An organic organizational structure is characterized by an extremely flat reporting structure within an organization. In this organization, the span of control of the typical manager encompasses a large number of employees. Interactions among employees tend to be horizontally across the organization, rather than vertically between layers of managers and their direct reports.
Because interactions are mostly amongst employees within a flat reporting structure, decisions are more likely to be made by consensus among groups of employees, rather than by individual managers. There also tends to be a larger amount of information sharing among employees, rather than the concentration of information at the upper levels of an organization that is more commonly seen in traditional top-down reporting organizations. There may be a large amount of cooperation between departments, rather than the silo effect that occurs in more hierarchically-organized businesses.
The advantage of the organic organizational structure is that the widespread availability of information tends to result in better decisions that react well to current market conditions; this is useful in an unstable market environment where change occurs regularly, and especially where there is a high level of competition.
The organic organizational structure has an impact from a human resources perspective, since it tends to operate better with employees who have diverse skill sets and the ability to deal with and make decisions on multiple topics. These types of employees do not need much direction from senior management.
There is less need for a broad array of formal procedures in an organic organizational structure, since procedures change as the business routinely adapts to variations in the business environment. Instead, it is more common to see a small number of relatively unchanged procedures in core processes, and much more fluidity among those procedures associated with aspects of the business that tend to change regularly.
However, decision making can be slow, because of the need to build a consensus. Thus, the organizational structure works best when there is time to churn through the alternatives with a number of people, and works less well in a crisis environment where decisions must be made at once. The top-down, hierarchical approach may work better in very stable environments that change little over the long term, and so require less company-wide consensus building.
This structure can be difficult to implement in a union environment, where work rules introduce a higher level of rigidity to how a business can be operated.
An organic organizational structure is also known as an open structure, a flat structure, and a horizontal structure.