Definition: Organizational structure is a management technique employed to arrange tasks within a group. An organizational structure generally refers to the set of job titles, hierarchies and main responsibilities of different employees of an organization.
What Does Organizational Structure Mean?
For businesses, to design and implement suitable organizational structures is a key element to succeed. This structure must be aligned with company goals and that is the reason why important changes in strategy must be often followed by organizational restructuring processes. Although it is generally seen as simple organizational charts, this structure goes beyond job titles and hierarchies.
It embraces functions and duties, lines of authority and accountability as well as relationships among people. Jobs should be defined, organized and grouped to perform each process in the most efficient way without sacrificing coordination, communication and timely decision making.
Example
Southern Tech Co. is a company that has been rapidly growing due to its innovative technological devices. Its clients are other companies looking to upgrade their technological networks. Southern Tech’s headquarters are located in Atlanta, but the firm sells its products nationwide through numerous sales representatives. Recently, the Board of Directors decided that the company would initiate an internationalization plan to reach European markets. Now they have to decide which the most adequate organizational structure is to develop such plan. Will they continue operating centralized with sale representatives located overseas? Or should they create an independent company located in Europe to manage all foreign affairs?
There are several options available and they must decide quickly about it. Some elements they should consider are: how much control the central office wants to have, how different are the new markets from the US, how linked to other departments the sale structure will be and how large the international sales are expected to be. After performing some analysis, the Board decided to create a new marketing and sales structure located in England that will be closely communicated and supervised by Atlanta’s officers. The England office will have freedom to design marketing and sales strategies according to the market’s requirements but other issues will be decided and addressed by Atlanta.
