Five common approaches —
- functional,
- divisional,
- matrix,
- team, and
- networking—help managers determine departmental groupings (grouping of positions into departments).
The five structures are basic organizational structures, which are then adapted to an organization’s needs.
Functional structure
The functional structure groups positions into work units based on similar activities, skills, expertise, and resources (see Figure 1 for a functional organizational chart). Production, marketing, finance, and human resources are common groupings within a functional structure.
Divisional structure
Because managers in large companies may have difficulty keeping track of all their company’s products and activities, specialized departments may develop. These departments are divided according to their organizational outputs. Examples include departments created to distinguish among production, customer service, and geographical categories. This grouping of departments is called divisional structure (see Figure 2). These departments allow managers to better focus their resources and results. Divisional structure also makes performance easier to monitor. As a result, this structure is flexible and responsive to change.
Matrix structure
The matrix structure combines functional specialization with the focus of divisional structure (see Figure 3). This structure uses permanent cross‐functional teams to integrate functional expertise with a divisional focus.
Employees in a matrix structure belong to at least two formal groups at the same time—a functional group and a product, program, or project team. They also report to two bosses—one within the functional group and the other within the team.
Team structure
Team structure organizes separate functions into a group based on one overall objective (see Figure 4). These cross‐functional teams are composed of members from different departments who work together as needed to solve problems and explore opportunities. The intent is to break down functional barriers among departments and create a more effective relationship for solving ongoing problems.
Network structure
The network structure relies on other organizations to perform critical functions on a contractual basis (see Figure 5). In other words, managers can contract out specific work to specialists.
