An organization’s structure is the way in which it arranges its employees and resources to achieve its goals. The organizational structure of a company determines how its employees work together.
There are many ways of structuring an organization. Some organizations are highly centralized, and others are highly decentralized, while some have a hierarchical structure and others have a flat structure.
Organizational structures can be classified according to their degree of centralization or decentralization, their degree of formalization or informality, or their degree of specialization or generalization.
Organizational structure is based on two key dimensions:
Centralization versus decentralization: Centralization involves placing decision-making power with a few people at the top of the organization. Decentralization involves distributing decision-making power to lower levels within the organization.
Formality versus informality: Formality refers to how strictly employees follow rules and procedures, while informality refers to how freely people work together without following strict rules or procedures.
The structure of an organization is often determined by its business model. For example, if it sells products directly to consumers over the Internet, then it may have a different organizational structure than if it sells through retail outlets or wholesalers.
