Types Of Organizations: Which One Do You Belong To?

Businesses today have become increasingly complex and dynamic. A business’s strength lies in the robustness of its foundational organizational design. An Organizational structure of a company offers an insight into the company’s vision– both, towards its employees and also towards the clients/ consumers.

“There is no such thing as a good or bad organizational structure; there are only appropriate or inappropriate ones.” – Harold Kerzner

Knowledge of types of organization in management is a handy tool for business owners and those seeking to enter the job-market alike.

Know Your Organisation: The In’s, Out’s & Organograms

Entrepreneurs on the learning curve can equip themselves with the team structure formulation skills. A stable organizational hierarchy aids resource optimization.

“Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization.” ~ Harold Geneen

Job-seekers too should have at least a rough know-how of the organogram, i.e. the representation of the organizational structure of the company, which work as a vantage point from the triad perspective:

• Develop deeper analysis into the organizational design, aiding better understanding your role.
• Recognize the variety of roles available to chart your career path and take well-planned steps to ascend the organizational hierarchy.
• Understanding the types of organisation will enable you to work efficiently, tying in your role with that colleagues and higher-ups, in your own, and other departments, strengthening the team structure.

Types of the organizations may imply the legal-regulatory structure or types in management. Herein, we deal solely with the latter.

An uncompromisable precondition for a thriving organisation is the durability of its organizational structure. When synthesising the core types of organisation, it is prudent to consider the interplay of multipronged factors playing a major role in demarcating types of organisation.

“Organizational structures of today demand too much from a few, and not much at all from everyone else.” ~ Gary Hamel

The present-day organisation performs complex and multitudinous functions. Nature of a particular organisation’s structure and set-up also traces its roots to its client profile and nature of products and services offered.

Increasing focus on delivering niche services and specialisations also impacts the types of organizational structure often carving out unique industry /function-specific organizational design.

Given the intricate web of functions, often organisations may have a unique model of intra-organisation types. Team size, functional scope, financial position, regulatory-legal environment decisively guide the selection of the type of organisation structure.

“Titles or organizational structures, that’s not the lens through which we see our peers.” ~ Jonathan I’ve

While ‘formal’ or ‘informal’ may be prone to adaptation based on the organization’s objectives and changing scope, the type of organizational structure adopted has an insurmountable bearing on its functionality.

Types of organizations in management can be usually classified into one of the structures below

Horizontal Organisation

The best example of a visual analogy of this organizational design is an open-plan office. Also termed as a flat organizational structure, rigid corporate hierarchies find no place here.

The middle-management work-levels are dramatically reduced, and employees report to the handful, or in certain cases, a sole supervisor. This team structure is often recommended for smaller organizations.

Hierarchical Organisation

Working on the principle contrasting that of flat organizations, in the hierarchical set-up, the entry-level staff form the base of the work-force. Multiple levels of middle-management act as the bridge between the base-level and the top-management.

This traditional form of organizational design is commonplace in most medium and large conglomerations. Reporting and increasing power and responsibilities follow the bottom-to-top approach along with a pyramidal structure.

Matrix Organisation

In the matrix organization design, the employee is rather uniquely positioned. The employee reports to several managers.

Cross-management of the employees work in terms of functions and projects under the leadership of two or more different managers is the key feature of this mesh or grid-form of organizational structure.

There is a functional manager and a project based manager. The employee will be reporting directly to the functional manager on the functions of his work overall, however, he will also be reporting to the project manager on the status of the project work.

Functional Organisation

In large-sized organizations, each function assumes its personality or individuality. As the organizational hierarchy and team, structure develop in scope over time, each business function, such as:

• Finance
• Marketing
• Administration
• Legal and
• Human-resource optimization;

transforms into a semi-autonomous unit of functional organization. Every employee performs tasks related to the function or the business-department s/he is a part of.

Industry-Niche Organisation

Certain organizations may tend to set up the organizational structure of their business by treating the various products or markets they engage with as fully operational quasi-independent entities forming the business cluster.

Such instances are frequently observed wherein the organization may, in case of product-segmentation develop several lines of their product-offerings, e.g. an organization selling home cooking appliances may develop an organizational design on the lines of its various products such as refrigerators, ovens, blenders etc.

Alternatively, a business offering Fast Moving Consumer Goods (FMCG) may choose to have a market-relevant type of organizational structure such as edibles, cleaning supplies, cosmetics products, Over The Counter (OTC) medicines etc.

Geolocation Specific Organisation

An organization may adopt the geolocation specific type of organizational structure. This model is popular among corporations having mass-scale national or transcontinental operations.

This organizational structure of management helps to shape and frame the business as per local clientele demands and ensure compliance with the mandated area-specific regulatory framework.

Additionally, this organizational design aids inventory-optimization, better cost-control measures, and efficient resource allocation.

Network Structure

The consultant-model of providing services, outsourcing etc. have been in vogue for quite some time now. This organizational structure focuses on decentralization and multiple points of connectivity within and beyond the organization. It leans towards the flat, rather than the vertical structure.

Organizational Circle

An organizational circle is often misunderstood as a flat organizational structure. However, that is an erroneous understanding. The organizational design here does not do away with hierarchies.

Sectored concentric circles is an apt mode to visualize this organizational structure of management. Entry-level employees form the periphery of the circle, and the individual is placed within inner rings based on the seniority. Various sectors denote the different departments of the organization.

Each organization structure presents itself with its share of opportunities and challenges. In most cases, organizations have a proclivity to adopt a hybrid structure adopting the best from the various types of organizational structures.