Effect of Organizational Structure on Employees

Case Assignment

Write a 4- to 5-page critique answering the questions below.

  • An organization’s structure can have significant effects on its members. What might those effects be? Analyze the behavioral implications of different organizational designs and use at least two examples.

Is it possible to generalize and say that a certain structure is better than others? That is, is there a structure that is superior in terms of its effects on its members? Take a stand and defend your comments with references to the concepts in the readings in this module and any previous modules that you find relevant. Demonstrate that you have read, understood, and can apply the background materials by citing them in support of your analysis

This paper looks at the effects of various organizational structures on employees. It identifies some of the common organizational structures to include such as functional organizational structure, divisional organizational structure and the matrix structure that integrates the first and the second structures. Employees react differently to different management styles, which draw its sources from the organizational structures used by companies. It highlights the effects of the organizational structure on employees as; inhibiting creativity level of employees, creating a sense of leadership, a momentum of power struggle and also enhances competition, which can be unhealthy. The paper offers an insight on how and which organizational structures the managers should adopt by giving the benefits of each structure besides comparing all of them. Managers need to select an organizational structure carefully, as it will determine such factors as coordination and whether to centralize or decentralize power.


Organizational structure is meant to show how activities such as coordination and supervision by management, are laid down by an organization in a bid to achieve its goals as per its mission and vision. An organizational structure exists in many forms, and the kind of structure in which a particular organization uses depends on its choice (Ivancevich & Duening, 2007). An organizational structure is very important in every business aspect today, hence the need for managers to consider the most fundamental issues when it comes to making any organizational decisions (Ivancevich & Duening, 2007). This means that any decision undertaken by the organization has to undergo a very tight scrutiny before it becomes a law in a particular business. Organizational structure is one of the issues that an organization management ought to look at keenly because it influences the way an organization is run.  For example, a company should spell clearly whether to centralize or decentralize power, and this will affect its everyday operations. In order to understand the effects of an organizational structure, there is need to understand the most common organizational structures.  

The functional structure is a design where each portion of the organizational functions is grouped according to its purpose. For example, an organization could group some of the functioning into units such as marketing units, production units, among others. This particular structure works well in small organizations. However, communication and coordination within this particular structure is limited by the organizational boundaries, which involves different units having to carry out their functions separately. The other structure is the divisionalstructure, where needs can be met more efficiently and specifically, hence works well with large organizations, especially those that operate within a large geographical area. However, this structure has its own fair share of challenges as the benefits of communication are not realized. This is because employees in different divisions are not working together. This structure therefore proves to be more costly

Matrix is another kind of organizational structure and is a hybrid of both the functional and divisional structures. As much as this structure is able to utilize the benefits exhibited by the matrix and the divisional structures, it has a huge disadvantage as it can create big power struggles (Kurtz & Boone, 2008). This is because most areas of the company that uses this structure will always exhibit a double management, which include a product divisional manager and a functional manager. Having looked at the most common organizational structures, we can focus on the effects of these structures on employees.

An organizational structure can have significant effects on its members, who include the members of staff and the management. Therefore, when designing an organizational structure, it is important to consider its impacts on its employees and the organization as a whole. The following are the effects of an organizational structure on staff.

An organization structure can create a culture of evasiveness on the part of the employees. An organizational structure such as the matrix structure can create this particular behavior, because no employer likes the idea of being answerable to two bosses. This is because the matrix structure has both the product divisional manager and a functional manager at the same time, hence employees may be reluctant to participate in jobs that would cause any conflict in terms of instructions (Ivancevich & Duening, 2007).

An organizational structure can inhibit creativity on the part of the employee. For example, the functional structure is a major culprit of this behavior because jobs are executed according to the line of duties, hence lacking proficiency and initiative. Such kind of an organizational structure limits the potential of employees as authority is characterized by the top down approach (Ivancevich & Duening, 2007). Functional structure is mechanistic in nature and characterized by the top down hierarchy. Therefore, an organizational structure can divide people into two groups; leaders and followers.

Another impact of organizational structure is that it creates managers who are leaders by nature. Such organizational structure as divisional has employees working in teams over one particular workload at a time, and this means that managers have to be leaders in order to effectively execute the job at hand. With this kind of structure, employees work together as a single entity, hence boosting creativity, while minimizing specialization. It is also of benefit to the organization as set goals and targets can be easily achieved through teamwork.

Organizational structure may also promote unhealthy competition, especially among the managers, thus creating territorial managers. Also, it can promote insular behavior that leads to the segregation of employee groups. Depending on which structure an organization chooses to use, a structure may even prevent an organization from achieving its goals due to uncooperative behaviors and the endless interdepartmental wars that could have resulted from the structure, the organization laid down to achieve its goals. Lastly, organizational structures such as the functional structures may promote indifference and sometimes hostility among the members of staff. This is because each unit of an organization is a specialized unit, hence each works to achieve its set goals (Kurtz & Boone, 2008).

From the above effects, we can see that it is almost impossible to say that one structure is better than the other. This is because as much as a structure may seem superior to the other, its limitations may quickly taint it. However, I find the divisional structure to exhibit more advantages than disadvantages and therefore, it may seem superior to the others in modern society. Employees in many organizations today have attained higher academic qualifications and hence, no one wants to be commanded around by their leaders. Therefore, a functional structure may be seen to be more primitive in today’s organizations. Kurtz states “the result of the organizing process should be an overall structure that permits interactions among individuals and departments needed to achieve the goals and objectives of a business” (Kurtz & Boone, 2008). With this in view, Kurtz argument relates to today’s business world, where every employee wants to get an experience from a particular task. To achieve this, interaction of employees at all levels should be made effective, and the only way to do this is by designing a befit organizational structure. Divisional structure seems to bring out this aspect of employee interaction.


In conclusion, organizational structure is a very important management aspect that affects the everyday organizational functioning and therefore, managers should stand up to the task to ensure that quality decisions are made for the benefit of the organization. Quality is every businesses’ target, as Henry David Thoreau says “to affect the quality of the day that is the highest of the arts”, managers should strive for nothing less than quality, through the organizational structures they choose to implement.


Ivancevich, J., & Duening, T. N. (2007). Business: Principles, Guidelines and Practices . Atomic Dog Publishing .

Kurtz, D. L., & Boone, L. E. (2008). Contemporary Business. Cengage Learning.

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