What Is Organizational Structure?

Every organizational must arrange its activities to reach its goals. Organizational structure is the blueprint for this arrangement. It is the way an Organization is tried together.

Managers need to know about structure for a variety of reasons. Knowledge about organizations are put together helps managers understand “the big picture.” Without some knowledge of structure, it is difficult to know how the human resources of an organization are deployed and where these resources are located, what information may be gained from them, and what contribution they might be expected to make to the organization. Structure gives clues to the location of power and is an indicator of a company's management philosophy.

Structure should reflect—and facilitate the achievement of—an organization's goals. In sum, a manager can better understand her own place in the fabric of the whole by knowing something about structure.
When people think of organizational structure, what immediately comes to mind is the hierarchy of authority and reporting relationships portrayed in an organizational chart, and sometimes who is accountable. While this view of an organization is one part of structure, it is not the only aspect. Indeed, an organization is structured using many different structural elements. These elements are the basic building blocks of organizations; they are the ways of both creating and expressing structure. Management uses them to erect the structure; in turn, they can be analyzed to determine the true structure of an organization—as opposed to the structure professed by management.

Some elements of structure are static; that is, they reflect where, on a continuum of choices, an organization sits. These elements involve such characteristics as size, hierarchy, and centralization. Looking at these characteristics of an organization, however, only shows the organization at one point in time. To provide descriptions that more closely match the fluid, changing entities that organizations are, a number of researchers have focused on organizations as networks of relationships that develop over time. These studies reveal the dynamic elements of an organization's structure— structure as an expression of how people interact.

These two general views of organizational structure are derived from somewhat different premises, and they are not easily integrated with one and other. One might think of them as roughly analogous to photographic slides and motion pictures: slides are useful for showing what a scene or person looks like at a single moment, and motion pictures show movement and change over time.

A number of different factors are determinants of structure; they shape how these elements are used to structure the organization. These factors include goals, social customs and mores, beliefs and values of the founders or the current managers, environmental constraints, and available technology. Once we learn about the elements of structure, we will see how these various determinants affect how those elements are combined into actual structures.

Our notions of structure include the assumption that organizations have relatively impermeable and easy-to-find boundaries. That is, one can fairly easily differentiate the organization from its environment. This premise is true of most organizations today but may be less true tomorrow, when we may have to alter radically our notions about what constitutes structure. In industrialized nations we are quickly working ourselves into a world in which high technology office management systems are used to complete and integrate work. It may be difficult to define the boundaries of, say, a bank if many of its clerical personnel work at home on terminals and transmit their completed work into a central computer, if customers access the bank through automatic teller machines and personal computers at home, and if banking has become so deregulated that lines of demarcation between banks and other financial institutions have blurred or been erased. This is due to the fact that environmental and technological changes are likely to have a profound impact on organizational structure in the future.