How does the structure of a company affect its work culture?

A business’ organizational structure doesn’t just have an impact on the clients, but on the employees, managers, and other members of a business. How a company’s structure functions can lay the groundwork for the culture of said company as well. 

If the business holds to a more “chain-of-command” employees would have to go through specific managers and supervisors to get their information or ideas through. However, if the business utilizes a flatter structure, one where both employee and CEO are working in tandem, then it would be somewhat easier for employees to interact with their boss and provide constructive feedback on the structure of the business. In an article by CXService360 titled “How Organizational Structure Affects Business Productivity” writer Harry Conley notes that the idea of an organizational structure to boost productivity in the business comes with trade-offs: “The decision on the organizational structure is an important one and it shouldn’t be taken lightly. It will determine how people interact and how they work together,” Harry Conley notes.

As I mentioned in the beginning of the article, how a business is structured is important and lays the groundwork for the type of culture that a company creates. Conley provides several different potential structures in his article that could affect a business’ work culture:

  • Functional Structure: This structure sorts the employees into specific groups based on their specific specialties. This structure can also create subgroups; for instance, sales is a subgroup of marketing. However, because everyone is in their specific groups, according to Conley, “… this also means less creativity, flexibility and adaptability to changes on the market. The [specialization] can also reduce morale and lower productivity as well” (Conley).
  • Divisional Structure: The divisional structure focuses largely on products or services the company offers. Using this structure, every product or service that a company offers will operate as their own “business” with each division reporting to the owner. As Conley notes in his article, the division structure is organized like the functional structure but allows for more adaptability.
  • Team Structure: Unlike the divisional or functional structures, the team structure focuses on the employees. Whereas the functional structure lacked creativity, flexibility, and adaptability, the team structure “[surpasses] it in the areas of innovation, flexibility, employee happiness and motivation, responsiveness and so on.” (Conley) Additionally, the team structure works more effectively on accomplishing a company’s goals but has a harder time communicating; forcing them to spend more time in meetings.
  • Virtual: While the team, divisional, and functional structures are face-to-face, the virtual isn’t. It allows the owner to outsource their work to a small number of employees (in the case of a small business owner) whenever the owner needs help. Although this allows the business to slowly expand and potentially grow into the team or divisional structure, there may not be much to do.

As you can see, each of the different structures that a business can utilize has their advantages and disadvantages. Depending on the specific business and the CEO, the structure of a business can shift between any one of the four mentioned above. When COVID-19 struck the world, many businesses shifted to a virtual structure, when they previously worked as a part of a functional, divisional, or team structure.

“If the organization and its employees share a common culture the environment makes it easier to share common goals and to follow suitable procedures in achieving them,” Kabelo Lefifi stated in an article for LinkedIn titled “The relationship between Organizational Culture, Structure and Performance.” 

Kabelo is right, in a sense. A business that shares a common culture and is fully committed to the goals of the business, the work environment will be better off for it. The goals and environment of the business will determine what kind of structure is set in stone and how that will affect everyone involved.

Structure is important to a company. No business could survive without it. But if that business’ structure begins to affect the work culture negatively, then maybe it’s time to change. A structure is only as good as the person who put it in place. If employees don’t feel like the work they are doing matters, that needs to be addressed by the business because the employees, outside of other sectors of a company, have contact with old and potential clients.


Conley, Harry. “How Organizational Structure Affects Business Productivity.” CXService360, Accessed 14 Apr 2021.

Lefifi, Kabelo. “The relationship between Organizational Culture, Structure and Performance.” LinkedIn, Accessed 14 Apr 2021.


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