This is a key characteristic in an organization with a functional structure

Hiring skillful employees is only the first step towards building a high-performing organization. You need to make every team member fit in. You need a clear organizational structure.

Large enterprises require an established, organized structure to coordinate large numbers of employees and avoid chaos. But smaller businesses and startups rarely think of designing an organizational structure in the first place.

This lack of structure leads to miscommunication, work delays, poor process flows, low morale, and other serious consequences that stunt business growth. In contrast, a strong organizational structure helps to coordinate teamwork, reduce conflicts, and boost productivity. 

Whether small or large, each company must consider the way in which its organization is designed and structured. To operate effectively and efficiently, a company needs a formal system of communication, decision-making and task-completion that matches the needs of the organization.

A small company, for example, may only need a simple organizational design. As a company grows and becomes more complex, the organizational structure might need to change. As such, organizational design is often considered a continuous process.

Characteristics of an effective organizational structure including clearly defined roles of authority, detailed job descriptions, objective benchmarks and effective two-way communications between departments and between management and staff.

Organizing by Work Specialization

Work specialization, also referred to as the division of labor, is the degree to which specific tasks within an organization are broken down into individual jobs. When work specialization is extensive, a company may assign a single task to an individual as part of a larger project.

Often, this type of environment creates repetitive, narrow, smaller tasks. For example, assembly line factories may designate a single task, such as running a machine or welding a part, for the completion of an end product. On the other hand, companies may decide to enlarge jobs for the purpose of challenging employees or giving them additional responsibilities.

Using Traditional Departmentalization

Departmentalization describes the way in which an organization groups different jobs or segments of its company together, explains Business Jargons. For example, a functional organizational structure groups jobs according to function, such as marketing, sales, customer service and manufacturing.

An organization that uses a divisional approach groups according to geography, such as a western and eastern region. Other forms of departmentalization include product, customer or market departmentalization.

Hierarchy of Authority

One of the most common forms of small-business management models use a hierarchical organizational structure, which uses a top-down approach, according to Accounting Tools. Hierarchy of authority–or chain of command–refers to an organization's line of authority and describes who reports to whom. Related to hierarchy of authority is the span of control, which refers to the number of subordinates over which managers have authority.

Organizational structures can either be flat or tall. Flat structures have fewer levels of authority and wide spans of control. For example, a small startup company may position the CEO at the top, who has authority over all other company employees. Tall organizational structures, such as larger companies and corporations, have many levels of authority and narrow spans of control.

Line and Staff Relationships

Line and staff relationships extend throughout the organizational structure and describe the way people are involved in the organization. Line managers are responsible for achieving company objectives or goals and include those in the direct line or chain of command.

Staff employees or managers give advice or make recommendations to line managers and support the overall operations. In retail corporations, for example, line employees may include department managers, store managers, the vice president and president of operations, and the board of directors.

In contrast, a scientific research organization may have scientists and researchers as line managers and administrative employees as staff employees.

Decentralization and Centralization

Decentralized organizational structures spread decision-making responsibilities to lower-level managers and some non-managerial employees. In contrast, a centralized organization maintains control and decision-making responsibilities near the top of the company.

For example, companies that have franchise operations may centralize control at company headquarters. Whether a company is decentralized or centralized, however, may depend on several factors, such as how many hierarchical levels the organization has or the extent to which a company is geographically dispersed.

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