How to Create an Organizational Structure for Your Tech Business

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 Updated: 
September 15, 2019
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When your business first started, you likely used a standard business structure. Perhaps you were a sole proprietorship with only yourself at the helm running everything. Maybe you had a handful of people, so defining your business wasn’t nearly as important. However, as a company expands, figuring out who’s in charge and how the logistics of your business work become more important. Who has the final say in big decisions, and which smaller ones are best handled by specific employees?

For the simplest form of business framework, you have sole proprietorships, partnerships, corporations, S corporations and limited liability corporations (LLCs). However, there are many other formats your business can take on, outside of how the IRS defines you. The structure of your leadership may vary and might even change over time. An example would be a fast-food restaurant, such as McDonald’s. In the early days, it was a single restaurant, then it was a chain and today it is more of a franchise system. The structure changed from two brothers who owned a restaurant to a corporate structure with a CEO. Your leadership style has an impact on the organizational makeup you choose.

As the business grows, you’ll need to structure your organization and figure out how different tasks group into categories — such as products, geography, functions, processes and how individuals and groups fit into the format. Tech businesses have a few unique needs you must also consider as you create methods for your business. Here are a few of the different structures you must think about as you move into the next phase of your business:

Standard Structure

The standard structure has a leader at the top and adds other department heads as the business grows. Employees in each department report to the head of that department and the leader of the area reports back to the top of the company as needed. Each team takes care of the tasks in that department. For example shipping deals with logistics and marketing handle promotion.

Elon Musk is a good example of a tech company mogul who favors this type of structure. The founder serves at the top and has people under him. He leads by example and trusts his team to take care of the smaller tasks. Another example of a standard structure is most airlines. They have a CEO, president and so on. Even on an airplane, there is a standard structure with the pilot in charge, and then the co-pilot and others down the chain of command.

Offline Product Structure

If you’d like a more product-focused system, then an offline product structure is your best choice. With this type of setup, the focus is on a few products, and the company dedicates itself to making those the best they can be and getting the word out. At the same time, the brand has divisions which have specific functions to create a product. The focus is on revenue with this structure. Apple, although it also uses a standard structure, has an offline model. The focus is always on the next big tech release with huge announcements about the latest iPhone and what its capabilities are.

Functional Structure

With a functional structure, the lines between the different departments are less clearly defined, and there is more crossover between employee positions and tasks. Workers get each part of each priority finished however they can, rather than only focusing on their role. There is one disadvantage with the functional structure in that it is sometimes unclear who is in charge. Depending on the personality of the players, this may or may not be a problem.

Matrix Structure

Under a matrix structure, employees have a specific function but they are also tied to the product itself. The spotlight is always on the product. However, employees also know who within the company has the best knowledge and can accomplish tasks to get the product created and out to the public in the best way possible. The matrix may be one of the most flexible structure types and can be combined with other kinds for a customized design.

Action Items to Keep in Mind

While there are additional structures, these four work well for most tech companies, depending on the product and where they are in the lifespan of their company. As you set up your brand structure, keep these things in mind:

Define Roles

Who is in charge of what, and how does the leadership hierarchy play out? If you don’t already have a clear chain of command, now is the time to create one. A strong company has strong leadership. Employees know who to report to and who to see if they have a question. Should their immediate manager do something of concern, they should know who to talk to next for results. You can have a single leader at the top or a group of leaders, but you should also define how decisions are made if managers are not in full agreement.

More than just defining the chain of leadership, you should also determine what type of attitude you want in your company. Leaders don’t just make decisions — they set the tone for the company. Their attitudes often impact the employees under them. Choose people and philosophy of team-building, and then set up a company culture primed for growth.

Focus on Organization

It’s more than likely that you sell a product as a tech company. How well you deliver that product to your distributors and the public rely on the organization of your warehouse. Yes, the leadership structure of your company matters, but so does the logistics of how you store the product once it’s made and how easily you can find and ship it.

Think about whether you want to add machines that sort and find products as needed or if your budget requires a less automated process at this time. At what point in your company’s growth do you think you’ll be ready for automation? How might adding robots to your team allow your employees more time for things such as personalizing shipments or ensuring quality control measures are in place?

Build Your Team

No matter which structure you go with, choose team members who’ve worked in that atmosphere before. Their knowledge is invaluable when it comes to growing your organization and succeeding as you add new customers and products. Think about who your target audience is and hire people who’ve worked in that sector before. If you sell a product aimed at financial services, look for new hires with experience in that field.

Of course, you’ll also have to pay experienced workers more than you would a newbie, so keep in mind your budget and hire accordingly. You might bring aboard one qualified person to be a mentor and train entry-level workers in best practices.

Change When Needed

If you start with a standard structure but find later on that a matrix structure works better, don’t be afraid to change things around. The best companies adapt as the world around them shifts. They try new things when old methods aren’t working. If one structure doesn’t suit your brand’s personality or your style, then try another one.

The best structure for your business likely doesn’t fit into a neat box that is easily defined. Your organizational structure may have elements of both matrix and standard. Time is the best teacher for what works for you.

Create a Chart

One way you can figure out the structure of your business is by creating a flow chart and outlining all the roles within your company. Look at the ones currently held as well what you think you might add in the future. Start at the top with the head of the company. Who makes the final decision on big-ticket items? Next, look at department leaders. What are the departments you currently have and how might these change over time? Who is in charge? List not a name but a job title here.

You can even create a separate sheet that defines each role in a bit more detail if you didn’t already define them, such as what the head of marketing is responsible for. This also helps you when you seek job candidates for an open position because you’ll already have a job description in place.

Next, go out to the side and fill in roles such as administrative or companywide leaders. Perhaps you have someone in charge of employee satisfaction or a person who plans events for the company. These roles fill a sort of leadership structure within your company, even if they don’t have any employees under them. They belong on the same level as other department leaders.

Finally, flesh in how many employees are in each department and what roles they fulfill. This structure is the most likely to change over time as your company grows and department leaders find they need more help completing the work.

A chart shows wherein the business hierarchy each employee falls. This also helps determine salary and special perks, as well as give you a roadmap for employee advancement.

Creating a Structure for Your Tech Business

With a knowledge of the structural options available to you, plus these action items, you should be well on your way to deciding what shape your company will take. The future is yours, but only if you lay the proper foundation — but also know when it’s time to make changes.

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