The 7½ Types of Business Organizational Structures

Summary

This video explores the various types of organizational charts commonly used by businesses. It explains seven main structures: functional, product, geographical, hierarchical, flat, holacracy, matrix, and tribes and squads. Each chart type organizes employees and management differently, either by department, product line, geographic location, or by focusing on flexibility and collaboration. The video highlights how different structures influence decision-making, team dynamics, and operational efficiency, helping companies choose the best fit for their needs.

Takeaways

• 📊 Every organization typically has an org chart to structure roles and responsibilities.
• 🗂️ A functional org chart organizes the company by separating departments and managing them independently.
• 🌍 A product or geographical org chart divides the company by specific product lines or regions, functioning like separate companies.
• 🏛️ A hierarchical org chart features a clear chain of command with distinct ranks and tends to involve bureaucracy.
• 🏢 A flat org chart has fewer levels with a wide span of management, promoting equality among employees.
• 🔄 A holacracy organizes employees around projects and objectives rather than departments, allowing decisions to be made by anyone from anywhere.
• 🔀 A matrix org chart brings people from different areas together for specific projects, where employees report to both project leaders and department managers.
• 👥 Tribes and squads is a subset of the matrix structure, where tribes consist of groups (squads) working in a related area with one leader.
• 🎯 Each squad in the tribes and squads structure has a single focus and all necessary resources to achieve its goals.
• 💡 There are many different types of organizational charts, each serving a different structural need depending on the company's objectives.

Q & A

What is a functional org chart?

A functional org chart organizes a company by separating departments, such as marketing, finance, or HR, and managing them independently of each other.

How does a product or geographical org chart differ from a functional org chart?

A product or geographical org chart divides a company based on specific product lines or geographical regions, operating them like separate companies, unlike the functional org chart which is based on departments.

What is a hierarchical org chart?

A hierarchical org chart is characterized by a vertical chain of command with distinct ranks and high levels of bureaucracy, where authority flows from the top down.

What is the main characteristic of a flat org chart?

A flat org chart has fewer levels of management and a broad span of control, aiming to give each employee equal footing with minimal hierarchy.

How do holacratic org charts organize employees?

In holacratic org charts, employees are organized around work projects and objectives, rather than traditional departments, with decision-making being distributed across all levels.

What is the purpose of a matrix org chart?

A matrix org chart brings together employees from different departments to work on specific projects, where they report to both a project leader and their department manager.

What are tribes and squads in an organizational structure?

Tribes and squads are part of a matrix structure where tribes consist of groups of squads working in related areas. Each squad focuses on a specific task with all the resources needed to achieve its goal.

How do decision-making processes differ in a holacratic structure compared to a hierarchical one?

In a holacratic structure, decision-making is decentralized and can happen at any level by anyone, whereas in a hierarchical structure, decisions are made top-down by higher management.

What is the main advantage of a flat org chart?

The main advantage of a flat org chart is that it promotes faster decision-making and a more collaborative environment due to the reduced layers of management.

What is the difference between a functional and matrix org chart?

In a functional org chart, departments are managed independently of each other, while in a matrix org chart, employees from different departments collaborate on specific projects and report to multiple managers.