addressing who is will be taking on which roles and hats. In other words, creating unarguable accountability for the key organizational functions must also be matched with an information-sharing and decision-making process that creates radical transparency and rapid execution across the organization.
Every effective organizational design, no matter its shape, is an attempt to clarify accountability and move the organization forward in its chosen direction with little lost time and energy in its momentum. Now that you have a basic appreciation for organizational structure, it should be clear that there’s also a need for managing the people within that structure.
Unlike a traditional HRMS that is title-centric, you’ll want to modify your HRMS so that it is role-centric.


This HRMS creates an organizational tree that calls out the major and minor roles of the company as reflected in the structure. Having a role-centric HRMS based on the design of the structure gives you the best of both worlds. Each type serves its own purpose that a company can abide by depending on what their needs are. This category in the organizational structure types is being based on the divisions of the company. Attempting to use a structure that is not right for a company will lead to very disastrous results and confuse the lines of authority.
Now lets take a look at types of organizational charts which can be used in different scenarios. The below image shows a functional org chart with finance, technical , HR and admin groups. 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).
But these same engineers may be assigned to different projects and might be reporting to those project managers as well.
It’s almost impossible to use this model in larger companies with many projects and employees. But there are plenty more models which has various advantages and disadvantages based on the situation and organization. Feel free to ask them in the comments or you can reach to us via our social media channels. I handle marketing stuff here at Creately including writing blog posts and handling social media accounts. The organizational charts work as the support tools while defining the organizational structure, culture, and style. Hierarchical organizations are structured in a way where the employees are organized in groups or under functional departments. The teams work on different projects and the projects are managed by different project managers. Do you need one or the other—or both—to manage your business?” I get asked different versions of this question a lot.
You do not need a classic org chart—that constantly-changing and almost instantly-out-of-date diagram that shows names, job titles, and lines of reporting responsibilities.
So drop the classic org chart and instead embrace the principles of effective organizational structure combined with a role-centric HRMS. Individual perceptions of job status, internal politics, titles, compensation, and desired career paths can make changing your structure seem complicated, if not daunting. And sure, there are key elements of a classic org chart that you’ll want to maintain in a role-centric HRMS to make the job of managing staff, budgets, and HR stuff easier. Before you even start the design, you first take any consideration for people and titles off the table.
The team was suffering from role confusion, unclear accountabilities, a lack of real strategic priorities, and stalled execution. What matters at this conceptual stage of the design is that a single person, whether as a dedicated role or wearing a temporary hat, is held accountable for the success of that area of the business. This shorthand code allows the company to have a shared definition of some key management requirements for each role, as well as the type of leader who is best suited to own it. Actually, any pre-existing silos in the business disappear with the adoption of an effective team-based decision making process that creates transparency and cohesion, therefore bringing the new organizational structure to life.
You can read more about tying strategy, structure, and execution together in Parts III and IV of my book Organizational Physics: The Science of Growing a Business. You may be thinking, “Wait, do we really need a hierarchy in our organizational design?
Rather than trying to translate the structure into a classic org chart with names, titles and lines of reporting, keep the HR stuff in your human resources management system (HRMS). He's grown from co-founder and CEO of the world's largest affiliate marketing company to follow his passion as CEO Coach to the world's next generation of expansion-stage companies.


There are basically three structural types for organizations to choose from, and it is the head’s responsibility to choose one that serves their purpose best.
It basically follows the company’s rules and has very concise lines of authority for different levels of management. This means that every department has their own sets of rules and authoritative figures that they follow which may not be applicable to the other branches of the company.  For instance, those that are under marketing have their own structure and those who are in products and development have theirs as well.
Just that decision making power is shared and employees are held accountable for their decisions.
Read ahead to gain insights into different organizational structures and styles through their charts. These charts are normally designed during the organizational planning or restructuring phase.
The project managers will have complete freedom and a great deal of control over these projects. Many companies set themselves up for failure by attempting to redesign the organization from an existing org chart.
You start with a blank slate and think through the functions the business must perform to succeed in its chosen growth strategy now and over time. 5000 Fastest Growing Company that I helped to redesign as part of my strategic execution coaching program. The blue boxes under each major function capture some of the high-level KPIs for that functional area. It helps tremendously with hiring and creating role alignment and satisfaction among the staff.
Keeping the HR stuff in the HRMS, while also having the HRMS mirror the design of the structure itself, allows you to have the best of both worlds. Notice that the Role Entry includes the purpose, accountabilities, and top KPIs for that role.
As your organization grows and develops, having this role-centric mindset creates flexibility to move people into roles where they are needed in that moment, without being so caught up in job titles and the status quo. A lot of corporations use this structure as it is most effective and is proven to be efficient. The hierarchical chart for the functional organization is illustrated in the diagram below. Knowing the answers—and approaching your organizational design the right way—is mission-critical to scaling your business.
Two years after the redesign, revenues were up 40% and net profits up 30%, the culture was restored, and the organization is now much easier (not to mention more a lot more fun) to manage.
Calling out the KPIs in the structure helps to bring clarity and focus to the structural discussion and ultimate adoption of new roles by the individuals involved.
To wit, if I was to gather together the fiercest proponents of hierarchy-less management structures, they would soon form into a new hierarchy of total believers over semi-believers. As the structure changes, people are reassigned and roles are added and deleted, as appropriate. They are classified as the line structure, line & staff structure and the functional structure. They often report directly to the project heads or work as a separate functional group to support specific functions. The different groups such as marketing, sales, production, and design are structured with each employee clearly having a supervisor.
The key advantage of having a hierarchical organization is its reduced communication overhead since each staff has one supervisor and one subordinate.



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