In every thriving organisation, there’s an invisible framework that determines how people work, communicate, and make decisions. It’s what gives shape to the company’s culture, strategy, and daily rhythm. That framework is the organisational structure.
Yet, structure is often misunderstood. Many see it as just boxes and lines on an org chart and consider it to be static and bureaucratic. However, in truth, it’s one of the most powerful levers a business has to create clarity, drive accountability, and enable agility.
Whether you’re an entrepreneur scaling a start-up, a middle manager navigating a transformation, or a leader shaping future strategy, understanding organisational structure is fundamental to achieving business success.
Structure defines how work gets done
At its simplest, organisational structure defines how work is divided, who is responsible for what, and how people collaborate to achieve goals.
When designed thoughtfully, structure ensures:
Clear accountability: Everyone knows their role, responsibilities, and reporting lines.
Efficient workflows: Tasks are distributed logically, avoiding duplication and confusion.
Smooth communication: Decision-making channels are clear, reducing delays and conflicts.
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For instance, in a functional structure, marketing, finance, operations, and HR each operate as specialised units. This builds expertise and consistency. In contrast, a project-based or matrix structure encourages cross-functional collaboration and rapid execution.
The key is having good alignment where the right structure can serve and boost the organisation’s strategic purpose.
A poorly designed organisational structure can lead to overlapping responsibilities, unclear decision authority, and internal friction. But when it aligns with goals, it acts like a well-designed operating system which is powering everything efficiently.
Structure translates strategy into action
A company’s structure should evolve directly from its strategy. As Alfred Chandler, the legendary business historian, famously said, ‘structure follows strategy’. If an organisation’s goal is to innovate rapidly, it needs a flat structure with empowered teams that can experiment and make quick decisions. Think of start-ups or tech firms that thrive on autonomy and speed.
On the other hand, a business in a highly regulated or safety-critical industry (like banking, healthcare, or aviation) might require a more hierarchical, control-orientated structure to ensure compliance and risk management.
When structure doesn’t match strategy, problems emerge. For example, a company trying to innovate within a rigid hierarchy often struggles with slow approvals and low morale. Similarly, a company that prioritises cost efficiency may find a matrix structure too complex and resource-intensive.
Thus, the right structure operationalises strategy, ensuring every department and individual moves in the same direction.
Structure shapes organisational culture
Culture and structure are two sides of the same coin. How people behave at work, and whether they take initiative, collaborate, or wait for instructions, is heavily influenced by how the organisation is structured.
A flat, networked structure encourages open communication, faster feedback loops, and a culture of trust and innovation. Start-ups often rely on this to harness creativity and keep energy high.
Example: Shoe company Zappos did away with its hierarchical structure in 2014 and replaced it with a holacracy. The brainchild of then-CEO Tony Hsieh, the flatter holacracy organised the company’s 1,500 employees into around 400 different circles.
A more hierarchical structure, meanwhile, promotes discipline, stability, and control that can be valuable in large organisations managing scale and complexity.
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Example: McDonald’s has a divisional organisational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, and the hierarchical leadership structure is organised around regional and functional divisions.
However, structure must evolve with the organisation’s growth stage and goals. A start-up that retains a flat structure even after scaling to hundreds of employees may struggle with coordination. Conversely, an overly bureaucratic structure can slow down innovation and frustrate talent.
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When structure and culture reinforce each other, the result is an organisation that not only performs efficiently but also feels cohesive, inspired, and aligned.
Structure enables agility in a changing world
In today’s volatile business landscape, agility is non-negotiable. Technological, economic, or environmental disruptions demand that organisations adapt quickly.
An effective structure allows a company to respond without chaos. For example:
- Decentralised decision-making empowers teams closest to customers to act fast.
- Cross-functional collaboration enables creative problem-solving.
- Clear accountability ensures that adaptation doesn’t come at the cost of confusion.
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Many modern companies are now adopting agile or networked structures, small, empowered teams connected by shared goals rather than rigid hierarchies. Spotify’s ‘squad and tribe’ model and Haier’s ‘microenterprise’ system are popular examples where structure enables speed, innovation, and autonomy.
The future belongs to organisations that treat structure as dynamic, something to be revisited and reconfigured as strategy evolves.
Structure builds leadership clarity and growth pathways
Structure is also a mirror of leadership. It clarifies who makes which decisions, what authority each level holds, and how leaders are accountable for outcomes.
A transparent structure gives emerging leaders visibility into how different functions connect. It helps them understand the business holistically, which is a crucial quality for strategic leadership.
Moreover, structure defines career progression. In well-structured organisations, employees can see clear growth paths, from individual contributor roles to leadership positions. This not only motivates performance but also aids retention.
For leaders, the ability to design and adapt structure is a critical skill. It requires balancing control with empowerment, stability with innovation, and hierarchy with collaboration.
Structure and the human element
Ultimately, no structure works without people. The most sophisticated frameworks fail if employees feel disconnected or disempowered. That’s why successful organisations focus on structural empathy, designing systems that make work meaningful, manageable, and motivating.
When employees understand how their role contributes to the bigger picture, they find purpose. When reporting lines are clear, they experience psychological safety. When collaboration is easy, they feel part of something larger.
Thus, structure isn’t about control; it’s about connection.
Learning the art of organisational design at SPJIMR
Understanding and influencing organisational structure isn’t just for CEOs; it’s an essential skill for every manager and leader. At SPJIMR, the Post Graduate Programme in Management (PGPM) equips professionals with the tools to understand how strategy, structure, and culture interact to drive performance.
Through a blend of real-world case studies, live projects, and immersive learning experiences, participants gain a practical understanding of organisational design and leadership dynamics. They learn how to:
- Diagnose structural challenges and redesign for efficiency.
- Align structure with evolving strategic goals.
- Manage change and culture during organisational transitions.
- Build adaptive, people-centric systems for sustainable success.
The PGPM programme is uniquely designed for experienced professionals who want to accelerate their leadership journey. The focus is on developing the strategic thinking and self-awareness required to lead transformation.
Learn more about the programme here.
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