The Advantages of Divisional Organization Structure on Accountability

by Tara Duggan

A divisional organization divides your company into a structure that corresponds with products, services or locations. Each division provides all the functions to support the division, including finance, marketing and sales. Because all activities fall under one manager, employees get consistent support. The reporting hierarchy encourages accountability, because it eliminates conflicting loyalties over limited resources. While operational inefficiencies may exist in the company as whole, most related to communication, the positives may outweigh the negatives for your business.

Establishing Autonomy

In a divisional organizational structure, if one division fails, it doesn’t threaten the rest of the company’s success. Decision making occurs quickly, allowing the division to react and respond to market conditions. Managers can shift activities without requesting approval from other divisions in the company. This makes them accountable for their own actions. If the market is unpredictable or volatile, a divisional structure tends to be more flexible.

Providing Specialized Support

A divisional organizational structure typically makes it easier to create specialized job descriptions with tailored roles and responsibilities that are directly accountable to the division's management. This type of structure also facilitates the streamlining and improvement of internal processes. For example, if a manufacturing division has high product error rates, it can procure experts to fix problems specific to its production line. This specialized support can help the division eliminate activities that introduce inefficiencies or inaccuracies to any of its customized processes.

Maximizing Performance

In a divisional structure, each division concentrates on its own performance. Each function gets to focus on only the efforts that improve that division’s profitability. Divisions can create a culture that meets the needs of a product or service. If employees need training, the division authorizes it to improve performance and implements initiatives to fix problems specific to that work force.

Fostering Relationships

Employees build relationships within the division and know each other well. For example, the sales team works closely with the marketing team on an ongoing basis. Rivalries between functions dissipate when employees share the same goals and understand the business challenges intimately. Policies, processes and procedures can be adjusted if business conditions change and these operating practices no longer make sense for the division.


Companies with complex divisional structures usually have clearly defined lines of control and responsibility. This typically improves communication over less formal structures. While employees have less involvement in decision making processes, information starts at the top and cascades to the bottom. Communication tends to be focused on topics that interest that division and don’t include irrelevant topics that contribute to information overload. For example, communication can include newsletters that encourage employees to be accountable for their actions. These actions should be specific to enabling the division to meet its strategic goals.

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