Traditional team structures have gone unchallenged for too long.
If you’ve ever seen a pyramid-shaped organizational chart with the CEO at the top and a cascade down through the ranks to frontline employees, then you know the type of structure we’re talking about.
Like many business “rules,” this top-down hierarchical team structure has ancient origins and was codified during the Industrial Revolution.
But the world – and work – has moved on. The “rules” are changing.
This raises some thorny questions. For example, do traditional team structures still work in hybrid work models? How can you apply structure to remote employees working in different time zones? What is leadership’s role in modern organizations?
In your search for answers to these questions, both operational and existential, you’re likely to encounter a range of opinions. More than a few buzzy-sounding team structures, too, like “flatarchy” and “holacracy”.
To help you sift through all the information out there and identify the team structure that best meets your needs, we’ve collected insights and examples from high-performing teams.
We’ll also outline how to transform your team structure, manage employees effectively through the change, and build an adaptable culture where structure enables excellence.
Table of Contents
- The anatomy of effective teams
- Definition and descriptions for the 10 common team structures
- Designing your team structure
- Common team structure mistakes and how to avoid them
- Let’s break the rules together
The anatomy of effective teams
Just a heads up before we get too far: this isn’t going to be one of those blogs that espouses the need to abandon structure altogether.
Structure is important. It helps employees (and leaders) understand where they belong and how their contributions matter.
If you don’t define and design a team structure, one will form organically. That comes with risks you want to avoid, like dominant personalities overshadowing hard workers, or hybrid work schedules leaving employees feeling disconnected.
We’re not even suggesting that traditional team structures are irrelevant. However, they are typically too rigid for the complex challenges of managing remote employees, navigating globalized markets, and maintaining customer loyalty amid increasing competition.
Traditional top-down teams
That pyramid structure, with a single leader at the top and layers of employees reporting upwards, is called a “hierarchical” or “tall” structure. It thrived after the Industrial Revolution and was especially popular in large, bureaucratic organizations.
Here are some key characteristics of traditional top-down teams:
- Clear lines of authority: Decisions flowed from the top down, with little room for employee input.
- Functional departments: Employees were grouped by specialized skills, creating silos and limiting cross-functional collaboration.
- Focus on efficiency: The primary goal was to maximize output, often at the expense of employee autonomy.
While the simplified, straightforward, chain-of-command model improved efficiency for traditional organizations (especially manufacturers), it imposes limitations on modern organizations. Namely, there’s little room for innovation, employees feel disengaged and demotivated, and the organization is slow to adapt.
Evolutions in the remote and hybrid era
The rise of technology, globalization, and the knowledge economy forced a shift in how teams operate. The limitations of traditional structures became more apparent, paving the way for a new era of team structures.
These models are characterized by:
- Autonomy: Teams are more free to manage their work and make decisions.
- Emphasis on collaboration: Cross-functional teams and project-based work encourage collaboration across departments.
- Adaptability: Flexible structures and processes allow organizations to respond to market changes and take technological advancements in stride.
Far from rendering traditional structures obsolete, the evolution has instead highlighted the need to adapt and integrate new practices.
Organizations are now fusing elements of traditional hierarchies with the flexibility of modern approaches as they transition to hybrid work schedules. There’s no rule against blending team structures, and doing so can yield the best of both worlds.
Definition and descriptions for the 10 common team structures
1. Functional team structure
Teams are organized based on their specific functions or roles. Think marketing, finance, product development or customer support.
This structure allows for specialized skill development and fosters deep knowledge within departments but limits cross-functional collaboration.
2. Market-focused team structure
Teams are built around specific market segments or customer demographics, enabling teams to tailor their strategies and services to meet the unique needs of different customer groups.
This approach is tailor-made for organizations serving diverse markets, like a multinational using different strategies to engage customers in (for example) France, Germany and the UK.
3. Product-focused team structure
In this structure, teams are organized around specific products or product lines. This allows for concentrated expertise and responsiveness to market trends, although being hyper-focused can limit the field of view.
Apple transitioned to this model under Tim Cook. Although Steve Jobs preferred a traditional hierarchical model, the evolved product-focused structure gives department heads more independence. You only need to look at Apple’s sky-high revenue and the innovative products released under Cook’s leadership to see that it worked.
Elements of product-focused team structure are beneficial for companies with a diverse range of products. Just make sure to consider the customer’s needs from every angle.
4. Process-based team structure
As you might guess, this model focuses on optimizing workflows and processes. Teams are organized around specific end-to-end processes like R&D or customer acquisition rather than dividing those responsibilities along functional lines.
This structure aims to optimize efficiency and quality by aligning employees’ efforts with the key processes for strengthening the organization’s value chain. It’s especially useful for companies focused on continuous improvement and operational excellence, although departmental siloes are common.
5. Matrix team structure
This more complex framework combines functional and project-based approaches to create cross-functional teams. Employees report to multiple managers, typically a functional manager and a project or product manager.
It’s excellent for complex projects requiring input from various departments but often leads to confusion about reporting lines and priorities.
Unless you’re Cisco. Facing rapidly increasing competition, and unable to adapt fast enough under a traditional model, Cisco embraced a matrix-style cross-functional model that created “a bridge between siloed architecture experts and customer-facing staff in diverse groups across the company,” according to a 2011 case study.
6. Agile team structure
Agile teams are cross-functional, self-organizing groups that work on projects in short cycles or sprints. An iterative development cycle and continuous feedback allow for rapid adaptation to change.
Agile team structures are particularly popular in software development and innovative projects where speed and flexibility are critical. They’re less popular in relationship or service-focused organizations.
7. Circular team structure
A new twist on traditional hierarchies, circular team structures arrange teams in concentric circles around a central leadership point. This symbolizes the flow of information from the core outward and back, aiming to enhance communication and improve collaboration.
It’s particularly effective in flattening hierarchies and fostering a sense of shared purpose, although it might not scale for large organizations.
8. Flat team structure
Now we get to the “flatarchy”, characterized by a minimalistic approach to hierarchy and management layers. Communication and collaboration thrive, decision-making is decentralized, and employees have more autonomy.
Netflix might be the most famous example of what happens when flat team structures scale up. The fact that it’s not entirely flat is evidence that there’s rarely a clear-cut example of team structures in the wild; Netflix’s corporate HQ still calls the shots, and there are functional and geographical dividing lines.
Still, designing out management levels has evidently removed friction. No doubt we have this to thank for a glut of incredible original programming.
9. Network team structure
Arguably the most modern team structure, a network model consists of a web of interconnected individuals and teams linked through technology, collaborations and shared goals.
Teams operate as independent hubs connected through central points for communication and coordination. This structure is adaptive and highly scalable. It’s also one of the most suitable for managing remote employees or outsourcing some functions to external partners.
10. Bonus: the Holarchy
More thought experiment than team structure, holarchy is an organizational philosophy that emphasizes wholeness and autonomy. It views an organization as a network of self-governing entities (holons) that collaborate and contribute to a larger whole. Holons are simultaneously part of the system and fully formed individuals.
In practice, this looks like a mix of team structures within an organization. The engineering division might decide to be agile and HR might opt for a market-focused structure, depending on their specific needs.
Designing your team structure
Organizations come in all shapes and sizes. Understanding the different types of team structures is helpful for setting a framework, but the Netflix example illustrates the unlikeliness of any team fitting neatly into one category.
The ideal approach depends heavily on your organization’s unique DNA. Factors like size, industry, company culture, hybrid work models and project scope all play a crucial role.
However, by understanding your specific needs and embracing flexibility, you can design a structure that works – and, crucially, scales as your company grows.
Here are sample team structures to help you get started:
- Maketing team structure
- Design team structure
- Sales team structure
- Product team structure
- Finance team structure
- HR team structure
- Real estate team structure
- Engineering team structure
- Software development team structure
Assessing your needs
Before deciding on specific structures, analyze your organization’s current state, emerging challenges and future goals.
Here are some key questions to consider:
- What are our core values?
- What is the size and composition of our workforce (remote, in-office, hybrid)?
- What types of projects do we undertake (ongoing, short-term, complex)?
- What level of collaboration is required across departments?
- How do we measure success (efficiency, innovation, customer satisfaction)?
Answering these questions can help you clearly understand your priorities. Then, you can start sketching out a structure that aligns with strategic objectives, supports team capabilities, and acknowledges resourcing realities.
Building flexibility in team structures
The fact that we’re even talking about team structures proves that whatever structure works today will need adjustments in the future. Five years ago, you likely didn’t expect to be managing remote employees. Now, that’s more or less the norm.
Building flexibility into your team structure enables your organization to adapt when things inevitably change again.
- Embrace a hybrid approach. Don’t be afraid to combine elements from different structures, for example, building agile cross-functional project teams from functional departments.
- Empower self-organizing teams. Give teams the autonomy to define roles, responsibilities and workflows organically within a broader framework.
- Invest in communication tools. Facilitate seamless collaboration between remote and in-office team members through technology. For example, Time Doctor gives team leaders complete visibility to track the work being done and manage remote employees effectively, no matter where or when they work.
- Regularly review and adapt. Schedule regular check-ins to assess the effectiveness of your structure and make adjustments as needed.
By prioritizing flexibility, you ensure your team structure is resilient and adaptable – which is mission-critical given how fast the world is changing.
Technology’s role in the transformation
Technology plays a crucial role in maximizing the effectiveness of team structures, particularly in hybrid work environments.
Here are a few ways to reconsider technology as an employee empowerment tool:
- Project management tools enable agile and self-organizing team structures, with the ability to track progress and improve collaboration.
- Communication platforms facilitate real-time communication, knowledge sharing and virtual meetings, shrinking the distance between hybrid and remote employees.
- Cloud storage solutions ensure everyone has access to the latest information, regardless of location – and it’s secure.
- Workforce analytics gives managers peace of mind that the right work is being done, while employees gain tools to self-manage hybrid work schedules and autonomy to use their time on strategic tasks.
- Integrated SaaS solutions improve the flow of information between and within teams, improving collaboration and reducing double handling.
The common characteristic of all these tech enablers is integration. Individual “holons” might have their specialty software, but effective organizations find opportunities to connect and centralize data used to make strategic decisions.
Common team structure mistakes and how to avoid them
Even with the best intentions, organizations can fall prey to common pitfalls when designing team structures. Whether it’s resistance to change, communication breakdowns, conflicting priorities or a lack of strategic clarity, you need to watch for the signs of these weak points, or the whole structure could crumble.
One-size-fits-all mentality
Forcing a single structure across the entire organization can stifle innovation and collaboration.
Flexibility is the solution. That begins with building in flexibility as we discussed above.
Your role here doesn’t end once the structures are in place. Regularly assess how things are working and be prepared to make adjustments as circumstances evolve.
Lack of clarity
Confusion about ownership, accountability, roles and responsibilities can lead to inefficiency and frustration.
Document ownership and accountability for each team and employee, and clarify the link to strategic targets. Make this information accessible and make sure people know where to find it.
Poor communication
Information silos and a lack of transparency can hinder collaboration and decision-making. Ironically, this is both a common reason for rethinking team structures and a common pitfall of the reorganization process.
Establish clear communication channels and encourage open information sharing. Transparency throughout the design and reorganization process helps employees feel like they’re involved rather than being shuffled by an invisible hand.
Ignoring the human element
Neglecting employee preferences and work styles can lead to disengagement and low morale.
Seek employee input to ensure the structure aligns with their needs and preferences. If not, analyze their feedback to find a solution. Start that process from day one and continue without end.
Let’s break the rules together
As a champion of hybrid work and an enabler of effective teams, Time Doctor is your partner in radical reorganization.
We believe every organization needs the right tools to build team structures that work for them. By carefully considering your organization’s unique needs, challenges and capabilities, you can design a structure that enables your team to thrive. Not just today but tomorrow and 10 years from now.
We encourage you to bend the “rules” of team structure to suit your requirements. Just watch out for the pitfalls, particularly the chance for employees’ voices to get drowned out.
And remember: while flexibility and agility are important, structures don’t stay standing for long without maintenance.
That’s where we come in.
Time Doctor is an industry-leading workforce analytics platform providing your organization with a single source of truth. With features to monitor employee and project performance, promote work-life balance and enable employee autonomy, and the flexibility to suit any team structure, we’re here to support your growth.
Learn more about Time Doctor or jump in with a free 14-day trial.
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.