Organizational structure

Any organization regardless of size operates within a certain structure. This certain structure arranges the lines of authority, communications, relationships and rights and duties of the organization.

A well designed organizational structure results in benefiting from clear relationships and communications.

The organizational structure is, in fact, a visual diagram in which every firm describes what employees do, to whom they report, and in which way the decisions are made. Organizational structures use all data about functions, markets, products, and processes.

To have an efficient workflow, work processes should be categorized based on functional and natural criteria. This is realized by identifying all functions, activities, relationships which can be both vertical and horizontal.

Organizational structure is about assigning and coordinating roles, responsibilities, and duties. It also deals with information flows between the different levels of the organization.

A company such as Proctor & Gamble that sells multiple products may organize their structure so that groups are divided according to each product and depending on the geographical area as well.

An organizational chart illustrates the organizational structure.

There are some typical forms of organizational structure:

• Hierarchical Organizational Structure
• Matrix Organizational Structure
• Functional Organizational Structure
• Product Organizational Structure
• Customer Organizational Structure
• Geographic Organizational Structure

The preference of one structure over others comes from the organization’s objectives and strategy. For example, when the top levels of managers have the most power in the decision-making process, the structure should be centralized but when decision-making power is not intensive and has been already distributed, the structure could be arranged as a decentralized one.