An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims. According to the Theory of Organizational structure, organizational structure affects organizational action and provides the foundation on which standard operating procedures and routines rest. It determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions. Organizational structure can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on its objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup, and individual.
Organizations need to be efficient, flexible, innovative and caring in order to achieve a sustainable competitive advantage. Organizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today’s post-industrial structures.
As pointed out by Lawrence B. Mohr, the early theorists of organizational structure, Taylor, Fayol, and Weber “saw the importance of structure for effectiveness and efficiency and assumed without the slightest question that whatever structure was needed, people could fashion accordingly. Organizational structure was considered a matter of choice… When in the 1930s, the rebellion began that came to be known as human relations theory, there was still not a denial of the idea of structure as an artifact, but rather an advocacy of the creation of a different sort of structure, one in which the needs, knowledge, and opinions of employees might be given greater recognition.” However, a different view arose in the 1960s, suggesting that the organizational structure is “an externally caused phenomenon, an outcome rather than an artifact.” In the 21st century, organizational theorists such as Lim, Griffiths, and Sambrook (2010) are once again proposing that organizational structure development is very much dependent on the expression of the strategies and behavior of the management and the workers as constrained by the power distribution between them, and influenced by their environment and the outcome.