Organisational Design - 5 Common Organisational Design Structures

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Understanding 5 Common Types of Organisational Design

Every organisation has goals. These goals may include increased productivity and profitability, expansion, innovation, brand building, taking on social responsibilities, or optimised supply chain services. These goals begin at corporate level but trickle down to teams and individuals within the company. Organisational design is essentially the structure an organisation needs to achieve in what it sets out to do. Poor organisational design means goals are not met. We at Orgro assist companies with restructuring their internal architecture in a way that helps them deliver on the areas in which they are seeking growth and success.

There are various types of modern organisational design approaches; here is a quick look at some of the most common.

5 Common Organisational Design Structures:

The Functional Structure

This is the most popular, most straightforward, and oldest organisational design. It is applied in many larger corporations and is praised for its well-defined channels of hierarchy and communication. This structure categorises similar occupational specialities together to form departments. Division of labour and specialisation in specific functions is therefore possible. The drawback of this structure is that due to solid separation of departments, communication is slowed, and effective cooperation is reduced.

The Divisional Structure

The divisional structure further separates specialities into specific groups like geographical locations, products, certain markets, or services. For example, one department may focus on South African markets, while the other focuses on products in the United States. It gives managers specialised control over their own department, and they are responsible for its successes and failures. The downside to this organisational design is that divisions that could benefit from cooperating may instead compete, wasting resources, time, and money.

The Matrix Structure

An organisation may have several projects running concurrently. In some structures, these projects are department specific. Within a matrix approach, however, the company utilises the expertise of any employees and departments that can best assist with the project. It uses cross‐functional teams to integrate strengths while working toward a common goal but maintaining divisional focus. Naturally, interdepartmental cooperation is improved, as well as motivation and flexibility. There is also the opportunity for management training across divisions. The disadvantage of this structure is that it may lead to power struggles for authority, task confusion, and more overheads to accommodate the human resources used.

The Team Structure

This organisational design divides the company into teams that each work toward a common goal. Functional barriers are less rigid between departments, and there is no hierarchy as teams are held accountable for their performance. Administrative costs will inevitably decrease, and employees are generally quite motivated by such a structure. However, because the need for a chain of command is eliminated, time management issues might arise.

The Network Structure

The network approach is when one or more organisations combine to perform functions. This can mean managers who outsource work on a contractual basis, or associates allying to offer a product or service. Naturally, this approach is more flexible with few overheads to worry about, but it may be unpredictable to rely on outside organisations.

There are several more approaches, such as project structures, and many organisations try to adapt where possible. The Orgro team uses an action-research approach that is highly consultative and reflective to help your company meet its objectives. To find out more, contact us today.