Home » Blog » Company Culture » 3 signs you have poor organizational structure

3 signs you have poor organizational structure

The fourth activity of talent optimization is selecting your organization’s structure. This is where you decide how to organize your talent (think: departments, teams, organization charts, and reporting hierarchy). 

Some companies get this right and structure their talent to align with their business strategy—and their employees benefit as a result. But unfortunately, not all companies have a well-designed structure.

Why does poor organizational structure matter?

When you structure your talent in a way that’s at odds with your business strategy it leads to many issues:

Retention: In a world where roughly half of employees are actively looking for another job, you need to understand the factors that influence workplace culture to retain your best employees. Poor structure is one of those factors. 

Miscommunication: Poor organizational structure increases the likelihood of miscommunication. For example, changes to a product or service might not make their way down the chain of command—or effort might be put into initiatives that are no longer a company priority.

Work delays: Where miscommunication is prevalent, work delays are common. These delays lead to customers not getting their product on time, customer complaints, and a decrease in customer loyalty. It can cause customers to leave your company in favor of another company where the communication is clearer and they receive what they asked for, when they asked for it.

Reduced productivity: When your company’s organizational structure hasn’t been tended to, it can result in decreased productivity. When employees get contradicting directives from different superiors, they’re likely to stall on a project until they receive further clarification.

Low morale. When systems and processes aren’t in place to streamline communications, miscommunication leads to work delays and frustration. No longer wanting to deal with the rampant miscommunication and feeling like their work gets them nowhere, these employees start to look elsewhere for employment. 

All of these issues negatively impact your bottom line. This is why you need to keep a pulse on your organizational design to ensure it enables you to function at your best. If not, it’s time to switch things up and re-design your organization’s structure.

3 symptoms of poor organizational structure

Here are some signs your organizational structure needs fixing:

1. Mismatched hierarchies.

How many layers of management your organization has and how you structure employees will depend on both the size of your organization and your strategic objectives.

A small business, for instance, would benefit from a flat organizational structure. This allows for more open communication and collaboration. It also removes barriers to achieving rapid change and constant innovation—two necessary factors for small business success. 

A larger company, or a company that relies heavily on following rules and procedures, may benefit from a more functional or divisional model that includes multiple layers of management. This kind of organizational structure provides greater accountability and oversight to cut down on risk.

2. Unclear roles.

While scope creep is inevitable in small business and startup environments, it’s imperative to establish clear roles and responsibilities for each person in your company. If responsibilities are constantly in flux in your organization, take some time to understand why. In addition to a rapidly changing work environment, unclear roles can stem from overlap in management, which leads to confusion about reporting structure and what one person’s job responsibilities entail.

Join 10,000 companies solving the most complex people problems with PI.

Hire the right people, inspire their best work, design dream teams, and sustain engagement for the long haul.

3. Outdated processes and systems.

Processes or rules that are outdated inhibit growth. If updates and requests are taking a long time to get approved or projects are stalling, it’s likely because your processes and systems are no longer optimally functioning and need re-evaluation.


Shannon is a product manager at PI. She has a mirror-image twin sister—but they didn't discover this until they were 26.

View all articles
Copy link