Employees want to understand their job responsibilities, who they report to, what decisions they can and should make, and how they interact with other people and teams within the company. thinking about. The organizational structure creates this framework. Organizational structures can be centralized or decentralized, hierarchical or circular, flat or vertical.
Centralized and decentralized
Many companies use traditional models of centralized organizational structures. With centralized leadership, there is a transparent chain of command and each role has clearly defined responsibilities.
Conversely, a decentralized organizational structure increases team decision-making autonomy and allows for mutual cooperation between groups. Distributed leadership helps companies stay agile and adapt to changing needs.
Hierarchical and circular
A hierarchical organizational structure is the pyramid-shaped organizational chart that many people are accustomed to seeing. At the top of the pyramid he has one role and moves down the chain of command, decreasing responsibility and authority with each level.
A circular organization chart, on the other hand, looks like concentric circles, with the company's leaders in the center circle. Information does not flow to the next “level” but to the next management ring.
Vertical type and flat type
Vertical organizational charts have a clear chain of command with a small number of leaders at the top, while circular structures have a central position and each successive tier has less authority and responsibility. As explained below, our functional, product-based, market-based, and geographic organizational structures are vertical.
In a flat organizational structure, a person may report to multiple subordinates, and there may be cross-functional responsibilities and decision-making authority. The matrix organizational structure described below is an example of a flat structure.
Benefits of building an organizational structure
There are many benefits to creating an organizational structure that aligns with your company's operations, goals, and objectives. Communicate this information clearly to employees:
- provides accountability
- clarify expectations
- Document promotion criteria
- Specify decision-making authority
- create efficiency
- encourage collaboration
Essential elements of a clear organizational structure
Regardless of the special type of organizational structure you choose, you will need the following components:
- chain of command
- roles and responsibilities
- management range
- decision-making authority
- Department or team within your organization
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