Organisational structure really deals with ways of allocating or dividing up the work in the organisation. In a one-person company, work and decisions are vested in a single individual. The moment the organisation expands beyond one, the question arises as to who will do what, and who is going to take decisions.

Why is the structure of the organisation important?
Designing the optimal structure of the organisation is tremendously important because it will certainly have a profound effect on any number of things:

The cost of operating it- in general the more supervision the structure needs, the more people will be needed to supervise it. This can be expensive, but in an organisation where mistakes can be serious, say health or safety related, a heavily supervised structure may be necessary.

Structure has a profound effect on the way people behave in it – rivalries between units, competition for resources, internal politics, staff belief systems, all affect how people will approach their jobs, how hard they will work, the degree of discretion they will exercise etc.

Structure affects the efficiency and effectiveness with which organisations serve their customers. Customers being passed backwards and forwards between operating departments will affect their perception of service.

The speed at which it does things – if the structure involves many different sequential processes being applied by a series of specialist functions operations may be slower. The quality of goods and services the organisations provides may, however, be enhanced because of these specialist functions.

The risks it runs – devolved decision making is inherently more risky, but this may not matter depending on what the risks are and what gets devolved. If the opening unit needs to go through many layers in the structure for a decision, this will tend to slow things down which may be disadvantage, but then hasty decisions may be equally dangerous depending on what is getting decided.

There are no right or wrong answers for designing the structure of an organisation other than striving for simplicity and transparency, which are always advantages. Unsurprisingly, the degree to which the structure supports or frustrates the strategy must be the central determinant.

Excerpts from The University of Leicester Diploma in Management – Resource Development International (RDI) Jamaica. www.rdijamaica.com,