Selecting the optimal organizational design is important for long-term growth. Depending on the type of business (size, industry, strategic goals), the same business model can be advantageous or disadvantageous. In this article we will examine four common organizational designs and how they can help your company grow and scale.
Organizational Design #1 – A Functional Organization Structure
Advantages of a Functional Organization Design:
- The functional design creates clear lines of authority, role definition and accountability within the organization.
- There is an ability for employees to specialize and gain knowledge and skills in one area and become experts.
- With a centralized decision-making process, there is less duplication of efforts and more efficiency.
The functional design is most beneficial for large organizations where many employees may perform similar duties.
Organization Design #2 – A Divisional Organization Structure
Advantages of a Divisional Organization Design:
- There is flexibility to respond to changing market conditions and consumer preferences.
- Employee focus is on specific areas of the business and employee satisfaction improves due to better alignment with corporate strategy.
- Decision-making occurs at the local level (division) rather than having to go through the central office for approval.
The Divisional Organization Design is most beneficial to companies that have multiple product lines or operate in different geographic locations.
Organization Design #3 – A Matrix Organization Design
Benefits of a Matrix Organization Design:
- Encourages cross-functional teamwork and collaboration.
- Allows employees to learn about different areas of the business and develop new skills.
- Improves efficiency by using resources across all areas of the business, not just one department.
The Matrix Organization Design is most beneficial to organizations that require cross-functional teams working together on a regular basis.
Organization Design #4 – A Flat Organization Design
Benefits of a Flat Organization Design:
- Reduces bureaucracy and increases communication across departments.
- Increases speed of decision-making because there are fewer people involved in the decision-making process.
- Increases employee motivation and job satisfaction because employees feel empowered and responsible for the success of the company.
Flat Organizations are most beneficial to small organizations that want to maintain a team-based culture.
Conclusion
There are many ways to design an organization but selecting the optimal organizational design is important for developing a business that can grow and achieve strategic objectives. The four organizational designs described above are examples of how to select an organizational design that fits your business and your goals. By creating an organizational structure that supports your company’s mission and objectives you will be able to create a platform that promotes efficiency, collaboration and scalability.
