Organizational Structure

Organizational structure allows companies to effectively communicate between internal groups and carry out activities necessary to the company’s profitability. An organization can be arranged as centralized or decentralized. In a centralized organization, information flows from the top (management) down (employees who carry out tasks). In a decentralized organization, such as a startup, information flows in many directions. There isn’t a wrong or right answer in choosing a centralized vs. decentralized structure. Younger companies may choose a decentralized structure as it allows them to move more quickly. Generally, as companies mature, they move to a centralized structure.

Having an organizational structure in place is necessary for the efficient operation of a company. Otherwise, communication can devolve into chaos, and ultimately lead to the company’s demise.

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