Formal Organizational Structure. For the most part, as long as there are at least two people running a business there is some sort of hierarchy which determines who does what. When you have a business with more than two people this hierarchy often becomes a formal organization structure which specifically details the roles and responsibilities of all employees.
Without some sort of organization a business would be in total chaos because no one would know who is in charge of what or who to send inquiries to or anything- it’d be like having ten cooks to make a peanut butter and jelly sandwich all vying to be the head chef. No one would ever get their sandwich in this case.
For the very large businesses there is probably more of a corporate organizational structure in place. This approach is also known as the functional organization structure and has been used throughout the centuries since man first established any sort of hierarchy dictating that the men would hunt and the women would gather.
Today’s formal organizational structure is most commonly based on an approach which most closely resembles ruling dynasties. This means there’s usually one person or maybe one group at the very top of the corporation that is responsible for overseeing all aspects of the company’s business dealings.
There would be multiple layers of supervisors, department heads or directors, managers, and others between this top role and the actual workers. This is kind of like having the king or queen ruling the country and the different levels of aristocracy in between the ruler and the everyday citizen.
Just like most countries that operated or operate with a king or queen, the corporate organizational structure is based on some sort of formal bylaws, charts, and other documents which delineate exactly what each position entails, who they report to, who reports to them, and the methods for handling the day-to-day operations of the organization. There is often an element of standardization in this type of organization so that each branch of the company knows how to communicate with each other and the upper levels of management.
Most of the time the formal organizational structure provides a degree of comfort and security due to the fact that most procedures come with a specified set of instructions (“a” leads to “b” which leads to “c”). This makes many employees feel very safe and secure because they know exactly what their chain of command is should any issues arise for which they need further assistance. This type of structure also has in place very clear guidelines for punishment and recognition in order to maintain a positive culture.
One of the pitfalls of the formal organizational structure is that it can result in a slower decision making process because there are so many groups who have to be involved and consulted (think of how long it takes for most bills to become a law because it has to be approved by both the House of Representatives and the Senate before the President even gets to have a say).
However, some of this bureaucracy is necessary when dealing with a very large corporation to ensure the fair treatment of all employees.