An organizational structure includes the “…lines of authority, communications, rights and duties of an organization. Organizational structure determines how the roles, power, and responsibilities are assigned, controlled and coordinated, and how information flows between the different levels of management.” A company’s organizational structure formally allocates expectations and requirements of accountability and authority so the company may meet its short and long-term objectives. It is a diagrammatic representation of which position does what and at what level. The structure should optimize the leverage in a company, with as much work being pushed down to the lowest paid resource as possible without impacting quality. It should also facilitate working relationships among the various departments of an organization, and be sufficiently scalable for growth over the mid-term.
Companies that have outgrown their organizational structure tend to show consistent under-performance relative to their expectations.
Poor organizational design and structure results in a bewildering morass of contradictions: confusion within roles, a lack of coordination among functions, failure to share ideas, and slow decision making bringing managers unnecessary complexity, stress and conflict. Often those at the top of an organization are oblivious to these problems, or worse, pass them off as challenges to overcome or opportunities to develop.
It is common in poorly structured environments for workloads to be unbalanced among the different roles, and the reporting systems, lacking sufficient detail further mask this imbalance. Exclusive reliance on lagging performance indicators also plagues measurement systems and reduces their effectiveness.
Of course, structure is only one facet of overall company strategy (see the System for a System model, Bellrock, 2011). Further, there is no perfect organizational structure. What it can do, however, is provide an operational roadmap that sets the path for the company to achieve its goals, by prescribing the responsibilities of each position in the organization. Companies with effective structures typically have employees who understand their specific role in the company, know how their performance will be measured, and are aware of their potential career paths. Their priorities are clear – while conflicts may still happen, they can be managed through other systems.
When reorganizing a company, the value of an outside perspective cannot be over-emphasized. People working within the company cannot help but bring their own biases and agendas to the conversation, but this doesn’t make the insider’s perspective any less valuable. People working in the organization know the challenges of the current structure better than anyone, and they can anticipate the potential roadblocks to the other structures being considered.
Most common in smaller organizations, this informal structure relies on one leader to make all strategic decisions and communicate them through conversations with individual staff.
Groups employees based on product or service offerings, ensuring that each grouping has the skills to meet the market demands for that product or service.
Groups employees based upon the functions of specific jobs within the organization (i.e. sales, marketing, production, finance, etc.).
Groups employees by both function and division. This structure may combine the best of all structures, but may also weaken accountability. A matrix organization frequently uses teams of employees to accomplish work. Some forms of Matrix structure include:
Duties and Authorities:
Span of Control:
Career Planning and Succession:
 “What is organizational structure.” Business Dictionary. November 18th 2012. < http://www.businessdictionary.com/definition/organ izational-structure.html>.
 Gill Corkindale, “The Importance of Organizational Design and Structure.” HBR Blog Network, 11 February 2011. Web. 6 November 2012. http://blogs.hbr.org/corkindale/2011/02/the_importance _of_organization.html.