Organisational structure is a system used to define a hierarchy within an organization and developed to establish how an entity operates and helps the organization in achieving its goals and objectives. It identifies each job, its function and where it reports to within the organization. Organizational structure also determines how information flows from level to level within the company. The organizational structure, which may refer to the hierarchy of not just a business, but also any entity such as a charity, government department, agency or education establishment. The structure is illustrated using an organizational chart. It is a ‘viewing glass’ or perspective through which employees may see their organization and its environment.
Several types of organizational structures are each defined to meet the needs of organizations that operate differently. Types of organizational structure include divisional, functional, geographical and matrix. A divisional structure is suitable for organizations with distinct business units, while a geographical structure provides a hierarchy for organizations that operate at several locations nationally or internationally. A functional organizational structure is based on each job’s duties. A matrix structure, which has two or several supervisors for each job to report to, is the most complicated but may be necessary for large organizations with many locations and functional areas.