The definition of organizational structure and culture is important to the success of a business. It is necessary that a business owner or operator understands the difference between the organizational structure and the culture of the business.

The best organizational structure will depend on the company and its employees. There is no one best method to apply for guaranteed business success. It will also depend on the goals of the business. If a business wants to be effective, it needs to have a strong organizational structure and culture. You can often tell when a business has an effective organizational structure or culture in place.

Understanding Organizational Culture

Organizational culture is the expectations of the business. These are unwritten rules that dictate the attire, work ethic, and overall structure of the business. A new employee will often have to learn and follow these rules to fit into a business and its culture. Consider it the personality of the business. This culture sets the standards for the workplace and affects how the employees are expected to act.

Organizational culture might include the following:

  • Commonly shared beliefs.
  • Values that dictate the employees' behaviors.
  • Agreed upon assumptions.

Most organizations have a unique culture that sets them apart from other businesses. These unspoken culture rules affect the employees, managers, and owners of the business.

Understanding Organizational Structure

Organizational structure, on the other hand, is the legal structure of the business. The organizational structure might include the following:

  • The method in which you register your business.
  • The formal system of roles and authority within the business.
  • The organizational chart.
  • The policies and methods used to assign manager tasks.
  • The hierarchy structure.

The Structural Characteristics of the Hierarchy

The hierarchy structure consists of the organizational chart, which includes who reports to whom and who is assigned individual roles within the business. The hierarchy structure includes the following elements:

  • Characteristics: the specific policies and regulations used to manage the behaviors of management.
  • Height: the number of levels within the hierarchy.
  • Control span: how many employees are beneath each manager.
  • Departments: the specific groups of employees and available resources within each department.
  • Centralization: the upholding of policies and regulations throughout all levels of the hierarchy.
  • Standardization: the standard of rules and regulations.
  • Formalization: the formality of documenting rules and procedures.
  • Specialization: the level of special skills within each department.

Things That Affect Organizational Structure

There are a few things that can affect the organizational structure of a business. Business owners have a direct effect on corporate strategy. This is the standard of approach that will be used to grow and structure the business. Growth can also affect the organizational structure.

As a business grows, it will need additional managers and employees, which can change the current organizational structure. Diversification can also be an influential factor as the number of products or services within the business expands.

Concerns of environmental uncertainty can also affect the organizational structure of the business. When a business has a high level of environmental uncertainty, its managers and employees are more likely to be organic with their practices. On the other hand, when a business has very little environmental uncertainty, they are less likely to be organic with their daily business practices.

Flexible Organizational Structures

Many business owners believe that a flexible organizational structure is the most empowering type. A flexible organizational structure includes fewer managers, less centralization, and less formal rules and regulations. A flexible structure is set at the department level of the hierarchy.

This type of flexible structure can encourage employees to think for themselves and to experiment with new ideas. It gives freedom to all employees in the hierarchy, regardless of their level in the organization. A flexible schedule may not work for every type of business, so it is important for a business owner to consider if a flexible structure would work for their organization or not.

Organizational culture and structure each require their own strategy. Understanding the difference between the two is necessary to create a strategy that works best for the business based on its specific needs.

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