Organization structure generally refers to the way in which a business or similar organization arranges its tasks, people and techniques. A properly organized organizational structure will help provide transparency within the organization, ensuring the complete and timely disclosure of information. The main factors to consider when designing an organizational structure include clarity, understanding, decentralization, stability and adaptability.
Maintaining clarity within an organization means that employees have a completely clear picture of all aspects of their jobs. In other words, workers and supervisors alike should know what the employee’s goals are as well as the individual tasks required to reach those goals. There should be complete clarity in the reporting relationship as well as the sources of information used in the decision making process. Workers at all levels need to understand the purpose, often referred to as the mission or vision of the organization, as well as its structure. The structure refers to the relationship between one employee’s roles and responsibilities and those of others within the organization. Finally, there should be specific tools in place for measuring results so workers know where their efforts should be focused.
Understanding is achieved when all workers know where they fit within the bigger picture of the organization as a whole. The organization’s infrastructure, including physical, behavioral and cultural aspects, is an important element of this understanding. It is vital that members of management take into consideration the daily actions of workers as well as the underlying organizational culture, which dictates both their actions and reactions.
In a centralized organization, all discussions and decisions take place only among top-level managers, with no input from workers at lower levels. Centralization inhibits conversations among those who do the day-to-day work of the business. The decentralization of an organization is key in that it allows and encourages open conversation among workers at all levels, spurring a sharing of information that is not possible within a centralized organization. The successful delegation of authority is an effective way of decentralizing decision making within an organization.
Stability and Adaptability
A well-structured organization looks for changes in the environment and purposefully adapts to these changes. At the same time, the organization must be capable of maintaining stability in unstable circumstances. This simultaneous stability and adaptability can be achieved through the connections which can only be formed between people through organizational routines. The proper development of an organization’s culture and structure on a day-to-day basis is the key to maintaining performance levels long term.
- FAO Corporate Document Repository: Structure of an Organization
- Entrepreneurship: Creating Clarity of Purpose, Structure and Measurement
- Russell Consulting: Understanding Organizational Culture
- "Specific and General Knowledge and Organizational Structure"; Michael C. Jensen, William H. Meckling; 1990
- "Journal of Management Studies": Organizational Routines as Sources of Connections and Understandings