What Are Internal Factors in an Organization?

Internal factors in an organization are factors that are within its control, such as the organization’s culture, its management structure and internal communication. A positive organizational culture is vital for a growing organization because it impacts employee morale and the timely completion of projects.

A positive organizational culture should be cultivated by nurturing leadership and accountability, which allows employees to fail, own their mistakes and keep learning. A growing business cultivates a culture of internal innovation, which allows the company to stay ahead of its competitors. Such a business has disciplined staffers who are self-motivated, accountable and passionate about their work, which enables the business to overcome difficult challenges.

Communication within an organization is a critical internal factor; it consists of official communication materials, interpersonal communication and an organization’s policies. Effective communication within a business creates a positive working environment and makes employees’ work easier, which increases effectiveness. Effective communication also helps the employees identify with the company vision and mission and reduces employee turnover.

The structure of an organization influences how employees work, as well as its leadership hierarchy. Changing internal factors, such as the management structure, has indirect costs, including the loss of employee productivity. An organization that works with outside contractors benefits from less employee costs, but has limited control over the final outcome.