Organizational structure determines corporate communication, and the executive and managerial hierarchy, and creates a plan for efficient growth for the future. The six elements of organizational structure come together to create the blueprint for how your company is laid out, and determine how your managerial staff goes about effecting change in your organization.
Geography
How your organization is structured can depend on how many corporate locations you need to account for in your planning. The more spread out an organization is, the more autonomy each location will need to be given in order for the company to run efficiently. Hierarchy communication is also a challenge when creating an organizational structure over a large geographic area. Managers who report to executives in another location need to establish a clear line of communication in order to receive guidance and instruction.
Number of Employees
A large employee population can necessitate that there be several layers of management for a company to run efficiently. As a company grows, the organizational structure needs to be elastic enough to accommodate more employees and the potential need for a larger management structure.
Product Evolution
A company may start off with a small line of products that cover a general part of the industry. As the company grows, the need to create specified departments for product development and manufacturing can have an effect on the company's organizational structure.
Distribution of Authority
According to a study done by a group of college students known as Group A-Plus, a company's organizational structure is affected by whether the company wants centralized management or decentralized management. Centralized management keeps all major decisions with one specific executive group, while decentralized management allows company managers to have more say in the decision-making process.
Control
According to Management Guru, a company that requires a higher product quality will have stricter rules and a more regimented environment. This would apply to companies that manufacturer high tech products, hand-crafted products or critical products such as medical equipment. Companies that engage in the mass production of products may not exert as much control over the quality of their products and, subsequently, may create a different organizational structure.
Marketplace
The marketplace also has a bearing on how a company is structured. For example, a manufacturer may decide to sell products through wholesalers as well as directly to end users. In order for this model to be successful, the organizational structure of the company would need to be set up so as to keep these elements separate, including a separate marketing team and a separate sales force.
