What is Organizational Structure

Organizational structure is the way an organization is set up to operate to carry out the mission. It’s like a map that shows who does what and how the teams and functions of the organization work together.

Why is Organizational Structure Important?

The structure of an organization not only supports its goals and operations, but also helps define leadership, hierarchy, and decision-making. For social enterprises, organizational structure is particularly important, as it can facilitate employee access to necessary resources and support for success, while also making sure that social impact and equity considerations are taken into account.

Key Concepts and Considerations for Developing Organizational Structures

When designing and implementing organizational and team structures, it’s important to consider the following factors:

• The organization’s strategic goals and mission
• The size and scope of the organization
• The organization’s culture and value
• The organization’s budget and resources
• The skills and expertise needed of the organization’s employees
• The organization’s social impact and equity values and intentions

Best Practices 

Here are some practical steps for developing organizational and team structures:

1. Define and consider the organization’s strategic goals and values: If you haven’t already, the first step in developing organizational and team structures is to define the organization’s goals, mission, and values, as these should inform the design and structure of the organization.
2. Determine the organization’s size and scope: The size and scope of the organization will also influence the structures. Consider the current size and expected future size in the next 1-3 years. Larger organizations may require more teams and levels of leadership, while smaller organizations may be able to operate with a flatter structure and less defined roles in the early stages.
3. Choose a type of organizational and team structure: There are several common styles and types of organizational structures. Common structural styles for social enterprises that are associated with the levels of leadership are hierarchical, flat, and matrix. Common types and models of organizational structures are team and functional, which are based on the organization’s work and operations. Consider the pros and cons of each type and choose one, or consider a more custom or hybrid structure that aligns best with where you are in your organization’s journey.

Hierarchical structure: This is a traditional style of organizational structure with a clear chain of command and layers of management. Best suited for larger organizations with a need for clear lines of authority and decision-making power.

• Flat structure: This is a style of structure with fewer levels of management, with a focus on collaboration and shared decision-making. Best suited for smaller organizations with a need for flexibility and adaptability.

• Matrix structure: A hybrid  style of structure that combines the hierarchical and flat structures. Best suited for larger organizations with multiple projects or teams that require cross-functional collaboration.

• Team-based structure: A structure that groups employees together by function or project. Best suited for organizations with a focus on innovation and collaboration, where employees work on multiple projects simultaneously.

• Functional structure: A structure that groups employees together based on their function or expertise. Best suited for large organizations with specialized departments or areas of expertise, such as finance, human resources, marketing, and IT.

• Identify key roles and responsibilities: Identify the key roles and responsibilities needed to carry out the organization’s mission, goals, and strategy, including what skills, expertise, and qualities are needed. This also includes defining the responsibilities of management, staff, and any other partners.
• Determine and allocate a budget and resources to staffing: Determine the budget and resources required for staffing and allocate them equitably to ensure that the organization has the necessary resources to support its goals and objectives, while also ensuring compensation equity.
• Design an organizational and team chart: The organizational and team chart is a visual representation of the organization and team structures. It shows the hierarchy of positions and how they relate to one another. Consider designing a hybrid or alternative structure that works best for the organization.
• Evaluate and adjust the organizational and team structures: Once the organizational and team charts have been developed, evaluate and adjust them over time to ensure that they align with the organization’s mission and goals.

Questions and Considerations when Designing Organizational Structure

1. What are your organizational goals and values?

Example: If your organization has a mission to empower employees and promote shared decision-making, a flatter structure may align best with your values.

2. How large is your social enterprise?

Example: For a smaller social enterprise, a flat structure may be more viable due to the reduced complexity and need for flexibility. For larger organizations, more structure and hierarchy may be beneficial. 

3. What is the nature of your work and operations?

Example: If your work involves multiple projects, programs, or teams that require cross-collaboration, a matrix structure could provide the necessary support.

4. How do you want decision-making to occur?

Example: If you value employee autonomy and decentralized decision-making, a flat or team-based structure may be suitable.

5. What level of flexibility and adaptability do you need?

Example: If your social enterprise operates in a fast-paced and dynamic environment, a flat or matrix structure may offer the necessary flexibility and adaptability.

6. How important is collaboration and cross-functional teamwork?

Example: If collaboration and knowledge-sharing are critical to your organization’s success, a team-based or matrix structure may foster effective teamwork.

7. What is the preferred communication flow within your organization?

Example: If open communication and information-sharing are important, a flat or team-based structure with a more horizontal communication flow may be beneficial.

8. What are the existing skills and expertise within your team?

Example: If your team already possesses specialized knowledge in different functional areas (i.e., accounting, marketing, IT), a functional structure may allow for leveraging their expertise effectively.

9. How do you envision roles and responsibilities being defined?

Example: If you prefer a more flexible and adaptive approach to job functions, a team-based or matrix structure that allows for fluid role definitions may be appropriate.

10. How will the chosen structure impact diversity, equity, and inclusion efforts?

Example: A structure that promotes shared leadership and  decision-making, cross-functional collaboration and diverse teams, such as a matrix or team-based structure, can support equity, and inclusion efforts.

11. Are there any legal or regulatory requirements specific to your industry or sector?

Example: Consider any legal or regulatory requirements that may impact organizational structure, such as union/organized labor and compliance obligations or industry-specific regulations.

Success Metrics

To measure the effectiveness of your organizational and team structures, consider the following metrics:

• Mission alignment: Evaluating mission alignment can help determine whether the structures support the organization’s programmatic and operational goals, which can be measured through surveys or regular feedback from employees and partners.
• Project completion and efficiency: Measuring project completion and efficiency can help determine whether the structures enable employees to work together effectively and efficiently to achieve the organization’s goals.
• Power distribution: Measuring the extent to which the structures promote a healthy and transparent distribution of power and decision-making authority can help foster an inclusive and supportive environment for all employees.
• Cross-functional collaboration and communication: Effective organizational and team structures should facilitate cross-functional collaboration and communication, which can be measured through regular feedback from employees.
• Employee turnover rate: Measuring employee turnover rate can help determine whether the structures provide employees with the resources, opportunities, and support they need to succeed and feel valued.

Additional Resources

• Organizational Structure: Definition, Types, and Examples: An article from Insperity that provides a comprehensive guide to organizational structure, including definitions, types, and examples.
• Organizational Structure: How to Choose the Right Structure for Your Team: An article from BetterUp that provides tips on how to choose the right organizational structure for your team.

About S P A C E

S P A C E is a consulting firm that transforms the employee experience by creating a safe and positive work environment for all, particularly those who are most vulnerable to workplace adversity. They offer a range of services, including human-centered HR strategy and advisory, organizational development, and personal and professional development coaching and support.