So you’re looking for the best organisational structure for your SME. You want your company to run like a well-oiled machine.
Finding the perfect organizational structure is about finding that sweet spot between order and chaos, between structure and flexibility.
But how do you make this happen?
In this article, we break down different organisational structures. We also compile expert opinions on them and discuss common challenges with structuring your teams.
Before we get into it, let’s discover the challenges you mostly encounter when structuring your teams.
Ready?
What are the common challenges SMEs face when structuring their teams?
Here’s a list of SMEs’ most common challenges with structuring their teams:
- Unclear roles: As a small organisation, you may find assigning individual responsibilities challenging because their roles are unclear.
- Lack of vision: The top management believes micromanaging is more efficient than delegation.
- Lack of knowledge: Starting from scratch, you may lack the expertise and knowledge to structure your teams properly.
- Lack of trust: Your organisation probably doesn’t trust the structure to function correctly without supervision.
- Lack of resources: Being a small organisation, most resources are spent on day-to-day operations, leaving no room to plan for the bigger picture.
If you can overcome these challenges, you can finally take the first step to optimise your employee performance.
You can do this through a clearly defined workflow system that follows a particular organisational structure.
This brings us to our next question.
Which is the best organisational structure for SMEs?
We ran a survey to ask HR leaders which organisational structure they thought was best for SMEs.
Since small organisations usually don’t have multiple divisions and managerial levels, we restricted the options to flat, functional, and matrix structures.
Although the research on the best organisational structure for SMEs is rudimentary, one can establish that the preference for an organisational structure is subjective to different experts.
The survey results show that no organisational structure stands out among experts in the context of SMEs.
This is why we decided to break down all three organisational structures – so you can decide what best suits your SME.
Let’s start with the functional structure.
1. Functional organisational structure
Functional structure is where your employees are divided into different teams to perform a specific function they perform for the SME.
How functional structure works
Your employees are segregated in a functional organisational structure based on their shared skill sets and in different teams.
Each group has members with similar skill sets (although group members vary in experience).
Each functional group has its particular performance metrics and is expected to meet its overall group goals collectively.
The functional group members report to one team leader, who reports to top management.
How to deploy functional organisation structure in an SME
Deploying a functional organisational structure in an SME is super simple. Let’s assume you have 15 employees in your SME.
Now, figure out the prominent skillsets of employees and group them into different teams.
Group employees based on different skill sets and for their team.
Now, assign team leaders within groups and have each group pursue its specific goal.
There you go. Your SME now follows a functional structure.
Let’s discover some pros of functional organisational structure:
- Knowledge sharing is easier
- Skill development is efficient
Cons of functional organisational structure include the following:
- Information silos are prominent
- Quick decision-making is hindered
2. Matrix organisational structure
In a matrix organisational structure, your employees work on multiple projects simultaneously and report to multiple leaders.
“Matrix structure is advantageous in the sense that you have a mix of people working on the same project, providing the product team a better understanding of all the concerns related to the product.” – Joaquin V. The Scaffold.
How a Matrix organisational structure work
In a matrix organisational structure, you typically have more than one reporting structure.
For instance, an employee from your marketing functional group will report to the marketing team leader and the multiple project managers of the projects he is involved in.
This helps your company track departmental performance and project performance at the same time.
How to deploy Matrix organisation structure in an SME
To deploy a matrix organisational structure in an SME, you just have to hire project managers and give them the authority to lead your teams.
Once hired, you can tell your employees they must report to project managers and their departmental leads.
Your project managers can now overlook the projects they are responsible for and report to the higher management.
That’s it. This is precisely how you can have your SME following a matrix organisational structure.
Here are some pros of Matrix organisational structure:
- Project performance is significantly higher
- Inter-department collaboration is enhanced
Find its cons below:
- Project managers fight for employees’ time
- Employees have to juggle priorities
3. Flat organisational structure
A flat organisational structure despises the idea of multiple managerial levels and has the top management deal with frontline employees directly.
“In small businesses, when you think of innovation coming from the ground up, it is crucial for the organisational structure to be as flat as possible where ideas can be treated as more equal.” Farhan Thawar, Shopify
How a flat organisational structure works
A flat organisation structure is the most simple structure of all. There are no hierarchies, as there is no concept of middle management.
No project managers are in a flat organisation, and the top management works directly with your teams to bring ideas to life.
How to deploy a flat organisation structure in an SME
Managing an SME with a flat organisational structure is less complicated than other structures.
Your main job is clearly defining individual roles and keeping every employee accountable for their responsibilities.
Since there is no middle management, you must interact with frontline employees directly and check their project progress.
Streamline team communication in your SME
There you have it.
You learned the different types of organisational structures, understood how each structure works and how to deploy any structure in your SME.
Communication is the key to your SME’s growth regardless of your organisational structure.
Check out TalkMagnet, our robust team communication application built into a single software with text, voice, and video capabilities.
Use TalkMagnet’s free trial or schedule a demo to see how you can elevate your team’s communication.
