The way businesses operate has changed in many ways since the COVID-19 pandemic. Some of these changes are dramatic, and others are fairly straightforward. Now we are entering what can arguably be called the start of a new normal. Although we have a long way to go, and certainly there are no shortages of disruptions still to be managed, we are beginning to see the outlines of what business will look like in the future.
As we look ahead, it is important to consider your business’s organizational structure. The organizational structure dictates how the business flows — who does what and when, who reports to whom, and so on. Below are some basic facts about some popular organizational structures — and their possible limitations
Hierarchical structure
The hierarchical structure is the most common. It is what many of us think of when we envision how businesses run. Under this structure, decisions flow in a clear line from top to bottom. Roles are clearly defined, and the path to promotion is obvious.
But: Gen Zers have a different expectation of work: They want to feel that they have a say in how to approach their assignments, and the hierarchical structure is antithetical to that view. Some changes may be needed given the difficulty in attracting talent.
Matrix structure
The matrix structure allows employees to move between departments as needed. This structure allows management to choose the employees with the best skills for each particular project. This can be attractive to employees who want to continuously learn and use new skills.
But: Problems can arise if the needs of different departments conflict.
Team structure
In the team structure, the organization is composed of self-managed teams. Each team collaborates and collectively takes responsibility for achieving specific goals or tasks. This structure promotes employee empowerment and group decision-making.
But: Since this model does not adhere to the view of the corporate ladder, it can be a disincentive to employees who want to be promoted.
Flat structure
Flat business structures are decentralized and give nearly all employees equal power. This structure is well suited to startups and small businesses that do not have many employees and are not divided into departments.
But: This model can create confusion about who has the ultimate decision-making authority. In addition, it is difficult for employees to find a mentor or develop new skills.
Considerations
There is no one-size-fits-all when it comes to organizational structure. However, as you review what is and is not working for your business, keep in mind these two basic considerations:
- How much power do you want your employees to have?
- How innovative and adaptable do you want your company to be, especially in the current business environment?
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