The type of organizational structure a company chooses to use will affect employee relationships, customer service and business relationships.

An organic organizational structure’s purpose is to provide flexibility for change that can be initiated by employees.

A flat organizational model that limits the amount of hierarchy in an organisation, it is built around the employees' or workers' thoughts, needs and feedback. While an organic organizational structure encourages democracy in the workplace, it has disadvantages that need consideration.

No Boundaries

The members of the organisation define an organic organizational structure’s boundaries. This means the rules, boundaries and standards could be ever-changing depending on the influence of the team members.

This may work well in some organisations but could lead to greed and selfish motives instead of corporate responsibility. The lack of boundaries can also influence customer relations if a customer is given various replies to the same question.

Unproductive Directives

When leadership gives directives, those directives can become unproductive due to lack of motivation. For example, if an organic organizational structure was implemented in a local law enforcement agency, the need for urgent and immediate direction wouldn't exist. In this situation, a more authoritative organizational structure is needed where subordinates respond to orders immediately.

Ineffective Leadership

If the power lies in the employee’s hands, it can lead to ineffective leadership. For example, if the employees are used to governing themselves and then the leader attempts to implement change, the employees may not respond to the direction because they perceive themselves as the leadership. Leadership in an organic organizational structure needs to remain defined and actively involved in the decision-making and policy-enforcing process. An organic organizational structure can also remove upper management from the daily affairs of the business.

Communication Barriers

An organic organizational structure can create communication barriers between departments. Because the departments are self-governing, conflict can easily arise between two departments that don’t see things the same way. Another communication barrier is the lack of definition. If each department defines different policies differently, one department may not understand the message another department is sending.