Structure of a
Company
Business English
What Does Company Structure Mean?
• Company structure is a system outlining how the activities are organized
and directed to achieve goals.
• These activities will generally include the rules to be followed and the
roles and responsibilities of those within the company.
An Overview of Company Structure
• The organizational structure of a company is the basis or platform used to
determine how information flows between the different levels of management
based on how the information is coordinated and by whom.
• The structure defines the hierarchy within a company or organization. Businesses
of all sizes rely on it to keep the company operating efficiently and headed in the
right direction.
• A successful organizational structure clearly defines the job of each employee
and the place their job holds in the system. The structure is usually illustrated in
the form of a chart or diagram.
Company Structure Diagram
An Overview of Company Structure
• Without a formal organizational structure in place, it can prove difficult and
confusing for an organization. An example would be when employees are not
certain who their immediate supervisor is. It can also lead to confusion about
who is responsible for each job in the organization.
• An organizational structure within a company supports and promotes
efficiency, inspires better production, and provides clarity for each employee
at every level. In traditional organizations, the structure was a centralized
leadership with an established chain of command. The military is a perfect
example of a centralized structure within an organization.
An Overview of Company Structure
• There are also decentralized structures. The difference between the two is
that in a centralized structure, the majority of the decision making and
control of departments/divisions is through a top layer of management
members.
• A decentralized structure promotes the distribution of power among the
departments and division. This allows for different levels of
independence.
Types of Organizational Structures
• Several organizational structure types are the most common in real-world
businesses.
Functional/Bureaucratic
Flatarchy
Matrix
Types of Organizational Structures
Functional/Bureaucratic
• This is the most common organizational structure. It breaks up a company
according to the specifics and specialization of its workforce.
• This means the enterprise is divided into departments, such as sales,
operations, and marketing. A functional/bureaucratic organizational
structure is used mostly with small and medium-sized businesses.
Types of Organizational Structures
Flatarchy
• A flatarchy is a new structure used in many startups. With this structure,
the traditional chain of command is not in effect. Instead, the company
allows its employees to have more autonomy.
• The Johnson & Johnson company is a good example of a flatarchy. Within
the enterprise, there are thousands of projects and product lines.
Types of Organizational Structures
Matrix
• The matrix structure is the least used because it tends to be confusing
since employees are "matrixed" across different departments, divisions,
and superiors.
• Employees in a matrix structure may find themselves working and
responsible for duties in different departments, such as customer service
and sales.
Benefits of Organizational Structure
• Several areas are affected by implementing an organizational structure:
Job descriptions
Recruitment
Salary
Expansion
Benefits of Organizational Structure
Job Descriptions
• Job descriptions in an organizational structure are designed to meet the
goals of the company while promoting employee growth.
• The focus on internal equity and employee retention is one of the keys to
success.
Benefits of Organizational Structure
Recruitment
• For organizations, recruitment is a major area for investment. By focusing
on this area, employees have more opportunities and greater job security.
• This results in lower recruitment costs.
Benefits of Organizational Structure
Salary
• A fundamental step in an organizational structure is the creation of
salaries. Once the structure is in place, each job description will have
salary ranges applicable to each job in the company. For the most part,
each job within the company is aligned to a salary grade.
• Each salary grade has a specified range. Following this structure enables a
company to attain its financial goals and ensures that salaries are fairly
distributed within a set budget.
Benefits of Organizational Structure
Expansion
• When a business using an organized structure expands, it can grow and
move forward. Expanding an enterprise may include adding more layers of
management, creating new divisions, and increasing key functional areas.
• When a company structure reorganizes for expansion, it provides the
opportunity for the company to edit salaries and job descriptions. This
means the company operates on its own under the leadership of an
assigned president.
