5 types of organizational structures for entrepreneurs

Organizational structures, and the way those structures are visually represented in charts and diagrams, are important because they help sort out three key aspects of business operations: specific job duties, reporting relationships, and decision-making authority.

That’s why it’s important to understand the different types of organizational structures and how management differs in each of them. For example, larger companies face opportunities and obstacles different from those of smaller organizations.

Before we examine some common organizational structures, let’s look at another way to think about these structures in terms of their complexity and general “shape”: the hierarchical versus the flat.

Hierarchical vs flat structures

You can sort most types of organizational structures for businesses into one of two general types: hierarchical (sometimes called “mechanistic”) and flat.

Hierarchical structures are the most common and have been around the longest. This structure is somewhat flexible. It can be further classified according to specific corporate needs and a specific organizing factor.

The hierarchical structure creates a traditional bureaucracy. It can lead to a degree of inflexibility and…