A company requires a structure to maintain the multiple departments it is comprised of and the various levels of employees to hire. An organization is a social unit of the people of a business that is built to maintain its needs, execute its goals and attain its mission. Every organization has a management structure that allocates the roles and assigns the activities of every operating member.
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What is an Organization?
What Determines the Structure of an Organization?
The structure of an organization primarily depends on its magnitude, life cycle, and external business environment.
Magnitude: A large enterprise requires a detailed organizational framework to execute and operate its extensive operational activities. These firms aim to produce in bulk and require more labor to deliver that task. These laborers need to be supervised by several managers. Such enterprises require a complex framework, unlike smaller firms that operate on a minor scale in comparison.
Life Cycle: Businesses who aim to constantly evolve and expand their products and firm size opt for a flexible operating system that allows them to exercise their creativity.
External Business Environment: A business that is dynamic in nature constantly adapts its products to meet the changes in customer needs. This business cannot be handled by an unstructured or open organizational system.
Do All Organizations Have Any Common Elements?
Every organizational structure reflects four common characteristics.
1. Same Goal:
Every individual- an entry-level worker, a manager or a chief executive– has different task assignments but works to attain the objectives of the company. A company without a mission or vision will move without direction. A common purpose unifies the members of the organization and makes them feel like they are a part of something larger than their office cubicles. It is essential for the members of the managerial team to communicate the firm’s long term goals across the organization.
An organization is constructed to establish coordination. Everyone works harmoniously to achieve a common goal by maximizing the resources they have effectively and efficiently. Each task is dependent on the other.
3. Division of Labor:
An organization cannot exist without division of labor. The work is divided into various departments and segments so each task is done with greater efficiency utilizing the best of everyone’s skill sets. If a tasking job is divided into specialized tasks, the organization is able to make the most use of its human labor. This not only results in higher yields and efficiency but also lower costs per unit.
No company can effectively run without a strong executive panel. This hierarchical chain places ‘the right individuals at the right place at the right time.’ A company with a definitive chain of command is more prompt in making decisions whereas an uncertain one can slow down the production process.
Is There Any Benefit to Having an Organizational Structure?
An organizational structure allows its employees to witness the bigger picture and make them work in harmony towards a common set of goals. Without a stable organizational structure, a business cannot expand despite its investments in research and development. The manner in that a firm operates permits it to diversify its products or even develop a new item entirely. Centralized businesses help maximize efficiency and reduce wastages.
What Are the Signs of a Healthy Organization?
An organization must have well-known company policies to achieve long term success. A healthy organization practices full transparency with its workers and shares their goals with the employees irrespective of their level. Managers should be able to get their subordinates to function together.
If an employee does not feel like they are part of the company, they will not give maximum effort. Other characteristics of a well to do organization include teamwork and employee satisfaction. An employee with high morale will deliver more. They will begin to value their position and increase their productivity.
A healthy organization also provides training and education opportunities to its employees which hone their relevant skills. These companies should take proper measures to improve performance. This may include getting help externally to detect problems and offer solutions. Companies must be prepared to embrace the risks associated with the business. They must implement the necessary precautions to adapt to any sudden changes.
What Are the Common Organizational Types?
A company’s organizational structure highlights the chain of command and can be structured in various ways. Here are the top three:
1. Line Organization:
This scalar type of organization is the older structure there is. The authority follows a ‘top-down’ approach where the command comes from the top of the hierarchy to the rest of the levels. Authority and responsibility are clearly defined at each level. This structure is simple to understand and operate, and communication is fast and efficient. As the responsibility is fixed at every level, everyone is aware of the task they need to do and the duties they need to fulfill. This structure is rigid in nature and has very little scope for specialization.
2. Line and Staff Organization
This organization is frequently established in larger enterprises where the authorities set the goals and the staff fulfills them. This organization encourages employer-employee relationships that create a safe space for the staff to share their opinions on the matter.
3. Functional Organization:
In this structure, workers are allocated in different departments and groups according to their specific skills, experience, and knowledge. Every manager is an expert in their own field and has to perform only a limited number of functions. Specialization is highly encouraged in this type of organization. It is difficult to coordinate the different groups as the workers work under different supervisors and have separate agendas to fulfill.
Every organization has different organizing, planning, financing, and resourcing approaches. The process in which they plan to achieve these needs is unique to their organizational structures.