Have you ever thought about the value of structure in your life? Whether it’s the sentences you write, the way you organize your things or even traffic regulations, structure is part of your everyday life. Without it, we would lead a pretty chaotic life.

Structure is especially significant in organizations. Businesses can’t function without following a structure. Organizational structure has several advantages:

Let’s explore them in detail.

Meaning Of An Organizational Structure

When businesses are built from the ground up, the company’s organizational structure becomes critical. At its simplest, organizational structure refers to the system that helps detail how certain rules, roles and responsibilities are delegated to drive the mission and vision. A successful structure outlines every employee’s job description and how they fit within the organization.

Having an organizational structure allows businesses to remain efficient and focused. It even determines how information flows among various levels. For example, in a centralized structure, information flows from senior management to junior management. In other words, the definition of an organizational structure can be thought of as a visual map of different people shouldering different responsibilities.

The Importance Of Organizational Structure

If you want to keep up with the times and demands of fast-paced organizations, you must consider organizational structures seriously. Consider the benefits of having an organizational structure.

  1. Better Operating Efficiency

Structuring a business into teams ensures tasks and responsibilities are clearly allocated. This helps the different divisions meet their goals with greater efficiency. They’re able to operate quickly and streamline the process.

  1. Speedy Decision-Making

When responsibilities are clearly laid out, everyone knows what the expectations are. The organization’s overall communication is bound to improve as everybody is aware of who is responsible for what. Better flow of information enables different teams to communicate and collaborate, therefore boosting the decision-making process.

  1. Improvement In Performance

Organized teams enable feedback loops and performance reviews in a structured manner. When everyone gets proper guidance, they push themselves to perform better. Employees are more confident in their abilities in a structured organization. An increase in motivation and morale leads to improved productivity.

  1. Eliminates Duplication Of Work

An organizational structure eliminates the possibilities of overlapping responsibilities and duplication of activities. It’s because teams are divided according to their skills and the roles are clearly defined, making it impossible for two people to work on the same thing. For example, if a project is assigned to one team, no other team will be responsible for that project (unless asked to).

  1. Reduced Employee Conflict

One of the greatest advantages of organizational structures is minimized workplace conflicts. Employees work towards fulfilling clearly defined targets when there are no overlapping responsibilities and different teams work independently (unless required to collaborate).

The Need For An Organization Chart

Just like one size doesn’t fit all, one structure doesn’t suit every organization. If you’re seriously considering a change in the organizing structure, you can refer to an organization chart. An organization chart is simply a diagram that displays the relationship between various divisions and employees. Here is how you can use the chart to your advantage:

  • Show responsibilities and professional relationships

  • Enables everyone to understand how their role matters in advancing the organization’s objectives

  • Prompt leaders to manage growth or change more effectively

  • Encourage communication and cross-functional collaboration

  • Create a visual directory of every member of the organization

You must understand the needs and expectations of your organization before you customize your organization chart. Here is what a basic organizational structure chart looks like:

Types Of Organizational Structures

Based on the nature of activities in an organization, there are four key types of organizational structures:

  1. Functional Structure

Also known as the bureaucratic organizational structure, functional structure is based on functions. It means that similar jobs and responsibilities are categorized into groups and departments. This structure is commonly seen in small and medium-sized businesses and is fairly popular. For example, most businesses have finance, marketing and human resources departments, all categorized under similar functions.

  1. Divisional Structure

As the name suggests, a divisional structure is the integration of independent units. Such structures are fairly common in large and complex industries, which deal with diverse products and services. Put simply, various teams work towards a single goal in a divisional structure. For example, a Fast-Moving Consumer Goods (FMCG) organization will produce different kinds of products including sauce, noodles, spices and so on. While every branch will have an independent function with its own set of executives and managers, everyone will work towards a common objective of making a sale.

  1. Flat Structure

Often referred to as a flatarchy, a flat structure is one where the organization has little to no levels of management. It’s ideal for small organizations with few employees. You’ve probably seen startup businesses implement a flat structure. It provides people with plenty of autonomy and this further allows for speedy implementation of business decisions. As everyone has the opportunity to think out loud and contribute to problem-solving processes, morale increases and there’s more room for communication and collaboration.

  1. Matrix Structure

A combination of various organizational structures is known as the matrix structure. In this type, someone may have duties in multiple departments. Employees can have different managers, divisions and/or departments—at the same time. For example, you may be working with and reporting to two managers simultaneously—a project manager along with a functional manager. While it’s a good way of expanding one’s skills and expertise, it’s one of the most confusing structures, hence least preferred too.

Designing An Organizational Structure

Whether it’s starting a new business or reorganizing an ongoing one, you need to understand how different kinds of organizational structures work. It will help you make informed decisions as to what is best suited for your business and industry. Here are a few things you need to consider before designing a structure:

  1. Identify The Activities

The first step is to identify the activities that are instrumental in driving business goals. Once you underline the activities, dividing the responsibilities gets easier. You can further break down the major activities into smaller ones—simplifying the structuring process. Bear in mind that no two activities look alike and there is room for cross-team collaboration.

  1. Group The Activities

If you want different teams to coordinate and collaborate on different activities efficiently, you must group closely-related activities. For example, if a Gender Inclusion officer is working in an independent department, they can easily collaborate with the Human Resources team. Grouping activities makes it easier to delegate responsibilities, therefore creating accountability.

  1. Delegation Of Authority

When different positions are created, work needs to be assigned to different individuals. For getting things done, you need someone who can motivate and guide them to pursue and fulfill their objectives. People in authority like managers and leaders should be considered while designing; they should delegate authority and ensure that every individual is responsible. Delegation is a powerful way to define the structure and drive efficiency within an organization.

Now that you know what goes into designing a basic structure, you’re probably wondering what a good organizational structure looks like. Let’s look at the features of well-functioning organization structures and see what the basic requirements are:

  • There should be a clear demarcation of responsibilities to avoid confusion and conflict. For example, in a hierarchical structure, there is a clear line of authority that flows from top to bottom

  • Irrespective of whether it’s a functional structure or a flat structure, there should be someone who is held accountable. For example, a manager is responsible for their team, no matter what kind of organizational structure it is

  • The managerial levels should be kept to a minimum because it will take more time for information to flow from one level to another. However, the number of managerial levels will depend on the scale and nature of your operations

  • Treat every team uniquely because their expectations and requirements will be different. You also need to be careful about the number of people present in a team or the manager will be overwhelmed

  • Always aim for a simple and flexible structure because there shouldn’t be any ambiguity in the division of responsibilities. This will also allow you to adjust according to the needs and demands of the expanding industry


If you want to learn more about implementing or revising an existing organizational structure, you should understand how workplaces function. Harappa Education’s Navigating Workplaces course is specially designed to handhold you through the different elements that influence workplace settings. Learn more about the different kinds of power people hold at work through the Power Structures framework. Understand your organization better with Harappa’s courses today!

Explore Harappa Diaries to learn more about topics related to the COLLABORATE Habit such as Organizational BehaviorManaging Conflict and the Importance of Rapport to ensure smooth functioning of work and workplace.

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