What Is An Organisation? (Characteristics And Structures)

Indeed Editorial Team

Updated 30 September 2022

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An organisation typically comprises a group of experts who work together to attain short-term and long-term objectives. It is most likely to succeed when all invested members are aware of its goals. Studying how an organisation works can help you gain insight into the aspects that can motivate employees and increase the overall performance of a business. In this article, we explain what is an organisation, its characteristics and types and the significance of organisational structure.

What Is An Organisation?

The answer to the question, “What is an organisation?” is that it is a systematic arrangement of labour among members of an institution, with clear identification of power and duties, to accomplish collective goals. The planning process can be productive if employees' responsibilities and relationships with peers, superiors and subordinates are clear. Organisations may be able to accomplish their goals with ease if they follow effective organisational principles.

An organisation can clearly identify each member's job and responsibilities, and the professional relationship between members so that they can coordinate and strategise to achieve organisational goals. An organisational task splits into smaller segments and employees in each department receive specific duties with the purpose of enhancing organisational welfare and pursuing individual goals.

Related: What Is Organisational Culture?

What Are The Characteristics Of An Organisation?

An organisation is a group of individuals who gather to contribute their efforts and resources to pursue a common goal. Some characteristics of organisations include:

Clear division of work

Division of work involves separating a complex work process into several components or tasks, each of which a different individual or group of individuals may perform. By dividing labour among two or more individuals or groups of employees, an organisation can function more efficiently and effectively. Employees and teams can focus on certain aspects of the operation rather than on the overall process. Division of work can help reduce wastage of resources and maximise productivity. It is one of the core organisational concepts of an assembly line and typically applies to all systems of mass production.

Related: The Importance Of Delegation Of Authority In Management

Well-defined organisational goals

An organisation that lacks a clear purpose or objective can quickly become disorganised. A common purpose brings employees or staff members together and ensures that everyone understands the importance of their work in achieving an overarching goal. A major duty for managers is to ensure that the resources and information necessary to achieve a collective goal are accessible to employees. Managers convey goals by informing employees about the company's overall strategy, mission statement, values and short-term and long-term goals.

Related: SMART Goals: Definition And Examples

Co-operative relationships

An organisation fosters cooperative relationships among its members. Organisations rarely consist of a single individual. They typically involve the participation of at least two people. The organisational structure may be in such a way that it encourages individuals to work together to complete their tasks. Workplace synergy improves through teamwork. Team members may feel a stronger sense of accomplishment since they are partially responsible for the outcomes. This can provide them with the motivation to perform well and develop professionally.

Dynamic processes

Organisations comprise people and expand their knowledge and experience over time. Changes can influence various functions of an organisation. As a result, organisations may not behave or function the same way for extended periods of time. Successful organisations evolve in response to changing consumer demands and business situations. For example, new technology often has the potential to create or eliminate job roles in an organisation.


An organisation comprises several positions in a hierarchy with well-defined powers and responsibilities for each. A central authority is typically present, from which a chain of authority extends throughout the organisation. The routes of communication and patterns of interaction follow the relative hierarchy of organisational positions or designations.

What Are The Different Structures For Organisations?

Companies implement an organisational structure that best fits their size, scale of operations and business goals, to ensure that operations function systematically and efficiently. A well-defined organisational structure can help employees understand their roles and responsibilities clearly. Organisations may follow any of these structures:

Horizontal or flat structure

A horizontal or flat organisation is an organisational structure in which there are a few tiers of management. In a flat structure, managers have a wide range of authority over a larger number of employees and the chain of command is generally short. As there are few or no tiers of middle management, a firm that uses this structure can become more productive by accelerating the decision-making process. Flat businesses typically have lower budgets and higher productivity because there are limited wages and operational costs for middle-management. This structure is best suited for small to medium-sized businesses.

Functional structure

A functional organisational structure divides employees into groups based on their specialisations, skills or roles. It involves layers of hierarchy with several departments functioning under the supervision of designated leaders or department heads. Functional structure is widespread in businesses because it unites employees with similar knowledge and skills. Within this framework, employees can give and receive assistance. Large corporations frequently choose functional structures since each department can operate independently and contribute to overall efficiency.

Divisional structure

Parallel divisions make up a divisional organisational structure. These divisions may be in charge of a product or service, a specific geographic region or a consumer group. Large companies that operate in multiple geographic locations or have distinct, smaller divisions to cover different types of products or market areas benefit from divisional organisational structures. Effective management is the most critical aspect of success for business enterprises with divisional structures.

Matrix structure

A matrix organisational structure is more complicated since it has several lines of reporting managers, meaning employees are answerable to several bosses. Companies with large-scale projects benefit the most from employing this type of structure. There are various advantages to employing a matrix structure. This includes efficient use of limited resources and enhanced retention of professionals throughout a company's life. A matrix structure also allows senior management staff to integrate the firm's goals with its routine activities.

Team-based structure

A functional and matrix structure combines into a team-based organisational structure. Employees in team-based organisations work in small or large groups to achieve certain organisational goals. Some groups specialise in a single task, such as product development. Others may be cross-functional teams that work across different domains. While these groups function under the supervision of a project manager, ideas flow more freely because hierarchy is not a constraint here. This model is popular among start-ups because it emphasises collaboration over most other qualities.

Network structure

A network structure is a structure in which more than one organisation works together to create a product or offer a service. These organisations can form a partnership for a specific venture or employ other organisations to undertake one or more of their duties. A network structure provides companies with more flexibility and agility. One of the many benefits of a network approach to organisational structure is that it allows a company to focus on what it does best while outsourcing other activities to companies that specialise in those areas.

Hierarchical structure

Companies that follow the hierarchical structure of organisation have a pyramid-like structure and rely on a vertical chain of command, with the CEO at the top and multiple levels of management below. They often have many departments and are more likely to rely on specialist roles, allowing employees to specialise and become experts in their fields. Employees in hierarchical companies have a clear career path that allows them to progress and rise to more senior positions over time within the company. A hierarchical structure is typically suitable for large businesses and organisations.

Significance Of Organisational Structure

Organisational structure is the pattern or network of connections that exist among various positions in an organisation. It is a scheme of professional relationships that result from a deliberate planning procedure. Key executives in a company often choose the fundamental organisational pattern that they believe is best for themselves, their job role and the organisation's goals. Organisational structure is significant because:

  • A well-designed organisation can aid in improving teamwork and productivity by creating a structure within which individuals can most effectively cooperate.

  • A good organisational structure helps a company flourish by increasing its capacity to manage a larger workforce.

  • An organisational structure establishes communication channels and patterns. It makes proper administration possible.

  • Implementation of organisational structure aids in the expansion and diversification of an organisation's activities.

  • A structure eliminates duplication of functions and allows for maximum output with a given amount of effort.

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