There are two kinds of communication in an organizational structure, vertical and horizontal. If an organization is not structured well for communication up and down or across, this can lead to problems.
First, let's talk about horizontal communication, which is often the area most ripe for trouble. Horizontal communication is that which occurs between departments in an organization, for example, communication between the production department and the marketing department or between the finance department and the research and development department. If there is no formal process set up within the organization for communications amongst the various departments, all sorts of difficulties can and will arise. If the research and development department is not communicating with the finance department, it does not know when or if there will be budgeting for its projects. If the production department and the marketing department are not communicating, then the marketing department has no way of knowing that there is a new product being produced that it is expected to market. So, there must be a formal means built into the organizational structure to allow this horizontal communication. There can be meetings of department heads, for instance, or memos copied to all departments. But there must be a formal mechanism. An organization should not be relying on informal means to disseminate important information horizontally.
On the vertical plane, there can be problems, too. If the organizational structure is too "tall," with many layers from top to bottom, information can take far too long to filter down to the rank and file. Conversely, information from the bottom can take too long to rise up to the top. Both of these are bad for an organization, where information, for example, about a new process or policy needs to reach those who must implement the process or policy, or when a problem at the lowest levels of an organization does not come to the attention of those at the top. There should be some process built in to assure that the latter does not happen, even if it is just a suggestion and complaint box allowing for anonymous suggestions and complaints, a box the contents of which need to be reviewed frequently. Another aspect of communication difficulty arises in an organization in which those at the top have a habit of "flooding" everyone's inbox over every little thing. This results in people not bothering to read what has been sent to them. Procedures need to be built in so that communication is relevant to those who receive it. This can be accomplished by allowing middle managers the authority to "filter" information from the top, assuring that those below who receive information will find it meaningful enough to read.
We all know enough today about organizational theory and communication theory to safeguard against any of these difficulties, but organizations often persist in structuring themselves in ways that cause these kinds of problems.