What Are the Effects of Organizational Structure?

The effects of organizational structure can stretch into nearly every type of measurable performance. A well-planned, easily adaptable structure can help a business thrive in many areas, creating a chain reaction of mutual support and improvement. Some of the most important effects of organizational structure can be seen in employee morale, internal communications, efficiency, and effectiveness.

Employee morale often relies heavily on a strong organizational structure. Employees tend to feel motivated and loyal when they are treated with respect, challenged by their work, and have access to advancement opportunities. The effects of organizational structure on employee morale can also be negative; if, for instance, an organization routinely awards department heads with raises and bonuses while freezing junior employee salaries, lower level employees can quickly become disenchanted with the job. Since part of organizational structure determines how incentive programs, discipline, and advancement are managed, how a business is organized can play a very real part in the state of morale.

How well employees and departments can communicate is another of the most important effects of organizational structure. In a rigidly structured, highly separated environment, employees may be unable to access the information or personnel necessary to carry out a task. Conversely, an overly lax organization can lead to a vague chain of command, meaning that employees may not be able to figure out who they are supposed to be speaking with about a project or concern. Balancing the need for flexibility among departments with the importance of a clear chain of command is an important part of organizational structure.

Efficiency in organization refers the amount of work necessary to reach performance goals. If an organization is structured in an efficient manner, work will be productive and useful, with little waste. The effects of organizational structure on efficiency can be tremendous, since a poorly organized system can slow down work in nearly every area of a company. One example of organizational structure leading to inefficiency might be an employee who has to go through seven levels of bosses and supervisors to get approval for a task, his or her work may stagnate for hours, if not days, waiting for approval. The process of adapting structure for efficiency usually involves simplification or streamlining of command chains.

The goal of most organizations is effectiveness in all areas, including employee relations, efficiency, sales, and marketing. Organizational structure is often referred to as the “skeleton” of a business, which can either help or hinder the achievement of effectiveness. One of the ways structure can influence effectiveness is by building in a review process that checks expectations against actual performance. By creating an organizational structure that can review and adapt, a company can continually move forward toward meeting effectiveness goals.