Organization structure refers to a system which dictates the flow of command and activities within a company. It describes the rules, roles, and responsibilities of workers at every level. Organizational structures allow companies to operate with optimized efficiency and efficacy in terms of productivity. Organizational structures may be centralized or decentralized. A centralized structure is one in which the chain of command is hierarchical and each level has distinct and separate duties. Decisions flow from the top down to the bottom. This type of structure is losing popularity among businesses, but can still be seen in some companies or organizations such as the military. A decentralized structure is one in which the lower levels of the hierarchy maintain some level of autonomy and decision-making ability. An example would be fast-food chain restaurants, in which each individual restaurant has its own management, performs its own hiring, and can make some decisions without needing corporate approval. There are also four main subtypes of organizational structure. They are:Centralized or Decentralized?
The Four Main Subtypes of Organizational Structure
For example, sales and marketing may be split up into different departments. Many small to medium-sized companies use this structure.
For example, an employee may have duties for both the sales and customer service departments.
Types of Organizational Structure FAQs
Organization structure refers to a system which dictates the flow of command and activities within a company.
Organizational Structures describe the rules, roles, and responsibilities of workers at every level.
Organizational structures allow companies to operate with optimized efficiency and efficacy in terms of productivity.
Organizational structures may be centralized or decentralized.
There are also four main subtypes of organizational structure: functional/bureaucratic; divisional/multidivisional; flatarchy; matrix
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.