Team Structure: 10 Ways to Organize Your Development Team

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Rafael Timbó
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Rafael Timbó
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Chief Technology Officer
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This article breaks down ten types of organizational team structures that help companies optimize performance and drive growth.
Published on
March 13, 2024
Updated on
April 17, 2024

There's more than one way to crack an egg, as the saying goes. The same goes for defining team structures; an organization may structure its teams in various ways, each providing unique benefits. Different approaches often positively or negatively affect work culture, collaboration, and efficiency. The types of organizational team structures range from the hierarchical chain of command models to flat structures that cut out middle management.

Software development teams depend on effective team structure. Team structures allow for improved project management, ensure quality and consistency across teams, streamline workflows, and enhance communication across teams in different parts of the globe.

This article delves into team structure, factors managers should consider when choosing one, and the different types of team structures.

What Is Team Structure?

Team structure defines how organizations assemble and arrange their teams to achieve their objectives. Determining the most efficient way to organize a team positively affects the alignment of the organization's overall goals and ability to scale and adapt as needed.

An effective team structure is essential for facilitating communication and developing workflows. Depending on the structure, teams have evident lines of communication, streamlined decision-making processes, and optimized resource allocation. Team structure dictates how staff members interact and collaborate, making it vital for success.

Key Factors That Determine Development Team Structure

Each team is unique, as is the best way to structure them. One team may flourish when given free rein with less oversight, while another may do best with a more rigid structure. Engineering managers must work with product managers, senior leadership, human resources, and others to determine the most effective approach. Some key factors that engineering managers must consider when addressing different teams include the following:

  • Resource allocation: Engineering managers must determine how resource allocation will affect the team structure. Besides dividing staff and equipment, managers must consider the available budget and funding.
  • Project requirements: Each project has a different objective, scope, and complexity. Managers need to consider how these align with the various approaches to team organization to determine the best project team structure.
  • Tech stack: Tech stacks combine programming languages, frameworks, databases, and tools developers use to build software applications. When deciding on team structure, engineering managers must consider their available staff's skill sets and experience to allocate resources appropriately.
  • Communication: Engineering managers must consider how each team structure type affects communication and collaboration. Team members must communicate effectively within the development team and with others, such as project managers, stakeholders, and other teams.
  • Company culture: Engineering managers must choose a team structure that aligns with the company culture and organizational objectives that are already in place. They need to consider factors that affect the team environment, such as global distribution management and team autonomy, to determine the best organizational team structure.
  • Growth opportunities: Team structure may delineate professional growth and development opportunities. Understanding paths toward career advancement, learning new skills, and taking on additional responsibilities helps to motivate a workforce.

10 Ways To Organize Your Software Development Team Structure

Traditional team structures favor hierarchical lines of communication. Often, executives make decisions at the top and relay information down the line through a string of managers. Some contemporary team structures emphasize a more collaborative process and embrace open interactions.

Organizations choose specific team structures based on their industries, sizes, goals, and cultures. Understanding the different types of organizational structures and taking a calculated approach to determining the best fit ensures that the company is well-equipped to handle the challenges of its industry and continue to build and scale teams efficiently..  

1. Hierarchical Structure

Hierarchical structures are traditional organizational models that follow a chain of command. This top-down team hierarchy is a pyramid, with the most senior roles at the top. As the chain of command descends, the levels of authority become clear. Hierarchical structures reveal each employee's direct supervisor while delineating paths for promotion. For example, a software development team may have a development manager who sets goals and oversees the entire team. Team leaders and senior developers would report directly to the development manager and take responsibility for their employees, including front-end or back-end developers.

In a hierarchical structure, decision-making happens at the top, and the flow of information descends the pyramid. Because all employees understand where they fall in the hierarchy, team members have clearly defined roles and responsibilities. While hierarchical team organizational structures are common, the rigid structure sometimes hampers innovation and causes lower-level employees to feel unimportant.

2. Functional Structure

Another common method for organizing teams is a functional structure. These often have a hierarchical structure but create teams with similar roles and expertise. A tech company that utilizes functional structuring would create teams where all members have distinct responsibilities, such as user experience design or DevOps.

Functional organizational structures allow team members to collaborate with other employees with similar skill sets, fostering deeper knowledge and advanced skills in that area. However, specialized teams may create organizational silos, which hampers cross-functional communication and collaboration.

3. Matrix Structure

Matrix structures are not hierarchical models; instead, they organize teams as a grid. This grid format balances leadership and allows employees to report to more than one supervisor and work for multiple teams. Because employees report to multiple supervisors, they gain more perspective on their work and how it fits into the bigger picture. The matrix structure's cross-functional teamwork fosters a culture of collaboration as employees share skills and insights, facilitating better communication and decision-making.

The flexibility that a matrix structure offers also allows for improved resource allocation. Managers can select employees based on the needs or scale of a specific project. While the ability to distribute employees across various projects may enhance productivity, it can also create conflicts between managers over priorities and create confusion for employees if the managers' messages don't align.

4. Circular Structure

Circular structures function similarly to hierarchical structures, but the organizational chart depicts a circle rather than a pyramid. The circular structure begins with a small circle consisting of leadership and expands outwards into concentric circles. A development team may have a core of senior leaders who develop the overall strategy and focus on specific initiatives such as technical debt reduction. The next outer layer of the circle consists of managers who relay messages to the third layer, which includes software developers. The organization continues to create additional rings until it encompasses all employees.

This circular model promotes a culture of transparency and communication within an organization. Without a rigid hierarchical structure, team members feel more comfortable providing feedback, ideas, or concerns to team members in the same or other rings of the circle. However, while encompassing more voices and perspectives often leads to improved decision-making, it may also slow down the process. The lack of a clearly defined structure may also cause confusion on software development team roles and a lack of accountability.  

5. Network Structure

Organizations incorporating external teams in multiple locations worldwide or various small businesses may opt for a network structure. This dynamic model acts as a web of interconnected nodes incorporating on- and offsite resources, such as vendors, contractors, and remote workers.

Network structure may become complicated when incorporating a wide range of remote processes. It often uses digital tools and platforms to maintain communication and enhance collaboration. Software development tools like version control systems and cloud computing services ensure the network remains productive across several locations and time zones.

6. Flat Structure

A flat structure, also called a horizontal structure, has few, if any, levels of middle management separating the workforce from executives. This organic structure allows for more direct lines of communication between staff and upper management, leading to less bureaucracy, a faster decision-making process, and more autonomy. The workforce in a flat structure is often cross-functional in dealing with many tasks. This cross-functional flexibility facilitates productivity without constant supervision but also leads to a lack of specialization in certain areas.

A flat organizational structure works well with smaller organizations or startups where the entire staff works to fulfill common goals. However, maintaining a flat structure becomes increasingly difficult as companies expand and grow. Often, an organization must adapt and add more middle management layers to minimize complexity.

7. Team-Based Structure

A team-based organizational structure partitions a development team into smaller teams, focusing on a common goal while performing individual projects or tasks. In this structure, cross-functional teams are semi-autonomous but remain aligned with the overall objectives and initiatives. Team-based structures encourage each team to take responsibility for its own success.

Team-based structures give employees more control than traditional organization methods and foster better problem-solving and innovative solutions. It brings together team members from various functional backgrounds and experience levels to achieve a common goal. However, teams may adhere to different performance standards without a strong central oversight, leading to inconsistencies.

8. Process-Based Structure

In a process-based organizational structure, companies create teams based on each step in an overall workflow. A process-based structure aims to optimize each step in a process with a manager and team members who specialize in that stage.

Process-based teams may work concurrently or sequentially depending on how the steps interconnect. For example, a quality assurance team must wait for the development team to finish coding before it tests for bugs and performance issues. Process-based structures may speed up development and maintain product consistency but can also lead to misunderstandings between handoffs.

9. Market-Based Structure

Market-based organizational structures organize development teams around market segments or customer groups. With a market-based structure, companies can tailor development needs around specific industries or types of customers to cater to customer demands and follow market trends.

Alignment with a single industry allows teams to rapidly gather insights and feedback from their target market before responding to market changes. Companies use a market-based structure to develop specialized offerings, differentiating them from competitors. One challenge with this organizational structure is that markets may evolve and converge over time, causing overlap and confusion between teams.

10. Product-Based Structure

Companies that develop multiple products may benefit from an organizational structure based on product lines instead of functions or processes. Product team structures divide an organization to focus on developing, maintaining, and enhancing a specific product.

A software development company may have multiple offerings that range from online gaming to cloud-based services. In a product-based structure, each product would have its own set of developers, marketers, and support staff. Segmenting the company based on products may be beneficial to minimize failure. However, it comes with some disadvantages, such as inconsistent customer experiences and challenges balancing resources across teams.

Benefits of IT Organizational Structure

Organizational structure is a crucial aspect of software and IT development. It affects the staff's understanding of software development roles and who each team member reports to. Vertical team structures dictate information flow and communication lines in traditional organizational structures. In contemporary settings, employees may report to more than one superior and perform cross-functional tasks.

Regardless of the challenges, team structures help align business strategies and objectives across the organization. Some further benefits of an IT organizational structure include the following:

  • Role transparency: Roles and responsibilities in a structured organization are more easily defined, allowing employees to quickly identify key stakeholders and contributors.
  • Operational agility: Unlike hierarchical structures, market and matrix structures allow for quick adaptation based on customer demand, market trends, and emerging technology.
  • Streamlined workflows: When team members have a strong understanding of their place within a structure, it’s less complicated to divide tasks for a project or product.
  • Scalability: Because roles are defined, structured teams more easily grow and scale without issues such as role overlap and skill gaps.
  • Career paths: Software developers and engineers often have undefined career paths, but an upward trajectory is more attainable with a strong structure.

In the modern era of business, many teams or organizations split themselves across multiple geographical locations. Choosing the best structure will enable effective communication and collaboration, whether the teams need to work in person across an office or remotely.

Connect With Developers Who Fit Within Your Team Structure

Determining the organizational structure of a team is vital for its success and productivity. Organizations may keep a clearly defined hierarchy structure to maintain control and accountability or adopt a more modern approach emphasizing collaboration and transparency. However, the best organizational structure won't be effective if your company doesn't employ top-tier talent.

Revelo helps organizations build their teams with talented developers at a fraction of the price. We provide a talent pool of pre-vetted developers from Latin America who are time-zone-aligned. Our developers have the technical, soft, and English skills to meet high-quality standards and produce excellent results.

When you use Revelo to hire developers for your software team, we handle onboarding procedures, including payroll, taxes, benefits administration, and local compliance. We also offer continued support throughout the developer's tenure with your company to ensure engagement and retention.

Contact us to hire developers and begin to organize your development team.

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