Organisational structure determines the assignment and coordination of roles, power and responsibilities within a business. It also defines how information flows between the different levels of management.
Every business, from a sole trader to the largest company, is organised in a particular way. You can organise a business by function, geographical area, product or project. You can also organise a business in a hierarchical or a flat structure, or even a matrix structure. Introducing a formal organisational structure can help put your business in a better position to achieve its objectives.
This guide explains the different types of organisational structure and the advantages and disadvantages of each. It also describes some of the main reasons for changing your organisational structure.
Note: Organisational structure is different from a legal structure, which relates to business ownership. See legal structures: the basics.