Team structure: 10 effective ways to organize your team

Looking for ways to better organize and lead your team? You may be surprised to find out that there are many different ways to achieve an organizational structure that improves team efficiency. 

A team structure defines the relationships between activities, leadership, and team members. While this may seem simple enough, team structures can have a huge impact on the distribution of authority and how teams collaborate and work together on a daily basis. 

Each organizational structure features a different chain of command and offers unique ways to encourage teamwork with the help of collaboration software. Likewise, each of these helps to form relationship dynamics and create a collegial work environment. 

From a functional structure to a flat structure, we’ll go over the 10 most effective ways to organize your team to help you find the right approach for your goals. 

1. Hierarchical structure

A hierarchical format is the basis of most organizational charts. A hierarchy is organized into a pyramid-like structure, with executives, directors, managers, and employees in order from the highest level to the lowest in the chain. This is by far the most widely used structure and creates clear boundaries between team members. 

Many organizations use the traditional hierarchy structure, though there are many variations you can choose from. These include a process-based and circular structure, which use a similar hierarchy but are visualized in different ways.

The number of layers your structure includes will depend on the size and complexity of your team. Most organizations have four or more layers, and visualize the structure in a company-wide org chart.

Best for teams that are looking for:

• A straightforward reporting structure

• Clear career paths

• Specialties within individual positions 

Since this approach is a universal org structure, the hierarchical approach can work for most, if not all, teams. 

2. Functional structure

One of the most widely used team structures, apart from the hierarchical approach, is the functional organizational structure. In this approach, teams are grouped based on their skills and knowledge. These groups are then vertically structured between each department from the top-down, from the president to individual team members, and so on.

Functional structures organize top management—or a type of single authority—to oversee each department. 

While these teams will vary from company to company, the point of the functional structure is to allow for specialized skills and to prepare for organizational growth.

Best for teams that are looking for:

• Field experts

• Team accountability

• Organizational growth

A key feature of the functional structure is the ability to cultivate niche specialties within different departments. 

3. Matrix structure

The matrix structure differs the most from other team structures as it doesn’t follow the typical hierarchical model. Instead, this team structure is organized in a grid format, with team members reporting to more than one leader. These relationships are commonly structured as primary and secondary reporting relationships. 

Matrix organizations use this structure in order to create a balance between leadership and, ultimately, the decision-making process. 

The approach you choose will depend on the nature of your teams and reporting structure. The main benefit is creating a balanced organizational structure, which can be achieved by establishing reporting lines for every individual to multiple leaders in different departments or divisions. 

Best for teams that are looking for:

• A balance between units and products

• Improved collaboration and communication

• Fluid balance in leadership

This tends to work for teams that want to ensure decision making authority isn't limited to a handful of individuals, and rather, want team members to feel empowered to make decisions. 

4. Process-based structure

A process-based structure emphasizes different internal processes rather than departments. Similar to other structures, it’s also organized by hierarchy with leadership connected to these various processes.

This type of team structure is preferred by organizations whose processes take precedence over individual projects. These may be new processes or ones your organization has implemented already. 

Best for teams that are looking for:

• Efficiency

• Organizational growth

• Assistance with many different processes

Teams that are suited for this structure tend to be focused on internal processes and efficiency rather than external-facing projects. 

5. Circular structure

While visually different, the circular structure follows a hierarchical organization like most others. Higher-level team members are represented in the inner circle, and lower-level team members occupy the outer circles. Executive leadership is shown in the center of the circle, which represents the fluid relationship they have with each department head. 

This full-circle organizational structure keeps everyone connected, yet separate in their own circles. The number of rings in your structure will continue to increase until all individuals are placed at their appropriate level. 

Due to the visual nature of this structure, it’s best suited for small teams that aim to have fluid communication. 

Best for teams that are looking for:

• Streamlined communication

• Easy flow of information

• Fluid relationships

While different from many other structures, this modern approach can work well for remote organizations that need help effectively communicating between leadership and team members. 

6. Flat structure

Unlike the triangular shape of a traditional org structure, a flat structure is an interconnected web with multiple flat levels. These levels include all leadership tiers, from executives to middle managers and beyond. The difference is that there is only ever a couple of steps between leadership and individual teams—unlike a hierarchical approach which could have many levels in between executives and lower-level team members. 

The flat structure is great for teams that want to create centralized or unified networks that link back to common goals. 

Your connections will differ depending on your teams and the involvement of executives. The main objective of this structure is to create a balance between leadership and cross-functional teams. 

Best for teams that are looking for:

• Higher productivity

• Aligned goals

• Organizational clarity

If you’re willing to take a nontraditional approach, the flat method can have a tremendous impact on productivity and clarity. 

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7. Network organizational structure

In a network organizational structure, teams are structured based on relative networks. This is primarily well-suited for organizations that require work to be done by external teams, have various global locations, or even own multiple small businesses. 

In this structure, each of these networks is organized as a separate entity and connected to one another by hubs.

Separating teams into hubs allows a lot of information to be shared within networks as opposed to sharing little information with a lot of networks. This is because team members are more likely to know the appropriate team member to contact within their hub and communication can flow freely. 

Best for teams that are looking for:

• Communication within networks

• Clear contact information

• Specialties within networks

The network structure is most commonly used out of necessity. Most organizations won’t use it unless their team is already arranged into networks of some kind. 

8. Product-focused divisional structure

A divisional structure is one that groups each function into a separate division. Within this type of structure, there are a variety of specialized areas, including a product-focused structure. 

In this approach, each division is divided into individual product lines.

From there, select teams are responsible for each product line. This is helpful for organizations that revolve heavily around production and want to create clear responsibilities cross-departmentally.

Best for teams that are looking for:

• Semi-autonomous divisions

• Continuous product improvements

These features are best for teams heavily involved in product development and who prefer a balance of both individual work and teamwork. 

9. Market-focused divisional structure

While similar to product-focused, a market-focused division focuses on—you guessed it—individual markets. This can be anything from different industry types to customer types. Organizations that use this structure may have multiple brands under one umbrella company or even vastly different goods and services. 

This type of divisional structure creates clear responsibilities for specific departments. Companies that use this structure usually have a wide array of products and need help organizing departments across all the different product lines.

Best for teams that are looking for:

• The ability to focus on one market at a time

• Team specialization

• Individual accomplishments

Similar to other divisional structures, a market-focused structure is best for teams that prefer a balance of both individual work and teamwork. 

10. Geographical divisional structure

The final divisional structure type focuses on geographical areas. Regions, territories, or districts are organized into separate divisions, creating clear boundaries and logistics across geographies. This structure is best for organizations that rely on customers or supply chain needs within specific regions. 

Dividing work can positively impact a variety of functions, including individual specialization and increased value in select geographical locations.

Best for teams that are looking for:

• The ability to serve local communities

• Communication with local customers or supply chain facilities

• Team collaboration

Similar to the network structure, this type of divisional structure is most commonly used out of necessity. If your organization doesn’t have geographical limitations, like multiple brick-and-mortar locations or team members spread across multiple areas, you won’t need to worry about using this approach. Then again, it can be a great option for teams who do need a solution for geographically dispersed teams. 

Which team structure is right for you?

The right team structure for your organization depends on many factors, like the size of each team, the number of executives you have, and even your company values. While some may take more traditional approaches, others may take more modern ones. 

A couple of the key factors to consider when considering a new team structure mainly include communication and leadership balance—both of which can make or break a team dynamic.

Team structures and communication

When it comes to communication and clarity within an organization, there is very much a balance between too much and too little. Overcommunication can cause confusion and employee burnout. On the other hand, too little communication can result in duplicate work and low productivity. 

Team structures that embody balanced communication and clarity include:

• The matrix structure

• The circular structure

• The network structure

These types of structures can be used for development teams, marketing teams, and most others in between. 

Team structures and leadership

Similar to the balance that organizational communication requires, the dynamic between leadership and team members is equally as crucial. Large gaps between upper and lower-level employees have the potential to create a lack of clarity and communication issues. 

Finding a balance can be tough. On the one hand, those in leadership roles should have authority over areas that have broad impact to the organization. On the other hand, limiting authority to a few individuals can feel disempowering for the vast majority of team members. 

Team structures that create a balance of leadership authority include:

• The flat structure

• The matrix structure

• The hierarchical structure

The right authority structure will help empower your team to contribute ideas and deliver work that makes an impact. 

Structure your team for success

Your team’s structure impacts everything from team building to employee morale and even business success. As a project manager, creating clear boundaries between different teams can help improve productivity and performance. 

No more silos: Optimizing your organizational structure for stronger cross-team collaboration

In this ebook, learn how to structure your organization to prevent silos, move faster, and stay aligned in the face of change.

Get the insights