The corporate structure of your business is like the foundation of a house. For your business to be stable, its structure needs to align with your goals and values. And the structure helps define how the rest of your ‘house’ (your team) works together.
Four types of structures are used across industries. They are:
Functional Corporate Structures
In these organizations, departments are created for employees with similar skills and roles. Communication in the department is usually effective and decision-making can be quick. Research and Development and marketing are examples of functional teams.
Divisional Corporate Structures
When customers are in different industries or geographically dispersed, a divisional structure may work well. Cross-functional teams are established and assigned to each division, giving each team the talent required to meet customer needs.
Matrix Corporate Structures
Combining functional and divisional structures into a matrix gives team members two managers, one focused on role expertise and the other engaged with specific customers or projects. Employees have more interactions across departments and can be more productive and innovative.
Hybrid Corporate Structures
Another combination of function and division, the hybrid structure has some departments (like Human Resources or Finance) that are solely functional, while others are cross-functional to support customers. Specialized functions perform well, while customers gain the responsiveness of collaboration in divisional teams.
Implication of Corporate Structure for Financial Analysis
When organizations explore financing options, the financial planning and analysis (FP&A) team always considers the corporate structure. Why? Because differences in structure affect how easily costs and productivity can be measured for use with forecasts and budgets. The FP&A analysts will become familiar with department and team activities and gather data about costs, expenses and productivity.
- Functional or divisional organizations are less complex, making the financial modeling process straightforward.
- The overlapping resources in matrix and hybrid organizations may require analysts to use estimates of hours worked and costs.
The team at Value Capital Funding will tailor your financing plans to fit your corporate structure. Contact us for more information about the right solution for you.