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Organizational Structures: But which to use?
June 12, 2017Pierre Veyrat
Centralized, decentralized, linear, horizontal, traditional, matrix… there are several organizational structure examples ,
and each one is better suited to a particular business type and process model.
In this post, we’ll analyze and exemplify 5 of them, so you can understand their advantages and disadvantages, and
choose which one to employ in your organization.
Organizational structure examples
Among the types of organizational structures, 3 of them stand out, with the first one presenting 3 subtypes.
We’ll discuss their characteristics and exemplify some business areas that best fit these different organizational structure
styles.
1- Line, functional and line-and-staff structures Organizational structure example – Line
The traditional line structure is organized in such a way that a president or CEO (Chief Executive Officer) is at the top.
Then there are the directors or VPs (Vice-Presidents) of specific areas, followed by managers, and so on, until the
operational personnel. This structure can be seen below:
It’s a very rigid structure, with little information exchange, typical of bureaucratic companies in which there is little
collaboration.
Nowadays it’s unusual, but in the past it was practiced in military, religious, and even academic organizations. In this way,
one area doesn’t interfere with the work of another, and the staff only obeys the ‘orders’ of the immediate superior.
Today this is the most used structure in many companies and organizations, but this doesn’t mean it’s the best one.
Everything will depend on the relationship between managers and, especially, on the appropriate use of IT to aid
in internal communication.
This organizational structure example is suitable for small companies, such as manufacturing, hotels, medium-sized car
repair shops, medical clinics, or other types of business where informal structures allow functional control over employees
without generating conflicts between managers.
Organizational structure example – Line-and-staff
It’s similar to the line structure, except that in this case the staff advises, gives opinion, makes reports, authorizes
and supports the organization.
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.
2- Project-based structure
Highly dynamic and creative companies – such as software developers, architecture firms, special industrial equipment
installation projects and event organization companies – typically use this structure. It’s characterized by a series of
specialized employees, ready to compose a work team as needed.
In each project, these collaborators report to a different leader. Once they complete the project, a manager assigns them
a new project and leader.
An example of a business area that would benefit from this type of organizational hierarchy is consultancy for ERP
Software installation.
Each project must occur independently. However, it’s important to have a senior manager of each department (finance,
operations, HR, marketing, etc.) to check if everything is in accordance with the company’s policies and level of services.
Knowing the best organizational structure example for your company is crucial, as well as modeling and automating
your processes.
How to Make a Business Organizational Chart in 3 Steps By Laura Handrick on May 8, 2018 An organizational chart (or org chart) is a visual aid used to clarify who reports to whom and who is responsible for what in your organization. It typically shows the business owner or department head at the top with subordinates below, in the format of a drawing, diagram, flow chart, or picture. Thank you to Pingboard for sponsoring this article. Pingboard provides an easy to use organizational chart tool that you can access for free, helping you create and maintain your own org chart. You can also sign up for a free trial of their advanced organizational charting features.
1. Choose the Type of Organizational Chart You Need For the purpose of managing your small business, there are three types of organizational charts that you’ll likely want to create — hierarchical/top-down, functional by department, and matrixed or cross-functional. Hierarchical/Top-Down Organizational Chart A hierarchical organizational chart is a diagram that shows an organization’s reporting structure from the top-down, starting with the business owner or department manager at the top of the chart and employees who report to them appearing below their name. All roles appear in boxes connected by a line to illustrate reporting relationships.
Most small businesses will use a top-down organizational chart because it’s the simpler of the three types. If your business consists of you and a few staff members who all report to you, your organizational chart would show your name at the top and your employees’ names below. It’s a bit more complicated when you begin to add supervisory staff and department heads, or have open, unfilled positions, but the basic idea is the same. The sample organizational chart shown above was drawn in about three minutes using the trial version of Pingboard. Functional Organizational Chart (by Department) Once your organization becomes larger and you start organizing your team into departments, such as sales, finance, operations, and customer service, you will probably use a functional organizational chart. This illustrates who is in charge of each department, as well as how many, and which employees report to each manager. Here’s an example below:
o In MS Word, once you have a document open, choose Insert>Smart Art>Organizational Chart. Instructions can be found here.
MS Office SmartArt Menu Options to Create an Org Chart
o In MS PowerPoint, you can insert text boxes and lines to draw your own organizational chart or search for free organizational chart online templates. o In Excel, PowerPoint, and Word, you can also download a free organizational chart add-in. Use a simple drawing or presentation program already available on your computer, like Google Slides. HR/payroll system – If you currently use an HR or payroll system like Justworks, SAP/Success Factors, or Zenefits, some can provide an organizational chart using employee data already in your system. If you just need something very basic, draw your organizational chart on paper or on a flip chart posted in your office. Free internet templates – Search for “free org chart template” and you will find plenty of free downloadable templates.
Paid Organizational Chart Tools You can expect to pay between $5 to $100+ per month for software that allows you to create organizational charts. These programs are great if you have a rapidly growing business, are making lots of organizational charts, or need to create other diagrams in addition to organizational charts (such as flowcharts and process maps). Many of the paid organizational charting sites offer free trials, but you may have to share your email address to get access. Organizational chart software pricing is generally structured in different feature tiers. For example, Pingboard’s starter plan gives three employees access to the software, including mobile app access, and email support in addition to the features in the free plan. Upgrading to Pingboard’s Standard or Pro plans offers advanced features such as integrations with your HR or IT software and access for your entire staff. The best org charts provide tools like the ability to drill down to see detailed employee information (profiles), color code the charts, search the charts by name or job title and even add employee photos. Some of Pingboard’s more useful features are shown below. The first ten features are available in Pingboard’s free version, while the four features shown at the bottom require an upgrade:
3. Fill Out Your Organizational Chart Depending on the reason you’re creating your organizational chart, each placeholder can include as little as a name and title or as much information as you can fit into each box. Our recommendation for most organizational charts is to include the following in each position box: Name (leave name blank if position is open) Department (for example, sales/marketing, accounting, operations) Role or Job title (for example, sales rep, supervisor, clerk, acct mgr) Optional: o Location (use if employees are geographically diverse, i.e., NY, TX, CA, or if you have multiple buildings) o Contact Information Phone (work phone extension or cell phone) Email (work or home email to be used for business contact) Photo / head shot Some org chart software allows you to add additional information so that it functions more like an employee directory. Here’s an example from Pingboard showing confidential information that only the Pingboard admin and the employee can see, including the employee’s shirt size and dietary restrictions.
Confidential employee information available on Pingboard, visible only to admins and the employee
Sample org chart with unfilled positions created using the free version of Pingboard
Benefits of Using an Online Organizational Chart One of the benefits of using a cloud-based organizational chart like Pingboard is that you can often sync it to existing applications, so that if data changes in one system, such as Google’s G-Suite, Okta, Azure Active Directory, or ADP, it will automatically update your organizational chart, saving you time and reducing duplicate data entry and errors.
