Entrepreneurs can’t do it alone. Some may try, but it’s almost impossible.
As business grows, new challenges and responsibilities arise and decisions need to be made about how many people are needed and how to structure them.
As James Cash Penney said, “Growth is never by mere chance; it is the result of forces working together.”
Well, that means building a team—because without the right people, a business can’t go far.
That means new hires need to know the organization they are stepping into, including the organization's structure and the company's culture.
Culture in Expansion
When organizations grow, they often develop common organisational structures such as a functional structure or divisional structure, make business decisions and create new roles or separate business units.
These internal frameworks—sometimes called organization structures or org charts—determine how tasks are divided and coordinated.
While the technical bits of growth (e.g. financial management, strategic planning) are important, the human bits are just as important.
Especially how a new hire adapts to the organization’s culture and the workplace culture plays a big part in organizational success.
Before new hires can excel, it helps if they see the organization structure as a support system rather than just a chain of command, especially in a decentralized organizational structure.
Whether the company has a hierarchical structure, flat structure or matrix structure, these types of organisational structures impact day-to-day interactions.
For example, a decentralized structure can give lower-level employees the freedom to make decisions on their own, while a centralized leadership approach might require approval from middle management or the leadership team.
What is Organizational Culture?
If you’ve ever wondered what the cultural values of an organization are, you’re not alone.
Simply put, organizational culture—sometimes called corporate culture or company culture—is the set of values, beliefs and behaviors that guide how employees interact with each other and external stakeholders.
Some call it cultural differences or “unwritten rules” while others use a more formal definition that focuses on open communication, company values and organizational communication standards.
A strong workplace culture is aligned with the organization’s mission and goals.
In some conversations, you’ll also hear about organizational climate, like the organization’s “weather”—how things feel on a given day.
Culture is more deeply embedded and slower to change. Both impact organizational performance and the broader organizational environment.
Organization Structures
Knowing the key bits of common organisational structures is useful for new and existing employees. Each structure impacts operational efficiency, cross-functional collaboration and organizational goals differently:
Functional and Divisional Structures
Functional structure (or functional org structure): Groups employees by functional departments (e.g. marketing, finance, HR), so functional managers can manage specialized teams.
This can speed up decision-making but can create silos if there isn’t open communication across departments.
Divisional organizational structure
Organizes the company by business unit, product line or geographic region, so each division has autonomy.
This allows for quick local decisions but can duplicate resources if not managed well.
Decentralized organizational structure
This structure empowers lower-level employees to make decisions independently, enhancing agility and promoting ownership.
This approach is increasingly favored by fast-growing companies and tech startups due to its adaptability and responsiveness to changing needs.
Matrix Structure
Matrix organizational structure: Overlays two or more types of structure, often combining functional managers with project managers.
This encourages cross-functional collaboration but can create confusion if roles aren’t clearly defined.
Team Based Structure
A team-based structure groups employees into permanent or project-specific teams, and emphasizes horizontal structure and collaboration.
While it can improve organizational communication, too many teams can create complexity in a line structure or hinder clear accountability.
Flat Structure
Also called a flat structure, it reduces middle management layers, so there’s direct interaction between leaders and lower-level employees.
This can speed up decision-making but in complex organizations can create role ambiguity.
Network Structure
In a network structure, core functions are in-house while other key functions are outsourced to external partners.
This can provide flexibility and cost savings but also increases dependence on third parties and complicates organizational communication.
Process Based Structure
Focuses on end-to-end processes rather than departmental functions. This can improve operational efficiency but requires strong collaboration among functional teams and business unit leaders.
Learning Organization
Not a traditional “org chart” but rather a concept where continuous improvement and knowledge sharing are prioritized.
This can overlap with a team-based structure, network structure or even a hierarchical structure depending on the company values around learning and innovation.
Regardless of the organization structures, each structure impacts the organizational structure diagrams (who reports to whom), the chain of command and the ability for organizational communication to flow.
Types of Organizational Structures
Organizational structures are the backbone of any company, and several types can be implemented depending on the company’s goals, industry, and culture.
Here are some of the most common types of organizational structures:
Functional Structure
A functional structure is the most common type of organizational structure.
It is a hierarchical structure where employees are grouped by their functional roles, such as marketing, finance, or human resources.
Each department is managed by a department head, who reports to senior management.
This structure is suitable for small to medium-sized businesses and is often used in industries where tasks are repetitive and require specialization.
The functional structure allows for efficient resource use and clear lines of authority, but it can also create silos if departments do not communicate effectively.
Divisional Structure
A divisional structure is a type of organizational structure where the company is divided into separate divisions or departments based on products, markets, or geographical regions.
Each division operates independently and has its own management team.
This structure is suitable for large companies with diverse product lines or services.
The divisional structure allows for greater flexibility and responsiveness to market changes, but it can also lead to duplication of resources and efforts if not managed properly.
Matrix Structure
A matrix structure is a type of organizational structure that combines functional and divisional structures. Employees report to multiple managers, both functional and divisional, and work on projects that require collaboration across departments.
This structure is suitable for companies that require flexibility and adaptability in their operations.
The matrix structure encourages cross-functional collaboration and resource sharing, but it can also create confusion and conflicts if roles and responsibilities are not clearly defined.
Building a Strong Organizational Culture
A good culture is key to business success. It attracts top talent and builds employee engagement and loyalty.
Here are the strategies to build and maintain a healthy culture that matches your best organisational structure:
Onboarding and Passing the Baton
A good onboarding program goes beyond paperwork by talking about company culture and organizational goals.
This includes explaining how functional and divisional structures or other common organisational structures work in practice.
Company Orientation
A structured orientation welcomes new hires and shows them the org chart, highlighting key aspects of the organization's culture – like open communication – and how many employees are in each functional department or business unit.
Training
Training sessions can show how cross-functional collaboration or team-based structure is necessary to achieve organizational goals.
By using real-life scenarios, trainers reinforce company culture and link it to practical tasks.
One-on-One
These one-on-ones address questions or concerns about company values or organizational structure diagrams. This is especially important for new hires to get clarity on decision-making and day-to-day organizational communication.
Mentoring
Pairing new hires with experienced employees helps them navigate cultural differences within the organization. Mentors are cultural ambassadors, explaining the subtleties like how decentralized structures work or why functional org charts are used in certain departments.
Team Meetings
Regular meetings promote open communication, and transparency on business updates and show how each business unit or project manager contributes to the organization's performance.
Company Culture: The Innovation Foundation
A good company culture is the foundation for creativity, adaptability and innovation. As American entrepreneur Brian Chesky said, “A company’s culture is the foundation for future innovation”.
Leaders who get this concept often prioritize cultural values – like trust, empathy and respect – to align the entire leadership team.
By creating an environment where employees feel safe to share ideas the company culture becomes the driver for continuous improvement and success.
Organizational Structure and Culture
A company’s organizational structure impacts how the company culture is lived. For example:
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A flat structure may encourage direct communication with company leaders, and speed up initiatives that require quick feedback loops.
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A hierarchical structure may enforce a strict chain of command, and bring stability but sometimes slow down decision-making.
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A divisional structure caters to different markets or regions and allows different business units to align to specific customer needs.
In each case, the company culture must match the chosen structure to achieve high performance. Project managers and functional managers must work together to ensure cultural norms – like open communication – are adhered to across the entire organization.
Mentors are cultural ambassadors, explaining the subtleties like how decentralized organizational structures work or why functional org charts are used in certain departments.
Designing and Implementing Your Organizational Structure
Designing and implementing an organizational structure requires careful consideration of several factors. Here are some of the key factors to consider:
Factors That Influence Structure Choice
When choosing an organizational structure, several factors come into play. These include:
Company Size: Larger companies tend to require more complex structures, while smaller companies can operate with simpler structures.
For instance, a small startup might thrive with a flat organizational structure, while a multinational corporation might need a more layered, hierarchical structure to manage its vast operations.
Industry: Different industries require different types of structures.
For example, a manufacturing company may require a functional structure to streamline production processes, while a tech startup may benefit from a matrix structure to foster innovation and rapid development.
Culture: The company culture plays a significant role in determining the type of structure that will work best.
For example, a company with a strong emphasis on teamwork and collaboration may require a matrix structure to facilitate cross-functional projects, while a company that values stability and consistency might prefer a hierarchical structure.
Goals: The company’s goals and objectives also play a role in determining the type of structure that will work best.
For example, a company to increase innovation may require a matrix structure to encourage creative problem-solving and collaboration across departments, while a company focused on cost efficiency might opt for a functional structure to streamline operations.
By considering these factors, companies can choose an organizational structure that aligns with their goals, industry, and culture and sets them up for success.
The right structure not only supports operational efficiency but also enhances the overall organizational culture, making it easier for new hires to integrate and contribute effectively.
FAQs
What does “organizational culture” mean?
Organizational culture means the shared values, beliefs and behaviors that guide how employees interact.
It encompasses the implicit “rules” of the workplace – from dress codes to work ethics to communication patterns. In short, it’s the company's personality.
What are the 4 types of organizational culture?
A popular model by Cameron and Quinn is:
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Clan Culture – Team-based, mentor-style leadership, collaboration focused
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Adhocracy Culture – Innovation-driven, risk-taking, adaptable to change
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Market Culture – Competitive, goal-focused, prioritizes performance metrics
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Hierarchy Culture – Structured, process-focused, values consistency and stability
What is an example of organizational culture?
A tech start-up with a flat structure that has daily stand-up meetings, hackathons and a casual dress code is an example of an adhocracy culture – innovation, creativity and agility are valued and open communication flows freely.
Why is organizational culture so important?
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It drives everyday behavior and business decisions
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It shapes employee engagement, retention and organizational communication
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It aligns everyone to organizational goals and unity
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It boosts brand reputation, attracts customers and talent
How does organizational culture impact employee retention?
A good culture – with recognition, open communication and supportive leadership – reduces turnover and boosts morale.
A bad or unclear culture makes employees look elsewhere, increases recruitment costs and undermines the organization.
What are the main differences between a hierarchy and a clan culture?
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Hierarchy: Formal structures, centralised decision-making, rules and processes focused
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Clan: Collaboration, team spirit, decentralized decisions, mutual support focused
How does a market culture impact employee motivation?
Market culture prioritizes targets, competition and results.
Employees in such cultures find motivation in performance metrics, sales targets and tangible rewards.
However, it can be stressful for those who prefer a more team-based or less target-driven approach.
What role does leadership play in shaping organizational culture?
Leaders define and model cultural values, make decisions and communicate in ways that reflect those values.
They set organizational priorities – innovation, collaboration, cost efficiency – that become part of the company culture over time.
How do you move from a bureaucracy to an adhocracy?
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Review Current Systems: Identify processes and policies that block flexibility.
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Change the Organizational Structure: From strict hierarchies to team-based or cross-functional models.
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Instil an Innovation Mindset: Encourage risk-taking through pilot programs, hackathons or labs.
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Redefine Leadership: From gatekeeping to facilitation.
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Reward Initiative: Recognise creative problem-solving to reinforce an agile innovative culture
Technology to Support Culture and Structure
Technology can be a great enabler, regardless of your organizational structure – functional, divisional, matrix or otherwise, and an organizational structure chart can help visualize these structures.
Tools like team messaging apps, project management software and data analytics can facilitate open communication across complex organizations, real-time feedback and help existing employees and new joiners stay aligned with company values.
Summary
An organization’s culture is more than words on a website or a policy in a handbook.
It’s shaped by every individual – from the leaders down to the lowest level employees – and heavily influenced by the organizational structure in place.
By using a functional org chart, a team-based org structure or any other model that fits your business unit and operational needs you can create a culture that everyone can buy into.
The real magic happens when the whole workforce believes and embodies the shared vision and company values – collaboration, innovation and business success.
Remember, prioritising culture during onboarding and beyond means new joiners become active contributors, not passive observers.
An aligned culture and org structure are the foundation for operational efficiency, organizational communication and long-term success.
