After reading this article you will learn about Organisational Structure:- 1. Meaning of Organisational Structure 2. Importance of Organisational Structure 3. Factors for Designing It.

Meaning of Organisational Structure:

Organisational structure means a developed enterprise being operated to achieve the given goals. It involves the structure of relationships among positions and jobs with the object of accomplishment of enterprise objectives.

It is a systematic combination of people, functions and facilities. It may take the form of line staff and line and staff. As a function it refers to establishing relationship between activities and authority pertaining to an enterprise.

An organisational structure is defined as the pattern or network of relationships that exist among various positions. It is a pattern of relationships that has been generated through a conscious planning process. Key executives typically decide upon the basic pattern of structure that in their opinion will be most appropriate for themselves, their work, and organisation goals.


According to Peter Drucker, organisational structure is an indispensable means, and a wrong structure will seriously impair business performance and may even destroy it. Organisational structure must be so designed as to make possible the attainment of the objectives of the business for five, ten or fifteen years hence.

An organisational structure should be designed to clarify who is to do what takes and who is responsible for what results, to remove obstacles to performance caused by confusion and uncertainty of assignment, and to furnish decision-making and communications networks reflecting and supporting enterprise objectives.

Importance of Organisational Structure:


The following are the importance of organisational structure:

1. Clear definition of authority, responsibility relationship facilities better understanding of the objectives and the policies of the enterprise.

2. Organisational structure lays down both channels and the patterns of communication. It facilitates proper administration.

3. It helps to coordinate activities of the component parts in order to facilitate the realisation of the goals of the organisation.


4. It helps in growth and diversification of the activities of an organisation.

5. Workers, participation in organisation increases their cooperation and improves their will to work. It stimulates initiation and creative thinking.

6. Implementation of policies and the achievement of the goals become easier.

7. It prevents duplication of functions and makes it possible to achieve maximum production with minimum efforts.


Thus to achieve these benefits an organisational structure should be designed well with care.

Factors for Designing Organisational Structure:

In this regard the following factors to be considered in designing an effective organisational structure:

(i) Environment.

(ii) Technology


(iii) Size of the organisation, and 

(iv) Strategy.

i. Environment:

It is an important factor affecting the organisational design. It would consider the impact of customers, suppliers, competitors, legal and political changes and cultural and economic conditions.


ii. Technology:

Technology is a combination of tools, techniques and know- how and has a major influence on organisational structure. The design of the organisational structure would depend upon whether the technology is simple and routine requiring few repetitive tasks.

Joan Woodward studied the relationship between technology and organisational structure in the early 1960’s among some English manufacturing firms. She concluded that technology is a major influence on organisational structure.

iii. Size of the Organisation:


The size of the organisation also affect the organisational structure. A big size of organisation may increase the number of functional departments, number of managerial levels, and number of employees with diversified responsibilities.

iv. Strategy:

Alfred D. Chandlre said that the strategy has a definite influence on structure. R. A. Pitts believes that the structure is highly influenced by strategy. There are primarily two strategies. Stability strategy and growth strategy. The stability strategy involves a predicted environment and a little chance in external changes. The growth strategy involves expansion thus introducing the element of complexity and uncertainty.

From the facts indicated before in this chapter, organisational structure refers to the way in which an organisation’s activities are divided—Organised and coordinated. Ernest Dale’s description of organising consists five-step process provides a good framework for the discussion of organisational structure.

(i) List the work that needs to be done to accomplish organisation goals. For example a hospital’s goal of caring for the sick would involve tasks ranging from purchasing equipment and supplies to hiring staffs and applying for accreditation or recognition, from various professional organisations.

(ii) Divide the total work load into tasks that can logically and comfortably be performed by individuals or groups. This is referred to as the division of work.


(iii) Combine task in a logical and efficient manner. The grouping of employees and tasks is generally referred to as departmentalization.

(iv) Set up mechanisms for coordination. This integration of individual, group and department efforts makes it easier to achieve goals.

(v) Monitor the organisational structure’s effectiveness and make adjustments as needed.