Organizational structure provides the guidelines for the system of reporting that drives an organization, dividing it into areas or departments that are responsible for certain aspects of the organization's purpose; it shows the relationships between areas and individuals needed to achieve more efficient operations while attaining the goals of the organization.
The organizational structure should be put in place at the start of an organization. It defines how the company will function, what is expected of employees and the chain of command.
The structure clarifies the areas of responsibility and the individuals that will work together. This allows for effective communication, decision making and sharing helpful information within departments.
A well designed organizational structure can create a climate, or environment, that encourages employees to be supportive, cooperative and hard working. It also contributes to job satisfaction.
By grouping people within their specific areas of expertise, it encourages teamwork and high levels of performance.
Providing an organizational structure gives employees the opportunity to see where they may be able to advance, motivating them to work hard in an effort to be promoted.