The Importance of defining organization structure for startups

The Importance of defining organization structure for startups


There is more to an organization than corporate law and marketing campaigns. Organization structure is the term which defines an organization and its policies. It can be considered as a chart which guides the employees in achieving organizational as well as personal goals.
Before understanding the various types of organization structures, one must evaluate their long term plans and consider whether they are based on the service industry, B2B or B2C Company.

Following are some points which should be taken into account:

  • Categorize departments as per the requirement of the object of the business
  • Hire resources as per the requirement of the organization as well as employees’ potential
  • Consider the form of the business, whether it is sole proprietorship, partnership or a company.

 Types of Organization structures:

  1. Functional Structure: Employees are assigned departments according to their skills and capabilities, as a result of which organizational goals are achieved effectively and efficiently. For example:- Purchase Department, Sales Department, HR Department, etc.
  2. Divisional Structure: Departments are classified on the basis of the number of products which the organization deals in. Under each department, there are sub-departments categorized on the basis of routine activities of business like sale, purchase, finance, etc.
  3. Matrix Structure: This is a combination of functional and divisional structure. Each department has a director head and a director for each brand. Such structure helps in increasing the process of decision-making as the directors are well-aware about the current state of each brand.
  4. Hybrid Structure: Similar to Matrix Structure, this model helps in utilizing the resources available in the organization as all the employees are connected with each other and use their knowledge to develop a particular brand. It is a decentralized system with vertical and horizontal functions interacting with each other.

There are other factors which are important for any startup, including:

  1. Organization Flow chart

It is important to understand who is in charge of what  This reduces the scope of confusion and helps in establishing an authority-responsibility relationship. It also simplifies the understanding of the decision-making process for a particular startup and how to go about it along with the hierarchy of the organization.

  1. Performance of the organization

For any start-up, performance matters. It helps in productivity and growth of the company. There are various software which helps in increasing the productivity and analyzing which team or individual is working on which task and for how long.

This will help the organization recognize the faults and take corrective action so as to eliminate such faults. As there are records of each work, it can also be used to train the interns and new employees.

  1. Startup Growth

One of the most important aspect post-analysis is to prepare a feedback for the employees. Detailed analysis and feedbacks guide the employees in the right direction and towards higher productivity. Such insights and feedback will lead the organization towards improvements and betterments.


All the above-mentioned factors will help any startup come-up with new products and brands which will be useful while entering into the new market. With these factors, startups would be able to compete with multinational corporates and would be able to move towards growth, development and success.

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