When setting up a new business, you should pay careful attention to designing your company’s organizational structure. This should be decided according to your company’s size, industry, and aims. You should think of organizational structures as communication flowcharts. 

Well designed organizational structures will produce efficient communication channels and encourage fast, clean decisions. Let’s take a look at several of the most common forms of organizational structures.

Functional structure

It’s a top-down flowchart with a high ranking executive at the top, with multiple middle managers – such as the human resources, marketing, accounting, and engineering department heads – all directly reporting to the top executive.

The strength of this system is that it’s easy to understand, and keeps businesses neatly compart metalized. 

Customer structure

If your company offers services, such as healthcare, you can use the customer-based organizational structure. This is simply a variation of the product structure. In which the different business segments at the bottom are each split into a specific customer group – for example, outpatients, inpatients, and free clinic patients.

The managers of each segment would then report directly to the hospital president at the top.

Regional structure

If your company gets big and starts to go national or global, you need to split your company structure into regional segments. This is also a variant of the functional structure, with the top executives based in your home country at the top, with the reporting segments being comprised of regional managers.

Localization is the goal here, in all aspects – pricing, real estate, and product lines. 

Matrix structure 

Many video game or movie companies use the matrix structure. With various departments, all equal, working in tandem to produce a single final product.

In this case, a strong manager at the top acts as a team leader to ensure that each segment receives the data they need to complete their separate tasks.

Each segment must receive some information from the other, and it’s the job of the movie director (at the top) to make sure all the threads of the web are connected.

Other Structures

It’s up to you to figure out which structure best fits your company. You can also mix and match the best parts of each to create a customized structure. Just remember, the reason for having an organizational structure is to maintain communication. And also to make sure that there are a few redundancies as possible.