The 4 types of business organization systems

Although from the outside it may seem that companies are all organized in the same way, the truth is that there are different types of structures depending on the size and activities that take place in them. perform.

Some may be more hierarchical, having managers in charge of different departments who, in turn, have other managers in charge of reporting everything that is done in them. Others, on the other hand, can completely dispense with that hierarchy and, it could even be said that there is no management at all.

There are different types of organization systems, each with its peculiarities and suitability depending on the case.. We are going to discover them below.

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What is the organization system of a company?

Organizational systems are the structures on which organizations are configured. This type of structure defines how each division of a company is made up, the hierarchy of who reports to whom and how communication flows

at different levels of the organization. With a well-defined organizational system, all workers know what is expected of them and to whom they owe inform since the hierarchy is well defined and there is fluidity in the communication of the different levels.

There are several types of organizational systems that, although there are those who think that some are better than others, the truth is that in the Each work environment is better adapted to the organization depending on the activities carried out in it, its size and other factors.

Having a well-defined organizational system brings many benefits, including better efficiency, higher productivity, and fluid decision-making, which is why it is necessary to know and choose the most appropriate organizational system for each case.

Types and characteristics of organizational systems

As we said, there are different types of organization systems, some more suitable than others depending on the characteristics of the organization. Here we see the main types that exist, as well as some real life examples.

1. Functional system

In the functional system are several specialized departments, such as sales, finance and operations. At the top of the departmental hierarchy there is a manager who oversees all departments.

The communication flow is quite clear and basic, since each employee is in charge of informing or reporting his activities to his boss. In turn, the heads of each department report to senior management, that is, the manager who oversees the entire structure.

As the organization is segmented into specialized departments, its workers also specialize, which contributes to a very well established path to growth. As each employee is very clear about what he has to do and does not go outside his scope of intervention, there is no room for ambiguity.

However, in the same way that this structure has these advantages, it has the main disadvantage that interdepartmental communication is complicated, in many cases non-existent since all report upwards. The negative consequence of this is that brainstorming is rare, except when senior management intervenes.

2. Divisional system

In the divisional system the organization is divided into work teams, each one working on different projects. Many different types of equipment can be included in this type of organization system.

The teams are created on purpose, thinking about tackling specific and significant projects for the performance and progress of the company. For example, a car company might have different separate teams, each dedicated to developing a different car model.

Each project team receives the supervision of a director, but also has autonomy within the organization. Thanks to the fact that each work team is exclusively dedicated to its project, employees can become deeply familiar with the work of their team.

However, the weak point of this type of organization closely resembles that of the functional system. The divisions of the organization are fully aware of the work of their colleagues within the project, but they do not know what the other teams are doing nor is there usually a communication between they.

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3. Matrix system

The matrix system is a combination of the two previous systems. The business system It is configured as a functional type from above, that is, having a traditional hierarchy and with specialized departments.

However, when putting the magnifying glass on the departments we can see that each of them is organized divisionally, with different teams in charge of carrying out different projects.

This system is complex, with which requires a lot of planning in addition to developing fluid and fast internal communication to avoid any misunderstandings, but thanks to its complexity, many problems associated with divisional and functional modalities are eliminated.

This type of organization allows communication to reach the right people and at the right time. Workers receive information quickly, thus increasing productivityIn addition, since all parts of the company are in communication with each other, it allows holistic thinking thanks to the fact that all teams know what others are doing. Added to this, cross-collaboration is encouraged.

However, a problem may arise associated with this type of structure. Although there is a certain hierarchical structure, from the bottom up, the fact that all those involved are intercommunicated it can bring with it the inconvenience that it is not known very well to whom to report when a certain homework.

4. Flat system

Lastly, we have the flat system in which, as its name suggests, it “flattens” much of the hierarchy, giving workers greater autonomy. Although they may have formal structures, in companies with a flat organization system, the work is usually divided by setting up temporary work teams..

It should not be thought that in this system there is no hierarchy at all. There are still employers and employees, as there are still top managers who run the operation. However, this system tries to completely avoid traditional hierarchical structures, which have often been associated with communication problems.

In the flat system this is avoided, and in fact in it there is a significant increase in communication between the teams, eliminating communication problems that can occur when messages travel through a hierarchical structure that is too extensive but confused.

But despite the fact that it has its advantages and that many consider it the ideal system for any company, in practice the flat system cannot be applied in large organizations.

This system is difficult to maintain when the company grows and requires more structured and, therefore, hierarchical communication systems. Additionally, workers in this type of organization can feel overwhelmed by having to do too many different tasks and not have much of a chance of being promoted.