A system that describes how certain activities are coordinated to achieve an organization’s goals is called an organizational structure. Rules, roles and responsibilities are examples of these activities. The functional structure of an organization also determines the flow of information between levels within an enterprise. 

A successful organisational structure determines each employee’s work environment while also complementing the system as a whole. In a centralised structure, for example, decision-making authority is top-down throughout the organisation, but in a decentralised structure, decision-making authority is distributed throughout the organisation. Decentralized arrangements provide nearly all employees a high level of personal responsibility, whereas centralised organisations have a set of directives that must be followed.

Understanding the Structure of an Organisation

• Organizational structures are commonly used by businesses of all shapes and sizes. Define a specific hierarchy within your organization. The functional structure of the organization defines the tasks of each employee and fits the entire system. Simply put, organizational structure defines who does what to help a company achieve its goals. 
•  This structuring gives the company a visual representation of the structured way and the best way to reach their goals. The organizational structure is usually represented by a pyramid chart or diagram, with the most influential members of the organization at the top and the least influential members at the bottom. 
•  Certain organizations may find it difficult to function without a formal structure. For example, an employee may not know who to consider his manager. 
•  This can confuse the attribution of obligations and responsibilities. The structure increases efficiency and brings clarity to everyone. This means increased productivity as each department focuses on energy and time.

Organisational Structures: Centralised vs Decentralised 

There is a central or distributed organizational structure. Organizations are traditionally organized by centralized leadership and a well-defined set of commands. The 

 The army is known for its highly centralized structure, including a long and detailed hierarchy of bosses and subordinates. In a centralized organizational system, each role has a clear responsibility, and subordinate roles rely on the manager to guide them.

•  As is the case with many technology startups, there has been an increase in decentralised organisations. With 
•  decentralization, the organization is fast, agile and adaptable, and almost every employee has a highly personal agency. For example, 
•  Johnson & Johnson is known for its distributed structure. Each operates independently as a large company, with over 200 business units and brands operating in multiple industries. 
•  Decentralized organizations also usually have hierarchies (for example, when the chief operating officer works at a higher level than entry-level associates). Teams, on the other hand, can make their own decisions and get the best results without the need for “approval” from above.

Organisational Structures Types

Functional Structures of Organisation

In the real world, four common organisational structures are used. The first and most common structure is a functional structure. This structure, also known as a bureaucratic organisational structure, divides a company into departments based on employee specialisation. The majority of small-to-medium-sized businesses use a functional structure. The company is divided into marketing, sales, and operations departments.

Divisional or Multidivisional Structures of Organisation

The latter is common in large corporations with multiple business units. The divisional or multidivisional structure is structuring a company’s leadership team based on products, projects, or subsidiaries. This structure is well-exemplified by Johnson & Johnson. Despite having thousands of products and lines of business, the company is structured so that each business unit operates as its own company with its president.

Flatarchy Structure of Organisation

The third type is futarchy, which is a newer structure that is popular among startups. As the name implies, it flattens the hierarchy and chain of command while giving employees significant autonomy. Companies that use this structure have a high rate of adoption.

Structure of the Matrix

A matrix structure is the fourth and final organisational structure. It’s also the most perplexing and underutilised. Employees are matrixed across superiors, divisions, and departments in this structure. For example, an employee may be responsible for sales and customer service in a matrixed company.

Organisational Structures’ Advantages

Putting in place an organisational structure can be highly beneficial to a business. 

• The system defines a company’s hierarchy and allows the company to lay out its employee pay structure. The firm can decide on salary grades and ranges for each position once the organisational structure is in place.
• The structure also improves the efficiency and effectiveness of operations. The company can perform multiple operations by separating employees and functions into different departments. 
• Furthermore, a well-defined organisational structure informs employees on the best ways to complete their tasks. For example, employees will have to work harder in a hierarchical organisation to buy favour or court those with decision-making power. In a decentralised organisation, employees must take more initiative and develop creative problem-solving solutions. 

Most functional structures of an organisation can also help set expectations for how employees can track their growth. These structures also emphasise a specific set of skills, and potential employees can determine if the company is a good fit for their interests and work styles.

Conclusion

The structure of an organisation influences its actions and serves as the foundation for standard operating procedures and routines. It determines who gets to participate in which decision-making processes and, as a result, how much their opinions influence the organisation’s actions. Individuals can see their organisation and its environment through the lens of organisational structure as a viewing glass or perspective.