Importance of Organisational Structure
Organisational structure is the backbone of every company. The primary aim of every company is to increase its profit margin without wasting too many resources. Organisational structure fulfills this aspect of a firm. It brings a systematic approach to the workflow. The aim here is to streamline the activities of a company in an efficient way that eliminates chaos, and increases productivity. The concept of organisation helps businesses to segregate tasks according to the merit of the workforce, distribute the workload, and to assign or map resources accordingly. Moreover, the implementation of this structure also includes defining roles.
Importance of Organization
Organization brings adaptability to a company. It paves the way for a smooth transition of work from one end to another and proper allocation of the workforce in a dynamic environment. Therefore, a comprehensive approach to an organizational structure can provide different pathways in front of the management to reach its goals. The importance of this structure is discussed below.
Clarity in the Workplace
The introduction of the concept of organisation brings clarity to a company. It promotes accountability by establishing a relationship among employees. It also establishes a chain of command. In this way, it puts in place a clear flow of instructions and information clarifying the hierarchy in a firm.
Focus on Specialization
Another major importance of business organisation is that it focuses on specialization. It means employees who are good at something will receive work in their area of expertise, repeatedly. A significant benefit of this method is that an employee working in a particular area for a long time attains invaluable knowledge and experience, which ultimately increases productivity.
Utilisation of Resources
The introduction of organisation helps businesses to optimally utilize their resources, both financial and human. The distribution of work, and keeping track of its completion and delivery is a part of this process. It further helps in curbing the waste of valuable resources.
Facilitates Administration
A well-designed organizational structure defines and maintains a balance between management and employees. It increases the productivity of management and motivates employees to perform better. Moreover, this format segregates the work and defines job roles, which siphons off the delays and make individuals responsible for their work.
Personal Growth
The importance of organising in management further proceeds to personal development. Delegation of labour and assigning work to the people who provide the best results reflect on their performance in the long run. Such employees gather expertise in that particular work and find ways to save more time.
On the other hand, the concept of an organisation also includes training and development of resources. It helps the firm to gather a skilled workforce that will increase productivity further and generate more revenue.
Additionally, this process also saves companies from an administrative crisis as well. In any such instances, companies will have personnel ready to step up and take charge of a situation. In a nutshell, the introduction of organizational structure creates leaders for tomorrow.
Encourages Creativity
The delegation of work and defined job roles stimulates creativity among employees. This structural approach gives enough freedom to a workforce to find new ways to do a job more efficiently, also, improve the end result as well.
Brings Stability
Effective leadership, cooperation, and communication bring stability in the workplace, and the concept of an organisation focuses on that. Additionally, this leaves a positive effect on employee satisfaction that reduces employee turnover.
Steps in the Introduction of the Organization
Here are the steps that ensure the effective implementation of organizational structure in a firm.
Identification and Segregation
The first step of introducing organizational structure is to identify work and resources. It finds the perfect workforce for a particular job and then segregates it further. The idea here is to share and lower the burden of work, corroborating accuracy, and eliminating duplication.
Finding or Creating Departments
Since the identification and distribution of work are complete, the next logical step here is to find groups that can perform similar activities. This helps in easy management of work and improvement of the final product.
Assignment of Work
After the groups, the focus shifts to the assignment of work among employees, since the structure is already in place, everyone is aware of their duties and responsibilities. A point to note during the distribution of work is that employees must work on their preferred subjects to increase productivity and gain specialization.
Establishing a Chain of Command
The final process is to establish a chain of command. It streamlines the workflow further and ensures optimum utilization of resources.
The concept of organisation is not new, it has existed for centuries. The significance of this concept mentioned above further speaks on its behalf and why implementing it in a business is important to stimulate its prosperity.
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FAQs on Organization and Its Importance: An Introduction
1. What is an organisation in the context of business studies?
In business studies, an organisation refers to the process of identifying and grouping work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. It acts as the structural framework that defines how tasks are divided, resources are deployed, and departments are coordinated to achieve a common goal.
2. What is the importance of organising for a business?
Organising is crucial for any business as it provides a clear structure for operations and goal achievement. Its key importance lies in:
- Benefits of Specialisation: It allows for the systematic allocation of jobs, leading to specialisation and increased efficiency.
- Clarity in Working Relationships: It clearly defines the lines of communication and specifies who is accountable to whom, which removes ambiguity.
- Optimum Utilisation of Resources: It helps in making the most effective use of all resources, including financial, physical, and human, by preventing duplication of work and wastage.
- Adaptation to Change: A well-designed organisational structure is flexible and facilitates adaptation to changes in the business environment.
- Effective Administration: It provides a clear description of jobs and related duties, which simplifies administration and management.
- Development of Personnel: It encourages delegation of authority, which motivates employees and helps in their development by providing opportunities to take initiative.
3. What are the essential steps in the process of organising?
The organising process involves a series of logical steps to create a functional structure. The essential steps as per the CBSE curriculum for the 2025-26 session are:
- Identification and Division of Work: The first step is to identify the total work to be done and divide it into specific, manageable jobs to avoid duplication and share the burden.
- Departmentalisation: Once work is divided, related and similar jobs are grouped together and put under one department. This can be done based on function (e.g., marketing, finance) or product.
- Assignment of Duties: After creating departments, the work is allocated to individuals based on their skills and competencies. It is essential to define the job and assign the corresponding duties clearly.
- Establishing Reporting Relationships: The final step involves defining the authority-responsibility relationships among individuals. Each person should know who they need to take orders from and to whom they are accountable, which creates a clear chain of command.
4. How does a well-defined organisational structure prevent confusion and conflicts in a company?
A well-defined organisational structure acts as a blueprint for business operations, preventing confusion and conflicts by establishing clarity. It achieves this by clearly defining the authority and responsibility of each employee. When every individual knows their specific role, what is expected of them, and who they report to, there is no ambiguity about tasks or jurisdiction. This eliminates overlapping duties and ensures that different people are not performing the same task. Furthermore, the established chain of command provides a clear path for communication and problem-solving, allowing disagreements to be resolved in an orderly manner through the proper channels.
5. Is organising just about creating a hierarchy chart? Explain its wider scope.
No, organising is much more than just creating a hierarchy chart (or organogram). While the chart is a visual representation of the structure, it is merely the outcome of the comprehensive organising process. The true scope of organising is a detailed management function that involves:
- Analysing and identifying all the activities required to achieve business goals.
- Grouping similar activities into logical departments (departmentalisation).
- Allocating resources, including staff, technology, and capital, to these departments.
- Assigning specific duties and responsibilities to individuals.
- Delegating the right amount of authority to carry out those duties.
- Creating a system of coordination and reporting to ensure all parts of the business work together harmoniously.
Therefore, it is a dynamic process of building the 'engine' of the business, not just drawing its map.
6. How are the management functions of 'Planning' and 'Organising' interrelated?
Planning and organising are deeply interrelated and are often called the 'twin functions' of management. Planning sets the objectives and decides the course of action, essentially creating the 'what' and 'how' for the business. Organising follows planning by creating the structural framework necessary to execute the plan. Without a plan, there is nothing to organise for, and the structure would be aimless. Conversely, without effective organising, even the best plans can fail due to a lack of resource allocation, unclear roles, and poor coordination. Organising translates plans into a tangible structure of roles and responsibilities, making the achievement of goals possible.
7. Using the example of arranging a sports day, explain the importance of organising.
Organising is vital for the success of any complex event like a school sports day. Here’s how it applies:
- Division of Work: The total work is divided into tasks like ground preparation, student registration, event scheduling, prize distribution, and first aid.
- Departmentalisation: These tasks are grouped under committees, such as a 'Logistics Committee' (for ground and equipment) and a 'Registration Committee'.
- Assignment of Duties: Teachers and student volunteers are assigned to these committees based on their skills. For instance, a physically active teacher might lead the Logistics Committee.
- Establishing Relationships: A clear hierarchy is set. The event coordinator is the overall head, and committee heads report to them. This ensures if the Registration Committee needs more tables, they know to approach the Logistics Committee head, who then coordinates with the coordinator.
Without this organising process, there would be chaos, duplicated efforts, and a high chance of failure.
