The Role of Organisational Structure in Saudi Arabian Business Success

Moving from oil-dependence to a diversified economy means companies must be flexible, innovative, and fast to respond to emerging sectors like technology, renewable energy, and tourism. How companies are structured, whether centralised, decentralised, or matrix-based, directly impacts their ability to innovate, respond to market demands, and collaborate both within the organisation and with external stakeholders.

This emphasis on structure is about positioning businesses for long-term success. 

From small-scale startups to multinational conglomerates, Saudi organisations have begun facing unique challenges in balancing tradition and innovation. Family-owned businesses, which form the backbone of the Saudi economy, may look at their structure through a lens of heritage and continuity. Whereas newer tech companies or joint ventures with international firms might lean towards more modern, flexible structures that encourage collaboration and creativity.

Understanding and optimising your organisational structure in Saudi Arabia is a key driver of business success in a time of transformation. Let’s explore how the right structure can be the foundation for not just surviving, but thriving in the competitive world of Saudi business.

What is an organisational structure?

An organisational structure refers to how activities, such as task allocation, coordination, and supervision, are directed toward achieving organisational goals. It defines roles, responsibilities, and lines of authority and communication within a company. In essence, it serves as the framework within which an organisation operates, shaping its culture, influencing decision-making processes, and determining operational efficiency.

At its core, the organisational structure answers the questions, “Who reports to whom?”, “How are tasks and responsibilities divided?”, and “How is information shared across departments?”

You can see these structures as a hierarchy or network where the board, the management, employees, and teams are grouped by function, product line, geography, or project. The structure can be centralised, where decision-making resides with top management, or decentralised, allowing decisions to be made at various levels.

In Saudi Arabia, traditional hierarchical and governance models have long dominated, but with Vision 2030, there’s a clear shift toward flatter and more dynamic structures that encourage innovation and efficiency.

The Importance of Organisational Structure in Business Success

Think of your organisational structure as the foundation. If it’s strong, everything runs smoothly, from communication and decision-making to innovation and accountability. But if it’s shaky or unclear? Even the best strategies will fall apart because there’s no direction.

In Saudi Arabia, organisational structure is critical as the business landscape looks like:

• Traditional, family-run businesses that still value hierarchy and heritage
• Conglomerates like SABIC, Aramco, and Almarai are handling global competition
• A rapidly growing SME and startup sector thriving under Vision 2030
• Government bodies and giga-projects operating on a massive scale

Without structure, even the most brilliant strategies fall flat. A good organisational design ensures that every department knows how their work supports the company’s objectives, focuses on collaboration over competition, and allocates resources effectively.

As Saudi startups scale, they quickly realise that there is no one-size-fits-all structure for each company. A thoughtful structure with a solid startup advisory board helps you establish new teams without confusion, launch new locations or verticals without losing control, and ensure decision rights are clear, even as complexity grows.

Many leaders worry that a structured organisation might stifle creativity or innovation. But the opposite is true if done well.

In Saudi Arabia’s evolving sectors (fintech, clean energy, e-commerce, etc.), companies are adopting flexible structures that allow teams to experiment within boundaries. Think of innovation labs within traditional banks, agile project teams at telecom companies, and cross-border R&D teams in the oil and energy space. When structure supports, not restricts, innovation, it becomes a launchpad, not a cage.

The Evolution of Organisational Structures in Saudi Arabia

Historically, organisational structures in Saudi Arabia were deeply influenced by tribal and familial systems. Many of the early businesses, especially in trade, construction, and agriculture, were family-run enterprises. Decision-making resided with the patriarch or eldest male, and the structure was heavily hierarchical and relationship-based rather than role-based.

While these models worked well for small to mid-sized businesses, especially in their early stages, they gradually started showing cracks as companies expanded and the market evolved.

During the oil boom era of the 1970s and ’80s, there was increasing pressure to adopt Western-style organisational structures. Global partnerships, foreign investments, and joint ventures required Saudi companies to implement more formalised, transparent systems that matched international business expectations.

This phase marked a transitional period. Many businesses still operated with family control at the top, but now with professional managers handling daily operations, a hybrid of traditional leadership and modern corporate governance.

The 1990s and 2000s saw the rise of Saudi conglomerates like SABIC, Almarai, and STC, which scaled rapidly and operated across multiple sectors and geographies. These companies required more sophisticated organisational designs to manage their complexity in operations, branding, compliance, and global competition. Saudi companies needed to project stability and maturity to investors and partners abroad.

Fast forward to the 2020s, and Saudi Arabia is now on a mission to diversify its economy and become a global innovation hub. Under Vision 2030, businesses are rapidly digitising and modernising organisational structures. Today, we’re seeing forward-looking structures in tech and telecom companies that facilitate cross-functional collaboration. We’re also looking at agile squads in startups and digital units of larger firms to speed up innovation and decision-making.

Types of Organisational Structures in Saudi Businesses

Some of the key types of structures that are currently present in the Kingdom are the following:

1. Functional Structure

In Saudi Arabia, the functional structure remains one of the widely adopted models, especially among older, well-established businesses, government entities, and family-run enterprises. This structure groups employees based on their professional expertise and function, such as HR, Finance, Marketing, IT, and so on. Each department is headed by a manager who has specialised knowledge in that area and reports to senior leadership.

This model is especially prevalent in sectors where clarity, specialisation, and routine execution are critical, such as in manufacturing, logistics, agriculture, or even education.

However, while functional structures foster deep expertise and strong departmental focus, they can also create silos. Nevertheless, it continues to thrive in traditional sectors and is often a starting point for organisations before they mature into more complex models.

2. Divisional Structure

As Saudi businesses expand and diversify under the initiatives of Vision 2030, many have embraced the divisional structure. Unlike the functional model, this structure divides the organisation based on product lines, services, geographic territories, or customer types. Each division essentially operates as its own mini-business with its own leadership and functional departments.

This is incredibly effective in large conglomerates and holding companies that operate across diverse sectors.

What makes this structure particularly suitable for Saudi Arabia is the country’s geographical diversity and the growing number of companies expanding into different provinces or even internationally. With divisions focused on Jeddah, Riyadh, or the Eastern Province, for instance, companies can localise their strategies while still aligning with national goals.

3. Matrix Structure

Saudi Arabia is undergoing a transformation that demands collaboration across disciplines, especially in sectors like energy, technology, and construction. Enter the matrix structure, a hybrid model that allows employees to report to more than one manager, typically one based on function and one based on a project, product, or geography.

This structure thrives in highly complex organisations where different teams must collaborate across massive, multifaceted projects. For example, an environmental engineer might report to the environmental sustainability department while also serving on a project team working on green infrastructure. This dual reporting system allows for both deep specialisation and cross-functional innovation.

While incredibly powerful in fostering collaboration and optimising resources, the matrix structure does come with challenges. Employees may feel pulled in different directions and managers may handle multiple conflict resolutions. However, for businesses with bold ambitions and multifaceted project environments, common in today’s Saudi Arabia, such a structure is an excellent fit.

4. Flat Structure

The flat structure is increasingly popular among Saudi startups, creative agencies, and young tech firms. This model minimises hierarchical levels and encourages a collaborative, informal workplace culture where decision-making is quick and employees are empowered to contribute ideas directly.

For example, a fintech startup in Riyadh might have a product lead, a handful of developers, a marketing expert, and a co-founder all working side by side. The flat structure nurtures a sense of ownership, speeds up innovation cycles, and helps attract Gen Z and millennial talent who value autonomy and purpose.

However, as these startups scale, the lack of hierarchy can lead to confusion over roles, duplicated efforts, and operational inefficiencies. Flat structures need strong culture and communication norms to prevent chaos.

5. Hybrid Structure

As Saudi companies grow and take root, they often find that no single structure can address the complexity of modern business. That’s where the hybrid structure comes in. This model combines aspects of two or more traditional structures, most often functional and divisional or functional and matrix, to meet unique organisational needs.

You might see this in large national companies like Saudi Arabian Airlines, where core departments such as Finance, HR, and Maintenance remain functionally organised, but flight operations are structured divisionally across domestic and international routes. Meanwhile, innovation teams and customer experience units might run more like a matrix, crossing departments and reporting directly to transformation leaders.

This structure allows organisations to preserve efficiency in their core operations while creating agile, responsive teams for projects, innovation, and customer-centric work. The challenge lies in managing this complexity. If leadership is not clear, or if coordination mechanisms aren’t robust, the hybrid model can quickly become disjointed.

6. Team-Based Structure

The team-based structure puts cross-functional collaboration at the heart of the business. Rather than rigid departments, this model organises work through fluid teams that come together to achieve specific goals or complete projects, then disband or reconfigure as needs come up.

This approach is especially prevalent in Saudi Arabia’s construction, consulting, and project-based tech sectors, where entire businesses operate around bids, tenders, and deliverables. Take, for example, a smart city initiative. The team responsible for a new energy district might include engineers, digital experts, environmental scientists, and logistics planners, all working together on a defined timeline and budget.

This structure encourages speed, creativity, and deep accountability. Team members feel a sense of ownership and are often empowered to make decisions within their project’s scope. However, the model can be difficult to sustain without a strong unifying company culture or project management systems. It works best in dynamic environments where agility is key, and that’s exactly what many parts of Saudi Arabia’s economy are becoming.

7. Network Structure

The network structure reflects the modern reality of globalised, outsourced, and ecosystem-driven business. Here, an organisation keeps its core functions lean and strategic while outsourcing or partnering for everything from logistics to R&D to marketing. It’s all about leveraging a web of external entities to extend capability and reach.

For example, a government-backed tech incubator might focus internally on strategy, program design, and stakeholder engagement, while relying on partner firms for digital platform development, legal services, and mentorship. This allows for incredible flexibility, rapid scaling, and access to external expertise.

Of course, there are challenges, like maintaining control over brand and culture, ensuring quality across partners, and managing data or intellectual property across entities.

Factors Affecting the Choice of Organisational Structure

The right structure can improve efficiency, communication, and strategic alignment within a company. In Saudi Arabia, these choices are further influenced by cultural, economic, and regulatory factors unique to the Kingdom.

1. Size and phase of the business

The first and most obvious factor is the size of the business. Startups don’t need a complex divisional structure. In such early stages, flat or team-based models are ideal to encourage agility, fast decision-making, and low overhead.

But as startups scale, they will need more clarity in reporting, coordination, and decision-making, pushing them towards a functional, divisional, or hybrid model.

2. Industry and sector demands

Your business sector has a direct influence on what structure will serve you best. In Saudi Arabia, traditional sectors like construction, logistics, and manufacturing often lean towards functional or divisional structures to ensure operational efficiency. On the other hand, tech firms, digital marketing agencies, and creative studios tend to adopt flat or team-based models that support speed, ideation, and flexible roles.

3. Geographic reach and operations

Whether your operations are localised or spread across regions, within or beyond Saudi Arabia’s borders, will also determine the structure. A business operating only in one state may comfortably operate with a functional or flat structure. But if you’re expanding across all 13 provinces of Saudi Arabia or entering international markets, a divisional or geographically segmented model often becomes essential.

4. Organisational culture and leadership style

A company built on hierarchical values, traditional norms, and family leadership, common among many long-standing Saudi businesses, will often prefer centralised, functional structures where authority is clearly defined and respected.

In contrast, companies with progressive leadership, particularly those influenced by international partners or foreign direct investment (FDI), might opt for decentralised, collaborative models like matrix or team-based structures. These structures support innovation, ownership, and bottom-up decision-making, which are key to staying competitive in tech-driven and creative fields.

5. Talent availability and workforce demographics

Saudi Arabia has a unique labour market, marked by a youthful, increasingly skilled Saudi population, a large expat workforce, and ongoing policies.

Flat and team-based models, for instance, appeal more to millennials and Gen Z Saudis, who prioritize empowerment, work-life balance, and direct impact. Meanwhile, expatriate-heavy teams in industrial or service sectors may prefer a clear chain of command to reduce confusion and bridge language or cultural gaps.

As companies hire for new skill sets, data science, digital marketing, and cybersecurity, they also restructure to accommodate new departments or integrate them into cross-functional teams.

6. Technology adoption and digital maturity

As Saudi companies digitise their operations, thanks to 5G, AI, cloud platforms, they gain more flexibility in how they structure work. With real-time collaboration tools like board management software, teams can work across departments, cities, or even countries without needing to sit in the same office.

This digital maturity encourages network and matrix structures, allowing businesses to work in ecosystems of partners, freelancers, and agencies, especially common in media, consulting, and fintech sectors. Companies with high digital adoption are no longer bound by traditional hierarchies; they can structure for flow, not control.

Empowering Saudi Business Success with Convene

Whether your organisation is navigating rapid growth, restructuring for digital transformation, or adapting to new regulations, the right structure ensures that decision-making, communication, and accountability are streamlined across all levels.

This is where Convene steps in, offering powerful solutions for boards and organisations of all sizes. From small startups to large enterprises, Convene provides a comprehensive suite of tools that help organisations achieve efficient collaboration, strategic alignment, and transparent governance, no matter the structure.

For businesses of any size, Convene’s integration with existing digital tools and systems supports the fluid adaptation of organisational structures as companies develop. It simplifies complex workflows and provides a centralised view of operations, which is essential for companies with multiple divisions or regional offices. It also supports compliance, making it easier for businesses to adhere to legal and regulatory requirements as they scale.

Get a detailed product walkthrough of Convene today, book a demo with us now.