The importance of good organizational structure cannot be overstated when it comes to businesses that run smoothly and profitably. There are several approaches to organizational structure for your business.
When evaluating your options—from team-based to hierarchical organizational structure—you might find that it can get overwhelming and confusing to know which organizational structure will work best for your specific business.
To determine the best organizational structure for your agency, you need to familiarize yourself with the types of organizational structures, which are:
Hierarchical organizational structure. This is the most common type of structure, and it features a chain of command that goes from the top down with the CEO at the top and entry-level employees at the bottom.
Horizontal or flat organizational structure. This works well for start-up businesses as it puts all employees (apart from the owner or manager) on the same level.
Matrix organizational structure. In this structure, cross-functional teams are formed for special projects.
Team-based organizational structure. The team structure is meant to focus more on cooperation and collaboration and give employees more control. It’s meant to disrupt the traditional hierarchy.
Network organizational structure. This structure focuses on organizing the multitudes of subcontractors, freelancers, vendors, satellite offices, and off-site locations.
Divisional organizational structure. In this structure, each division of the company essentially acts like its own company with its own marketing team, IT team, sales team, etc.
Functional organizational structure. This structure is like a hierarchical structure in that it begins with positions that have the highest amounts of responsibility on the top, and then it goes down from there. Employees are organized according to their specific skills.
Especially in the age of hybrid and remote work, more horizontal structures tend to work best. This opens communication across departments, and it allows for greater collaboration—even across locations and time zones. However, this isn’t always the case. Your business may work well under different conditions, so take a hard look at your current structure and see where to move forward.
The first step to deciding which organizational structure will work best for your agency is to take a good look at your unique circumstances and needs as an organization. Ask yourself and your co-workers the following questions:
- How does our team work best?
- What processes are working for the business?
- What processes could be improved?
If you don’t know what’s working and what isn’t, take some time to analyze your business. You can’t make changes and improve if you don’t know where you are starting.
Your team members are going to be more efficient if they can learn to work together more smoothly. Generally, you get better ideas out of a team collaborating than you do from one person working alone. Organizational silos can hurt the customer experience because misinformation can be spread, and disorganized processes will trickle down to marketing and sales. The customer is going to have a much better experience if the organization is communicating with each other and avoiding silos.
Potential collaboration also can present mentoring opportunities for employees on your team. This adds to a communicative, team-playing organizational structure. A mentor can help newer employees coming into the business by offering advice and personal stories about their own journeys in that particular industry—opening up horizontal communication and highlighting areas in which your team could improve the way it collaborates.
There are several different options available to your agency when it comes to organizational structure. You may have to try some different processes before you find the best fit for your business.