Importance of Having an Appropriate Organisational Structure, and the Factors that can Reduce its Effectiveness?

Question

What is the importance of having an appropriate organisational structure, and the factors that can reduce its effectiveness?

Answer

Organisational structure is the framework companies use to outline their authority and communication processes. This framework usually consists of policies, rules and responsibilities for each individual within the organisation. Organisational structure is important for any growing company to provide guidance and clarity on specific human resources issues, including managerial authority. A formal outline of the company’s structure makes it much easier to add new positions in the company, as well as providing flexibility for growth. Without a formal structure, employees may find it difficult to know who they officially report to in different scenarios. There are several factors to consider, in which organisational structure can be affected and may reduce its overall efficiency which can include: The size of the organisation – Larger business organisations have to invest into a high amount of resources, with regards to increasing the level of management to supervise the employees. Larger businesses usually require a more intense framework for their organisational structure, whereas within smaller businesses the business owner is responsible for completing all tasks. Business environment – The external business environment can be a major factor with reference to organisational structure. Organisations attempting to meet consumer demand can find it difficult when creating an organisational structure within an ever changing environment. Strategy – Within smaller businesses, defining their business strategy tends to take centre stage and often delay in creating an organisational structure, which can have a negative impact on the business and the overall efficiency in their activities they conduct.

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