Different Types of Organisational Structure
- Businesses typically structure their organisation in one of three ways
- Tall organisational structures
- Flat organisational structure
- Organisational structures based on product, function or region
1. Tall organisational structures
- Tall or vertical structures have multiple levels of management, a more centralised decision making process and a long chain of command
- Spans of control are usually narrow and managers exert significant control
- Tall structures are common in large organisations with complex operations e.g. government agencies and universities
2. Flat organisational structures
- Flat or horizontal structures have fewer levels of management, a decentralised decision-making process and a short chain of command
- Spans of control are often wide and employees have some level of autonomy
- Flat structures are common in small organisations or start-ups
A Comparison of tall and flat Organisational Structures
Tall Organisational Structure |
Flat Organisational Structure |
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3. Organisation by product
- This type of structure is usually built around specific products or projects (matrix structure)
- E.g. KitKat has its own team within Nestlé
- E.g. KitKat has its own team within Nestlé
- It combines the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business
An example of a product or project-based structure
Evaluating a Matrix Structure
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4. Organisation by function
- This is the most common form of organisational structure
- Employees are arranged into different functions that complete specific functions such as finance, human resources or marketing
- Employees are arranged according to their expertise, bringing appropriate skills, experience and qualifications to a particular area of the business
- There is a danger that functional areas focus only on their own area of responsibility and lose touch with the objectives of the business as a whole
Organisation by function
5. Organisation by region
- This structure is commonly found in businesses that are located in several different geographical locations
- Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations
- Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations
Organisation by region