What is the purpose of organizational structure?

The purpose of organizational structure is to establish a hierarchy within an organization. This hierarchy clarifies the lines of authority, responsibility, and reporting relationships, which are essential for efficient decision-making and overall organizational effectiveness. By defining who reports to whom, organizational structure helps ensure that everyone understands their roles and responsibilities, facilitating coordination and collaboration across different levels and departments.

While outlining communication channels is an important aspect of organizational structure, the primary role is to create a clear hierarchy to support management and operational functions. Similarly, establishing job benefits and compensation or creating a marketing strategy are distinct functions that do not directly relate to the fundamental structure that governs how an organization operates and manages its workforce.