How does the structure of the organization affect the way it makes decisions?

Organizational structure and organizational culture have a dependent relationship with one another. In the business world, management structure determines the behaviors, attitudes, dispositions and ethics that create the work culture. If a company's organizational structure is strictly hierarchical, with decision-making power centralized at the top, the company's culture will likely reflect a lack of freedom and autonomy at the lower levels. If a company's management structure is decentralized, with shared power and authority at all levels, the culture is likely to be more independent, personalized and accountable.

The way a company allocates power and authority determines how employees behave. These choices manifest in a company's organizational structure and organizational culture. Organizational structure is the the way a company arranges its management and lines of authority. It determines roles, responsibilities and the flow of information within the company. Work culture results from those decisions.

Most companies use a hierarchical structure that looks like a pyramid on paper. The chief executive or president sits at the very top of the pyramid. His direct reports, usually the vice-presidents, are on a line under him. Their direct reports are on a line under them. The pyramid stretches outward and downward based on the number of levels of management the company needs to operate according to its objectives.

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Upper management uses organizational structure to control who has power and authority in the company. For example, if a company president only wants to deal with the most important decisions and wants to leave the day-to-day decision-making to someone else, the organizational structure would have the president on the top line with the vice-president of operations sitting alone on the second line. This effectively means that the vice-president of operations is the only executive with a direct line to the president, and everyone else reports to him. In this scenario, the vice-president of operations has a great deal of power.

Conversely, the president could allow many of his executives with direct access to him. This is a decentralized approach to organizational structure, allowing more people to have input into the decision-making process. Decentralized power gives more autonomy to individual departments and managers. In this way, organizational structure and organizational culture are interrelated.

A decentralized power structure means there is more room for employee input into decisions. Employees are more accountable, because they have more responsibility. They work more independently, because they do not always need approvals from upper management to proceed. The organizational culture reflects these freedoms.

Likewise, organizational structure and organizational culture can have a negative impact on one another if power and authority are highly centralized at the top of the pyramid. In this instance, employees have little control over decisions and must merely do their jobs. The type of culture this structure can breed is one of no accountability at the lower levels, hostility and an environment where employees do not feel vested in the company or their jobs.

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How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?
How does the structure of the organization affect the way it makes decisions?

How does the structure of the organization affect the way it makes decisions?

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Discussion Comments

RoyalSpyderDecember 14, 2013

Though not always the case, when employers do most of the decision making, it can cause an abuse of power. When people put themselves on top of a pyramid, it sometimes leads them to believe that they can treat those below them however they want to.

astewartDecember 13, 2013

@Primemobi - I agree with you about power distribution in the workplace. It's important that employees feel at ease on the job, and that they aren't just looking forward to a paycheck every month.

PrimemobiDecember 12, 2013

Any successful organization is one that allows employees to own their jobs and be an integral part of decision making. The more buy-in employees have in what is going on within the organization, the more supportive they will be of decisions that are made.

Proper distribution of power and authority within an organization is crucial. Happy employees make a successful organization.

How does organizational structure affect decision

Perhaps the most important contributor to the way decisions are made in a company is its organizational structure. The way relationships are defined between managers and individual contributors in turn defines the mode of communication, the types of conflicts that can arise, and the way teams can resolve them.

How does structure affect an organization?

Organizational structures help businesses make sure that all of the tasks necessary for profitable operations get assigned to the right people. They also guide employees, from staff members to executives, to understand their roles in the company, who they report to and who they oversee.

WHAT IS organization design and how does it affect to your organization?

Organisational design is the process of aligning the structure of an organisation with its objectives, with the ultimate aim of improving efficiency and effectiveness. Work can be triggered by the need to improve service delivery or specific business processes, or as a result of a new mandate.

How does organizational structure affect organizational development?

The importance of organizational structures Organizational structures are important because they help businesses implement efficient decision-making processes. By assigning specialized roles to lower-level employees, businesses can make better decisions faster.