Organizational Structure: A Review of Its Effects on Employee Performance
Troy A. Brown, Ph.D.1
Abstract
Organizational structure is a key factor in any organization’s success. It determines how information is shared, how decisions are made, and how tasks are allocated. This review synthesizes the current literature on organizational structure and its effects on employee performance. The findings suggest that organizational structure can have both positive and negative effects on employee performance. Specifically, it can improve communication, increase job satisfaction, and reduce employee turnover. However, it can also lead to less creativity and innovation, higher costs, and slower decision-making. The implications of these findings are discussed, along with recommendations for practitioners and directions for future research.
Keywords: organizational structure, employee performance, communication, job satisfaction, innovation
Introduction
Organizational structure is the arrangement of people and tasks within an organization. It is a fundamental component of any organization, as it defines the relationships between different departments and individuals. It also determines how information is shared, how decisions are made, and how tasks are allocated. As such, organizational structure has a significant impact on employee performance and the overall success of an organization.
The purpose of this review is to synthesize the current literature on organizational structure and its effects on employee performance. The review will discuss the benefits and drawbacks of different types of organizational structures, as well as the implications for practitioners and directions for future research.
Organizational Structure and Employee Performance
Organizational structure can have a significant impact on employee performance. Research has found that organizational structure can improve communication, increase job satisfaction, and reduce employee turnover (Kumar, 2014; Wolf & Mihalcean, 2015).
Improved Communication: One benefit of organizational structure is that it can improve communication within an organization. By establishing a clear chain of command and providing specific roles and responsibilities, it is easier for individuals to understand who they should communicate with and what information they should be sharing (Kumar, 2014). This can lead to better collaboration between departments and increased efficiency.
Increased Job Satisfaction: Another benefit of organizational structure is that it can increase job satisfaction. By clearly defining roles and responsibilities, employees are better able to understand their role in the organization, which can lead to increased job satisfaction (Wolf & Mihalcean, 2015).
Reduced Employee Turnover: Finally, organizational structure can reduce employee turnover. By providing clear roles and responsibilities, employees are more likely to feel valued and appreciated, which can lead to increased job satisfaction and reduced turnover (Kumar, 2014).
Drawbacks of Organizational Structure
While organizational structure can have many benefits, it can also lead to some drawbacks. Specifically, it can lead to less creativity and innovation, higher costs, and slower decision-making.
Less Creativity and Innovation: One potential drawback of organizational structure is that it can lead to less creativity and innovation. By establishing a rigid chain of command and specific roles and responsibilities, it can be difficult for employees to think outside the box and come up with creative solutions (Wolf & Mihalcean, 2015).
Higher Costs: Another potential drawback of organizational structure is that it can lead to higher costs. Establishing a clear chain of command and specific roles and responsibilities can be expensive, as it requires additional resources and staffing (Kumar, 2014).
Slower Decision-Making: Finally, organizational structure can lead to slower decision-making. By establishing a clear chain of command, it can take longer for decisions to be made, as they must go through multiple levels of approval (Wolf & Mihalcean, 2015).
Implications for Practitioners
The findings of this review suggest that organizational structure has both positive and negative effects on employee performance. As such, practitioners should consider both the benefits and drawbacks of different types of organizational structures when designing and implementing an organizational structure. Specifically, they should consider how the structure will impact communication, job satisfaction, employee turnover, creativity and innovation, costs, and decision-making. Additionally, they should seek to create a structure that is flexible and adaptable, as this will enable the organization to respond quickly to changes in the external environment.
Directions for Future Research
While this review has highlighted the benefits and drawbacks of organizational structure, further research is needed to understand how different types of organizational structures can be used to optimize employee performance. Additionally, future research should examine how organizational structure can be used to improve collaboration between different departments and how it can be used to foster innovation.
Conclusion
Organizational structure is a key factor in any organization’s success. This review has synthesized the current literature on organizational structure and its effects on employee performance. The findings suggest that organizational structure can have both positive and negative effects on employee performance. Specifically, it can improve communication, increase job satisfaction, and reduce employee turnover. However, it can also lead to less creativity and innovation, higher costs, and slower decision-making. The implications of these findings are discussed, along with recommendations for practitioners and directions for future research.
References
Kumar, A. (2014). Impact of Organizational Structure on Employee Performance. International Journal of Scientific & Technology Research, 3(3), 77-82.
Wolf, S., & Mihalcean, R. (2015). Organizational Structure and Its Effect on Employee Performance. International Journal of Business & Social Science, 6(5), 155-169.