How to Find a Team Structure That Works for Your Small Business

Team working at office

You probably started your business to solve a problem. When you first began there were likely a lot of sleepless nights as you managed every role you needed for your business. But now, you’re ready to change that. You’re hiring—congratulations! As you consider hiring your first employees, or even if you’ve hired a few folks onto your team already, the structure of your team will impact your ability to grow and function with agility. 

There are two basic organizational structures generally thought to be ideal in the business world. They are vastly different and seem to be in stark contrast with each other, though both agree that when your team is functioning at its best they are organized around job functions. Meaning the structure you choose to use should group your team together with the duties they perform or their areas of expertise.

Mechanistic Versus Flat

Mechanistic or vertical teams are grouped with clear hierarchy and chain of command. Each team member knows where they stand, who their direct manager is, and who their manager’s manager is. They can follow the structure all the way to the top with the CEO. It’s clear to any person entering this workforce exactly who they report to and who will give them the information they need to complete their job every day. 

Flat or horizontal teams are not quite as clear cut. You’ll need to define who manages each area of the business to approve things like raises and paid time off requests, but generally, anyone can give input and an intern’s ideas are not considered any less than those coming from your Director of Finance. The chain of command, or how work is assigned, isn’t as strict and leaves room for a lot of flexibility.

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How Your Team Communicates and Works

When choosing between a mechanistic or flat organizational structure the most telling piece of information you’ll need to gather is how your team communicates now and if you’d like that to be how they continue to communicate moving forward. Thankfully, their natural patterns of communication and collaboration will tell you everything you need to know. 

If your team looks to certain people for communication, it may make sense for you to adopt a mechanistic structure where they can clearly go to certain folks for updates regarding the business. In this structure, your leadership team will divide and assign work to the folks below them. Businesses with stable environments who perform routine tasks or those who are under strict government regulation will thrive in this structure where one person must be responsible for completing a task. 

If your business suggests teammates check their metaphorical business card at the door upon arrival every morning, you’re likely to fare better with a flat structure. Ideas and communication can come from anywhere in this model, where there may be dotted lines between team members whose roles may not fit in one particular department. Departments will be tasked with initiatives and can split the load however they see fit amongst themselves. As companies grow, you’ll see natural leaders emerging from this flow and you can continue to have a flat structure while you promote various people to lead the teams collaborating to solve complex problems. 

Real-Life Application: The Matrix Approach

While there are plenty of examples of rigid mechanistic structures, like the military, the flat organization’s inspiration is a little harder to find. Most companies tend to work in a hybrid of these two structures, referred to as the matrix structure. The most prominent large-scale example of a combination organization is the sportswear brand, Nike. 

In this style of organization, decision making and authority flow both vertically and horizontally. The teams are grouped by geographical division who can each act semi-autonomously. Because of this, there are no “standard products” that come out of Nike. Each group in their organization is given the authority to create and own products for their region. This keeps them agile and able to develop their products with relative ease as every decision isn’t bubbled upward.

Building Out Your Structure

If you aren’t sure which positions you’re ready to hire for, you can test the waters by using contractors. This practice can be especially valuable if you aren’t sure how long you’ll need a particular role as your business grows, or if you need some time to figure out exactly the type of person you want to fill the role. 

As you sketch out what you want for your team structure, keep your business forecast and budget handy. Your forecast will remind you of the level of innovation your business needs from your team in the coming year. The more innovation you’re looking for, the more you’ll want to lean into a flat structure and empower people to make decisions—inspiring ownership throughout your whole company. Empowering your team to make decisions will help you avoid gridlock or a back-and-forth discussion on simple requests while staying nimble. 
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