What does organizational structure describe?

Organizational structure refers to how a company is set up to facilitate coordination, communication, and decision-making among its members. It encompasses the system of tasks, workflows, reporting relationships, and authority that shapes how an organization operates. By defining roles and responsibilities, organizational structure determines how individual employees work together to achieve company goals and how they interact within the organization.

This includes the hierarchical aspects of the company, which clarifies authority levels, as well as the network of relationships that foster collaboration and communication. A well-defined organizational structure helps to improve efficiency and transparency, as it supports the flow of information and helps employees understand their roles within the broader context of the company’s objectives.

While elements such as hierarchy (the chain of command) do play a part in how an organization is structured, the emphasis on interaction and organization captures the broader dynamics at play in any effective organizational system. The physical layout of the office and the company’s financial structure, although important, are not directly encompassed within the concept of organizational structure itself.