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The seven types of organizational structures that are in use in corporations around the world are pre-bureaucratic, bureaucratic, post-bureaucratic, functional, divisional, matrix, and horizontally-linked configurations. These ways of functionally arranging staff reflect a company's stance on decision-making and how the design of work relationships affect production. Companies are pre-disposed to adopting one of these seven standard structures because they have been proven to result in an optimal chain of command that positively impacts job performance and the bottom line.
An organizational structure is the way a company arranges its staff to reflect how operates. The organizational chart is the visual representation of this structure, and is used to study lines of connection. While it is understandable that a company should organize its affairs into a working order that can be charted and studied for improvement, it is less clear why there are only seven types of organizational structures to which most companies gravitate.
Over the hundreds of years over which the corporation has been in existence, management patterns have emerged. People have experimented with many different ways of managing a company, but the methods that have proven to be the most effective for certain industries are the ones that are adopted as best practices. In that context, the seven types of organizational structures are the proven models to which corporations tend to conform. The grouping is not exclusive of any variation or innovative approach to functional structure that may prove one day to be more effective in certain industries or under certain circumstances.
The pre-bureaucratic, bureaucratic, and post-bureaucratic organizational structures are related. Pre-bureaucratic is an entrepreneurial management structure that uses a centralized approach. The decisions are largely made by one person or a small group of people who are operating in an ad hoc manner in response to quickly changing circumstances. Decision-making power is not yet disbursed to branches or department heads.
Bureaucratic structures are the most standard type of format, and is hierarchal and structured. The chain of command goes straight up the chart with a decreasing lateral spread, like a triangle. Post-bureaucratic structures, comparatively, have a circular decision-making structure that relies on equality of power and consensus. This type of management system is used by nonprofits and cooperatives.
The functional, divisional, matrix, and horizontally-linked types of organizational structures are used in various types of product manufacturing companies. Functional structures put decision-making power along the bottom of the organizational chart with functional specialists. Divisional uses a product structure where decision-making groups are divided by product lines and have all of the functionality to operate independently. A matrix structure is related to the divisional structure, except employees are grouped by function and product. Horizontally-linked structures use features of the other formats and links them through a horizontal chain of command.