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Types of organizational structure in a company
Learn all about the different types of organizational structures for a company and why it's important to establish your own. Read us!
Marcos Lopez
HR Consultant
18 of February, 2025
Currently, our society is evolving and changing at rapid paces. The markets are continually experiencing shifts, both due to the creation of innovative technologies and the entry of new businesses with value propositions tailored to modern times. Many companies, regardless of their size, may struggle to keep up with this ever-changing environment.
Furthermore, most are likely unprepared to adapt their organization to the current circumstances. This is largely due to the rigidity and verticality of many business’s organizational structure. Learn more about the different types of organizational structures a company may have below.
What is a company’s organizational structure?
A company’s organizational structure, or its organizational culture, is how the hierarchical system within a company is structured. This structure helps to define the roles and tasks of all members of an organization and their relationships with one another.
It is closely linked to the company culture. On the other hand, with the leadership style, there is no better or worse organizational structure. Essentially, you must adapt the structure to your goals, sector, etc.
What are organizational structures for?
Its primary function is to define the characteristics of the organization within the company. It also aims to structure the working system within said company. In short, it serves to define the organizational charts, all processes, departments, and hierarchies within a company. In other words, it defines how the group of people that make up the company is managed.
The concept of Organimetry
It is an instrument that allows us to establish hierarchy, job positions, and order within a company. This generally helps us to achieve the organization’s set goals. It assists in measuring organizational systems by providing a pretty realistic picture of the company. This is done with the aim of understanding it in detail and having a specific idea of how it is structured.
It presents the division of functions, communication channels, the different hierarchical levels, the relationships between positions, and departments within the company, among many other things.
What are the differences between vertical and horizontal structures?
Below, we will mention the main differences between vertical or hierarchical organizational structures, and horizontal or flat ones… In summary, organizational structures in a company are useful when efficiency is essential in business and the various environments in which the company operates are stable.
However, this is becoming increasingly uncommon as companies in any sector need to be innovative and creative. As such, the trend is leaning towards flatter organizations with better internal communication and more flexibility. Hierarchical structures are much more vertical, with more levels or ranks between management and the workers below them, unlike what happens with flatter or horizontal organizations.
Types of organizational structure in a company
Currently, there are 3 most common and used types of organizational structure in a company. Over the last few decades, these organizational structures that we will mention below have been used and continue to be implemented:
Functional organizational structure
Organizations that choose this model are structured according to the different functions that exist within them. This is the structure most used during the last century since the market allowed for greater stability within companies. For this reason, these companies maintained the same production method, in a somewhat more standardized way.
Divisional organizational structure
Companies that lean towards this form of organization, are structured according to their products, geographical areas, etc. For example, in the 1980s, companies began to decentralize into divisions by product lines or businesses.
Matriarchal organizational structure
This last one, essentially, is a mix of the divisional and functional structures. Broadly speaking, almost all companies have decided to implement this type of structure in recent years. Theoretically, it is divided into two parts: by functions and by divisions. Example: an employee should report to two clients, the one from another division or country, and the functional one.
Tips for restructuring a company’s organizational model
- If your business is stable, assign each group a long-term goal and functions. If your business is more dynamic and innovative, organize it by projects.
- Create mini companies within your own company. Group very few people in each one of them, make it very manageable: a maximum of 50 people, for example.
- Empower employees and give them some autonomy. Look for talented people who are capable of making their own decisions. This way, you will make workers feel, in a way, like entrepreneurs, and they will be more motivated.
- This company’s organizational structure will have two levels: a horizontal structure of mini-companies. And on the other hand, a superior layer made up of leaders who define the company’s strategic vision.
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