An organizational structure can be either flat or tall, depending on the number of employees in the company. Flat structures are best for very small companies, as they usually have only one person responsible for each functional area, like marketing. Small companies can also have tall organizations, which are typically organized by functional area, specific products or a combination of the two, called a matrix organization. There are several key roles for any organizational structure.
Chain of Command
The role of the organizational structure is to set up a chain of command or reporting structure among workers. Chain of command refers to the hierarchy or rank of various employees. For example, vice presidents usually report to the president, directors report to vice presidents, and managers’ report to directors. Managers often have coordinators or analysts working under them.
Chain of command allows companies to assign a supervisor for one or more employees. Consequently, employees know where to go for advice, project assistance or to get something authorized. If an employee needs to speak to someone higher up than his supervisor, the communication is usually funneled through the supervisor.
One of the most important roles of organizational structure is decision-making. The advantage of a flat organization, or fewer management levels, is that decisions can be made much quicker. For example, if a small wholesaler that employs 10 people wants to sell a new line of products, it can usually make the decision right away. Subsequently, the products may be added to the wholesaler's catalog the next week.
Conversely, a larger organization will often need more time to make decisions. For example, the accounting department may need to secure financing, product managers will need to determine product specifications, and marketing research may need to test new product ideas with consumers. Thus,... [continues]
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