Communication takes places within organizations both formally, such as through written policies or employee memos, as well as informally — through the employee grapevine, for example. All of this communication, whether it goes through levels of organizational authority or among employees directly, is affected by how your organization is structured.

As a business owner, you can encourage and facilitate an open flow of communication, or discourage and stifle it. The structure and its effect on communication can be felt both inside and outside of the organization.

The Ins and Out of Internal Communication

Both formal and informal communications will flow within an organization in a specific direction. This is often governed by the organization’s structure and culture. For example, you may communicate policies downward, from management to employees.

At the same time, you may expressly or tacitly discourage any horizontal communication, or communication among employee peers, of official management policies. Organizations need a directional balance for effective communication; for example, too much downward communication to employees can cause them to tune out messages.

Engaging Stakeholders With External Communication 

You communicate externally with your organization’s outside stakeholders or audiences, such as media, customers and regulatory agencies. The functions of these communications are to create relationships with other organizations. Interacting with media helps to create and foster an image, while communicating with clients can grow branding, trust and customer loyalty.

How external audiences view an organization based on its communication largely depends on its structure. For example, if an employee assigned to customer service intake is not empowered to make immediate decisions to resolve a customer complaint, it can lead to negative public perceptions.

Functional Organizational Structure

The functional organizational structure is sometimes referred to as a strict hierarchical structure. Using an employee organizational chart is an example of this type of structure. There is no ambiguity as to lines of authority in this structure, as it clearly outlines whom employees report to directly, with one top executive such as the CEO.

This structure is particularly useful in times of crises or other scenarios where an organization needs to control its communication through gatekeepers who manage it both internally and externally. It can also stifle free-flowing information if those processes are not relaxed depending on the situation.

Flat Organizational Structure

Sometimes referred to as a horizontal structure, the flat organizational structure is most common in smaller companies in which the primary executive or CEO has direct lines of communication with all employees. There are no gatekeepers controlling information as there are fewer middle management employees. This structure generally allows for both internal and external communication to flow freely, and empower employees with access to relevant information. It can also be detrimental if unauthorized employees speak to the media, or information leaks externally about product development, for example.