ORGANIZATIONAL STRUCTURE &

COMMUNICATION CHANNELS

FORMS OF BUSINESS STRUCTURE

Entrepreneurial

- decisions made centrally

Pyramid - staff have a role, shared decision
making, specialisation is possible
Matrix - staff with specific skills join project
teams, individuals have responsibility
Independent - seen in professions where
organisation provides support systems and
little else

ILLUSTRATING STRUCTURES 1
The Pyramid
Traditional
view of
organisations
Decisions pass
down formal
channels from
managers to
staff

Information flows
up formal channels
from staff to
management

ILLUSTRATING STRUCTURES 2
Entrepreneurial
Key
worker

Most small
businesses have this
structure

Key
worker

Quick to act but

pressure on
decision makers
Decision
maker
Great reliance on
key workers
supporting decision
makers

Key
worker

One or two
people make
decisions

Key
worker

ILLUSTRATING STRUCTURES 3
Matrix

Marketing

Production

Finance

Project A
Project teams
created
Project B

Staff with
specialist skills

MORE ON BUSINESS STRUCTURE

Centralisation
Managers keep control
Decisions are made in
the interests of the
whole business
Costs can be cut by
standardising
purchasing and so on
Strong leadership

Decentralisation
Empowering and
motivating
Freeing up senior
managers time
Better knowledge of
those closer to
customers
Good staff development

CHANNELS OF COMMUNICATION
Communication in organisations follows paths or
channels
Communication between managers and subordinates
is known as vertical communication
This is because the information flows up or down the
hierarchy

VERTICAL/LATERAL COMMUNICATION
Organisation chart shows vertical (black arrows)
and lateral (green arrows)

Board of Directors

Finance

Marketing

Production

Finance
Officers

Marketing
Assistants

Factory
Operatives

CHANNELS OF COMMUNICATION
Channels

between departments or functions

involve lateral communication
As well as formal channels of
communication, information also passes
through an organisation informally
Communication is not complete until
feedback has been received

ORGANIZATIONAL COMMUNICATION

The

formal flow of information in an organization may move via

upward, downward, or horizontal channels. Most downward
communications
address
plans,
performance
feedback,
delegation, and training.
Most upward communications concern performance, complaints,
or requests for help. Horizontal communications focus on
coordination of tasks or resources.
Organizational structure creates, perpetuates, and encourages

formal means of communication. The chain of command typifies

vertical communication. Teamwork and interactions exemplify
lateral or horizontal efforts to communicate.

marriage of people to electronic communication

equipment and databases that store information is
a formal network. Formal communication networks
provide the electronic links for transferring and storing
information through formal organizational channels.

The

Informal channels, known as the grapevine, carry

casual, social, and personal messages through the
organization. The grapevine is an informal, person-toperson communication network of employees that is
not officially sanctioned by the organization. The
grapevine is spontaneous, quick, and hard to stop; it
can both help and hinder the understanding of
information.

Like interpersonal communication, organizational

communication can be blocked by barriers, such as the following:

Information

overload

Embellished
Delays
Lack

messages

in formal communications

of employee trust and openness

Different

styles of change

Intimidation

and unavailability of those of rank or status

Manager's

interpretations

Electronic

noises