What is Organizational Structure?

Summary

Organizational structure defines a company's hierarchy, outlining employees' roles, functions, and reporting lines. It illustrates how tasks, supervision, and coordination are directed toward the organization's goals. The structure can vary, including functional structures where departments are based on activities, divisional structures where divisions operate independently, and matrix structures that combine both approaches. Organizational structure helps employees understand their position, responsibilities, and how they contribute to the overall objectives of the company.

Takeaways

• 📊 Organizational structure defines a company's hierarchy, including each employee's role and who they report to.
• 🏢 It establishes the pecking order and organizes relationships between directors, managers, and employees.
• 🔧 Organizational structure outlines how tasks, supervision, and coordination are directed towards the organization's goals.
• 🔍 It acts as a lens through which employees can view their organization and understand their place within it.
• 👔 In a functional organizational structure, the company is divided into departments based on work activities or functions.
• 📈 A functional structure typically has top managers overseeing the work carried out by employees in each area.
• 📦 In a divisional organizational structure, the company is divided into divisions that operate independently with their own resources.
• 🌍 Divisions can be based on products, services, geographical areas, or other criteria.
• 🛠 In a matrix organizational structure, employees are assigned based on both their function and the product they work on, blending divisional and functional structures.
• 🎯 Organizational structure helps employees understand the company's aims, goals, and their role in achieving them.

Q & A

What is organizational structure?

Organizational structure is a system that defines a company's hierarchy, identifying each employee's position, their function, and who they report to within the organization.

How does organizational structure help employees?

It helps employees see where they stand within the organization, understand their roles, and know how their tasks align with the company’s goals.

What are the main components of an organizational structure?

The main components include the hierarchy of employees, their functions, and reporting relationships within the company.

What does organizational structure define apart from hierarchy?

It defines the pecking order, task allocation, supervision, and coordination, all directed towards the organization's goals.

What is a functional organizational structure?

A functional organizational structure divides the company into different departments based on specific work activities, with top managers overseeing the employees in each department.

What is a divisional organizational structure?

In a divisional organizational structure, the company is divided into divisions, each with its own resources, so that they can operate independently. Divisions can be defined by products, services, or geographical area.

How does a matrix organizational structure work?

A matrix structure combines aspects of both divisional and functional structures. Employees are organized according to their functions and the product they are working on, often forming teams to complete tasks.

What are the key benefits of a matrix organizational structure?

It combines the strengths of both functional and divisional structures, using teams to improve task completion and product development by aligning employees' functions with specific products.

How does organizational structure relate to a company's goals?

Organizational structure helps align activities such as task allocation, supervision, and coordination with the overall goals and objectives of the company.

Why is it important for employees to understand the organizational structure?

Understanding the organizational structure helps employees know their roles, responsibilities, and how their work contributes to the organization’s success.