In a recent post, I talked about the importance of communication skills for startup founders.
One of the reasons why founders find themselves in situations that are difficult to handle is the lack of well-defined relationships. Lack of an organizational structure can cause unwanted ambiguity and create unnecessary friction between team members and founders. Most founders chose flat organizational structures to promote self-motivation and ownership, however, there could be a downside to removing some organizational boundaries at an early-stage startup.
In this article, I will talk about some of the most common organizational structures that startups can adopt.
What is the purpose of an organizational structure?
Besides being a tool for controlling and tracking everything a startup has to do, organizational structure is about having a clear set of roles for each team member. Create roles and responsibilities that are appropriate for the role, a goal which is something that is completely unachievable unless the roles are properly defined. Do not decide who’s doing what in a team in the very beginning. Mould the roles based on the tasks at hand. Think of the role in the context of the team. What skill set does that person have, how strong of a team member are they, what skills do they have at their disposal? What types of roles would suit them?
Organizational structures that founders can choose from
The people-oriented structure This is the most common organizational structure used by startups. This structure emphasizes the importance of relationships between teams. One can build a team by either contracting or hiring certain members. The key aspect of this structure is to create strong connections among team members. The hierarchical structure of this structure entails the inclusion of people with high-ranking positions while the number of employees is limited. The members of a team should be working in a way that benefits them and adds value to the startup. The flat structure In the context of a startup, the idea of flat structures is contradictory, especially in the context of partnerships.
A flat organizational structure is the most common structure that startups adopt, and here is a brief explanation of the benefits: Advantages: This is the most common organizational structure used in startups, since it promotes self-motivation and ownership. It is useful in early-stage companies that have a lot of ideas and work in silos. Flat organizations allow for employees to work at different levels and create self-management. If you are not prepared to let your employees create their own departments, then a flat organization is best for you.
As startups grow, business lines and functional groups are often added. Most of the time, these additional teams fall under one specific organizational unit, so founders can quickly move from one task to the next. The following is an organizational structure that incorporates all the features of a divisional structure, but allows autonomy and ownership of the individual teams. The best setup for a startup that is trying to grow will have three functional units that function on a singular mission and are managed by separate executive leadership. They are: Corporate Services : This is the backbone of the organization that is responsible for the entire processes of every department that requires a central management.