The Impact of Organizational Structure

How the people in an organization are grouped impacts the business.

"Organizational structure" refers to the way people are organized ---the company's reporting structure. This structure varies from company to company. "Tall" organizations use many layers of management. "Flat" organizations use fewer levels, and managers often have a wider span of control.

Culture

The behaviors and beliefs characteristic of a workplace are its culture. The culture and structure of an organization affect one another. A structure appropriate to the organization helps to develop a healthy culture.

Communication

In companies with rigid structures, communication tends to follow reporting lines. In companies with flatter structures, communication may occur more easily across departments.

Job Satisfaction

Studies have found a relationship between job satisfaction and organizational structure. Organizations with flatter structures may foster more feelings of self-actualization and create less anxiety in employees.

Customer Relations

Relationships with customers may suffer if departmental relationships cause the customer difficulty in getting problems addressed. Multi-functional teams that can answer a customer's questions and resolve issues have a positive effect on customer satisfaction.

Projects

Organizational structure impacts the success of a company's projects. If project personnel also perform routine operational work, it may be difficult for them to focus on projects and meet schedules. If the flow of information across departments is difficult, it may affect ability to share resources effectively.

References

• Study Graduate School Of Management: Relation of Organizational Structure to Job Satisfaction, Anxiety, Stress and Performance
• Article Caucus Education Corporation: Structure Impacts Communication Style