Though it is obvious why understanding organizations is critical to business success, nevertheless it is worthwhile to review these reasons. The structure of a firm either enhances or hinders efficiency and productivity. In other words, how information flows and to whom, whether and how many parts of the work process is redundant, how clear and precise is the reporting structure, if and how new ideas and products are promoted - these and many more issues are obvious consequences of structure and profoundly affect the success of the business.
What may not be as obvious but is clearly as influential is how organizational structure either supports or blocks employee behavior. There is many an employee who was terminated from one company to become a star in another similar position in a different enterprise. Why? In many cases organizational structure makes it impossible for such a worker to blossom and produce. For example, a dedicated but independent-minded employee will feel demoralized if she has to work with poor tools or machinery that frequently break. A repetitive simple-minded work assignment will dull the instincts of many good workers. The creative employee who doesn't find a fertile field in a company for his ideas will find more challenging opportunities elsewhere. The list of examples can go on and on.
There are four basis elements or categories in the analysis of the structure of an organization. They include:
The firm's vision and strategy (whether explicit or not)
The flow of information and work (including all systems, from vendor relations to customer service and everything inbetween)
The culture of the organization
Its people (their selection, qualification, compensation, promotion, career pathing, their succession)
We will touch on the important highlights of the first three categories. The