8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (2022)

Large or small, every organization should operate with a defined organizational structure. A well thought out and strategic business configuration clarifies reporting relationships and supports good communication – resulting in efficient and effective work process flow.

The board and senior leadership should be the group who determines the type of organizational structure that would best support the internal operations, how work is carried out and the chain-of-command.

Determining the best structure is done by answering the questions:

  • What are the functional groupings of work processes?

  • Are there natural groupings of teams, work groups or units?

Senior leadership looks at all functions and determines how they would like work activities to be organized and carried out. This process also identifies natural reporting relationships and chain-of-command. Reporting relationships can be both vertical as well as horizontal.

8 Common Business Organizational Structures

1. Hierarchical Organizational Structure

Organizations that use a traditional hierarchical structure rely on a vertical chain of command as the prime method of organizing employees and their responsibilities. Military, government, and other very large organizations use a hierarchy to determine the level of control employees have over their work as well as their rank relative to others.

Hierarchical structures typically feature multiple layers of management and are therefore prone to bureaucracy and the creation of silos that prevent cross-team collaboration.

An example of hierarchical organizational structures:

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (1)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (2)

Pros:
  • Easy layout to understand

  • Communicate reporting relationships

  • Built-in understanding of future promotion opportunities

Cons:
  • Prone to bureaucracy

  • Can create organizational silos

Ready to build your own organizational chart?

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (3)

2. Flat or Horizontal Organizational Structure

Companies with flat or horizontal structures often have fewer levels of management or executives over employees. Most people that have worked for a small company such as a startup will have experienced this type of structure. At most, there is one layer of middle managers between an executive(s) and employees, but oftentimes there are no middle managers present at the company.

The advantage of a horizontal structure is that it gives employees more responsibilities which in turn requires them to have more transparency within the greater organization. It also removes the bureaucratic nature of large hierarchical structures, allowing for quick decisions to be made and executed on.

The disadvantage of a flat structure is that it requires multidisciplinary professionals who don’t desire to specialize. Middle managers also have a tendency to be stretched thin within this structure as they’ll be overseeing many types of professionals and projects.

Recommended Reading: Hierarchical vs. Flat Organizational Structures and Benefits of Each

Pros:
  • Employees often receive more responsibilities

  • Requires employees given more transparency

    (Video) 4 Organizational Org Chart Types - Differences And Pros

  • Allows for quick communication and decision making

Cons:
  • Challenging for employees to specialize

  • Managers can easily be stretched thin in this structure

3. Matrix Organizational Structure

A matrix structure provides for reporting levels both horizontally as well as vertically. Employees may be part of a functional group (i.e. engineer) but may serve on a team that supports new product development (i.e. new album). This kind of structure may have members of different groups working together to develop a new product line.

For example, a recording engineer who works for a music publisher, may have engineers who report to him but may also use his expertise and work with teams to develop new music albums.

Pros:
  • Easily allow cross-functional work between teams

  • Gives employees opportunity via their department projects and for organizational projects

Cons:
  • Employees might have multiple managers at one time

  • Requires employees to make more difficult prioritization decisions

4. FunctionalOrganizational Structure

Functional organizational structures are the most common. A structure of this type groups individuals by specific functions performed. Common departments such as human resources, accounting and purchasing are organized by separating each of these areas and managing them independently of the others.

For example, managers of different functional areas all report up to one director or vice president who has responsibility for all of the operational areas.

The advantage of this type of structure is that functions are separated by expertise but the challenges comes in when different functional areas turn into silos that focus only on their area of responsibility and don’t support the function of other departments.

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (6)

An example of functional organizational structures:

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (7)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (8)

Pros:
  • Most common and therefore understood by employees

  • Departments have plenty of specialized expertise

Cons:
  • Prone to Silos

    (Video) 22.Org chart in PowerPoint | Org chart in PowerPoint Templates | Free PowerPoint Templates

  • Employees may feel it’s not their responsibility to oversee that their work or project is successfully handed off to the other team

Ready to build your own functional organizational chart?

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (9)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (10)

5. ProductOrganizational Structure

Another common structure is to be organized by a specific product type. Each product group falls within the reporting structure of an executive and that person oversees everything related to that particular product line.

For example, an executive over Kraft products would be responsible for every product under that label – dressings, meats, sauces, etc.

The advantage of this type of structure is that it organizes products by category but can create completely separate processes from other product lines within the organization.

An example of product organizational structures:

Pros:
  • Organizes products by categories

  • Focus on specific market segments

  • Allows for specialization

  • Can encourage healthy competition between departments

Cons:
  • Other product teams might be cut off from innovations and learning opportunities by other teams at the same company

  • Can create inefficient/duplicative functions and resources

  • Can nurture negative rivalries across departments

Ready to build your own product organizational chart?

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (13)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (14)

6. CustomerOrganizational Structure

Certain industries will organize by customer type. This is done in an effort to ensure specific customer expectationsare met by a customized service approach.

(Video) How to make organizational chart in Microsoft Word

An example of this would be in healthcare. A patient seen as an outpatient has very different needs than those of patients who spend time in the hospital as inpatients. A customer centered structure creates customized care for those patients.

The advantage of this type of structure is that it specializes in the needs of each customer group but can ignore the needs of different customer types.

An example of customer organizational structures:

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (15)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (16)

Pros:
  • Allows for specialization

  • Creates a focus on customer satisfaction

Cons:
  • Customer groups are not always easily defined and segmented

  • It can be challenging to operationalize competing customer demands

Ready to build your customer organizational chart?

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (17)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (18)

7. GeographicOrganizational Structure

For organizations that cover a span of geographic regions, it sometimes makes sense to organize by region. This is done to better support logistical demands and differences in geographic customer needs.

Typically a structure that is organized by geographical regions reports up to a central oversight person. You see this type of structure in companies that go beyond a city or state limit and may have customers all across the country or in multiple states.

An example of geographic organizational structures:

Pros:
  • Better supports logistical demands

  • Caters to different cultural and geographic customer expectations

Cons:
  • Can cause conflicts between local and central management

  • Duplication of jobs, resources, and functions

Ready to build your geographic organizational chart?

(Video) How To Create A Company Org Chart (Organizational Chart)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (21)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (22)

8. Network Organizational Structure

Network organizational structures work for businesses that employ freelancers, subcontractors, and vendors dispersed between satellite offices. This type of structure organizes the proper distribution of the company’s resources. Employees can visualize workflows, processes, and relationships with on- and off-site coworkers.

The communication inherent in network organizational structures encourages employees to collaborate to complete projects. As there isn’t a strict hierarchy, employees are empowered to take initiative and make decisions.

An advantage of the network organizational structure is that it emphasizes open employee communication in the workplace over hierarchy. There isn’t a chain of command. It lets employees know each other’s project involvement so they can easily collaborate.

An example of network organizational charts

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (23)

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (24)

Pros:
  • Encourages collaboration and communication

  • Employees encouraged to take the initiative in key decisions

Cons:
  • Requires more complex relationships within the fluid organizational structure

  • Lacks easy-to-understand hierarchies

Start Building Your Organizational Structure With Pingboard

Deliberate time and thought should go into the design of an organization’s structure and the build out of an org chart. This is important so employees have a visual of how the organization functions and understands the chain-of-command. Operating within a defined structure, with good communication processes and work-flows, help to ensure efficient management of resources – people, time and money.

8 Types of Organizational Structures [+ Downloadable Org Chart Templates] | Pingboard (25)

Build an org chart today by importing your people data into Pingboard or simply drag and drop people into the org chart. Workforce planning is easy with Pingboard because you can create multiple versions of your org chart and share a private link with colleagues for collaboration. When you are ready to share with your staff give everyone a secure link to the org chart so they can see reporting structures across your organization, and insightful employee profiles of coworkers.

Try us out for free today! If you need any help setting up your account we’re always here.

Browse Organizational Structure Templates By Industry

We make it easy to structure your business and add transparency for all levels of employees. After compiling data from thousands of org charts, we invite you to check out our pre-built org chart templates designed with your industry in mind.

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FAQs

What are the 8 types of organizational structure? ›

The following are eight types of organizational structure, with explanations of how you can use them:
  • Functional structure. ...
  • Line structure. ...
  • Line-and-staff structure. ...
  • Matrix structure. ...
  • Divisional structure. ...
  • Organic structure. ...
  • Virtual structure. ...
  • Project structure.

What are the different types of organizational structures PDF? ›

The structures diagrammed and described are functional, product, customer, geographic, divisional or M-form, matrix, amorphous, and hybrids.

How do you create an organizational chart? ›

Building org charts with software
  1. Open a new PowerPoint document.
  2. Go to the Insert tab and click SmartArt.
  3. Navigate to the Hierarchy group and select the org chart template you need.
  4. Click into the shapes to add text.
  5. Add more shapes (or people) as needed.
25 Sept 2019

What is organizational structure examples? ›

Organizational structure examples of this type include insurance companies, engineering firms, law firms, regulatory agencies, etc. In other words, organizations that need isolated technical advice to assist employees who handle or manage the day-to-day operations on the front line.

How many organizational structures are there? ›

There are eight types of organizational structures, each of which is either centralized or decentralized in terms of who has the power. Each structure has advantages and disadvantages that you should consider when choosing one for your company.

What are the 5 organizational structures? ›

Each of these five types of organizational structures have advantages and disadvantages, so it's important to consider which one may be right for your business.
  • Functional reporting structure. ...
  • Divisional or product reporting structure. ...
  • Process-based structure. ...
  • Matrix structure. ...
  • Flat structure.
6 Jan 2022

How many types of Organisational charts are there? ›

There are three main types of org charts: hierarchical, matrix and flat.

How do I make an organizational chart in Word? ›

On the Insert tab, in the Illustrations group, click SmartArt. In the Choose a SmartArt Graphic gallery, click Hierarchy, click an organization chart layout (such as Organization Chart), and then click OK.

What is organogram PDF? ›

An organogram is a graphical representation of an organisation's structure. It's used to show hierarchical relationships between managers and the people who report to them, as well as departments.

What is a functional org chart? ›

A functional chart organizes workers in a business based on skills, expertise, and specialty. It also shows the basic hierarchy of the organization, with the head of the business at the top followed by the top decision-makers. Employees are stationed under certain managers based on their job descriptions.

What is organization and its types? ›

An organization is a group of people who work together, like a neighborhood association, a charity, a union, or a corporation. Organization is also the act of forming or establishing something (like an organization). Let's go through the five common types of organization and reasons why you might consider each of them.

What is a simple organizational structure? ›

Also known as the flat structure, the simple organizational structure doesn't have multiple layers of management or formal departments. Instead, a simple organizational structure usually has one owner that delegates tasks to employees directly.

What is the best org chart software? ›

Top 10 Org Chart Software
  • Lucidchart.
  • Freshteam.
  • Sift.
  • Visio.
  • Pingboard.
  • SmartDraw.
  • Happeo.
  • Organimi.

What is the best program to use to create an organizational chart? ›

Microsoft Visio helps you visualize data so you can bring ideas to life. The software includes dozens of ready-to-use templates and thousands of customizable shapes. You can easily create org charts to show team, hierarchy, or reporting structures in a visual manner.

What are the 5 types of organizational structures? ›

Each of these five types of organizational structures have advantages and disadvantages, so it's important to consider which one may be right for your business.
  • Functional reporting structure. ...
  • Divisional or product reporting structure. ...
  • Process-based structure. ...
  • Matrix structure. ...
  • Flat structure.
6 Jan 2022

How many organizational structures are there? ›

The four basic forms of organizational structure are functional, divisional, matrix, and flat structures.

How many types of organization are there? ›

As you might have guessed by now, there exist two types of organisation: Formal Organisation. Informal Organisation.

What are the 4 types of organization? ›

There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.

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