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Organisational Structure: An Overview

Chess pieces on a board representing organisational leaders and teams

The bedrock of any successful business is often rooted in its organisational structure.

While it might not be an everyday topic for some, it's an integral aspect of how businesses and corporations operate.

Let’s define and explore the concept of organisational structure.

Definition of Organisational Structure

Organisational structure, at its core, refers to how an organisation arranges its lines of authority, responsibilities, and communication. It essentially dictates the layout of positions, roles, and the overall chain of command within an organisation.

An effective organisational structure provides a clear and understandable path of delegation and communication for employees at every level of the company. This structure allows for clear objectives, appropriate decision-making processes, and overall, a well-functioning corporation.

Key Components of an Organisational Structure


The hierarchical framework forms the backbone of an organisational structure. The organisation's leadership is typically at the top of the hierarchy, followed by middle management and then employees at the operational level. It dictates who reports to whom and the path of command and control.

Division of Labour

This involves breaking down tasks into jobs and roles. Employees are assigned specific tasks according to their skills and expertise. The division of labor allows for job specialisation and increases operational efficiency.

Coordination and Collaboration

Organisational structure must enable coordination and collaboration between different departments and individuals. It should facilitate the flow of information and resources in a way that ensures effective cooperation.

Types of Organisational Structures

Functional Structure

In a functional organisational structure, departments are divided based on the functions of the organisation, such as marketing, human resources, finance, and operations. Each function is managed independently and contributes to achieving the company's objectives.

Divisional Structure

A divisional organisational structure segregates the organisation based on the different products, services, or markets. Each division operates semi-independently, having its own set of functional units like marketing, sales, and operations.

Matrix Structure

The matrix structure combines the functional and divisional structures, creating dual lines of authority. Employees report to two managers - a functional manager and a project or divisional manager. Explore matrix organisational structures further in the book “How Matrix Organisations Work”, available on Amazon now.

Flat Structure

Flat structures, or horizontal structures, have fewer levels of management, promoting open communication and a collaborative working environment. These are common in smaller organisations or start-ups.

Importance of Organisational Structure

Clarity and Direction

A well-defined organisational structure provides clarity regarding roles, responsibilities, and reporting relationships. This helps employees understand their part in achieving the organisation's objectives.

Communication and Collaboration

Organisational structures foster better communication and collaboration. A clear structure ensures that the right information reaches the right people at the right time.

Efficiency and Productivity

Organisational structures facilitate effective division of labour and resource allocation, thus leading to operational efficiency and increased productivity.

Choosing the Right Organisational Structure

There is no one-size-fits-all approach to choosing an organisational structure. The structure that works best depends on the organisation's nature, its goals, size, and industry. As companies grow and evolve, they may also need to alter their structures to meet new challenges or opportunities. The key is to ensure that the structure enhances communication, facilitates efficient operations, and aligns with the organisation's strategic objectives.

Organisational structure, as simple as it may sound, is a complex and crucial element of a business. It is an invisible backbone that provides shape, support, and direction to the corporate body, influencing its success or failure. Understanding and implementing an effective organisational structure is a strategic asset for any organisation aspiring to thrive in today's dynamic business landscape.

Read more on matrix organisations in the ebook “How Matrix Organisations Work” available on our website or through Amazon.


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