Organization Structure: Roles and Importance

By | February 13, 2018


Organisation structure can be viewed as established pattern of relationships among the components of the organization. In large and complex organizations. The structure is set forth initially by the design of the major components or subsystems and then by establishing relationships among these subsystems. It is the patterning of these relationships with some degree of permanency which is preferred to an organizational structure.

The organizational structure looks like a pyramid with a narrow top and a broad bottom.

According to Henry Fayol ‘Organization is of two kinds, i.e. Organization of the human factor and organization of material factor’. Organization of the human factor covers the distribution of work to those who are best suitable along with authority and responsibility. Organization of the material factor covers utilization of raw materials, plant and machinery etc.

The process of organizing lead to the creation of the structure of an organization. The term organization structure may be defined as a system of job positions, the roles assigned to them and the authority relationships among the various positions. The structure provides a basis for a framework for managers and employees for performing their various functions.

Roles of Organisation Structure:

Organization structure is the mechanism through which management directs, coordinates and controls the organizational activities. It is needed for the foundation of management.

There can be following roles of organization structure:

1. Facilitating Management Action: When a large number of people work together, some sort of formal structuring is required to place them according to the needs of the organization. All of them perform various functions which are interdependent and interrelated. As such, there must be a plan for systematic completion of the work of each specialized job so that total activities accomplish common objectives. Further, these activities should be completed in a coordinated way.

2. Encouraging Efficiency: Organisation structure is the framework within which an organization functions. In his functioning, efficiency is the major criterion. Therefore, organizational members trying to maximize the output of goods and services resulting from a given input of resources, or at least make a respectable showing in that direction.

3. Communication: Organization structure provides the pathways for communication among organizational members as well as between the organization and its environment. In fact, when we say that organization structure establishes relationships, we mean that it creates reporting relationships, that is, who will communicate with whom. Similarly, when the organization interacts with its environment, a communication process is involved. Thus structure serves the purpose of communication.

4. Optimum Use of Organizational Resources: Organization structure tries to make optimum use of organization resources by ensuring their allocation to points where there are needed. Organization structure gives a higher place to activities which are more important to the achievement of organizational objectives. Thus placing of activities according to their importance provides guidelines for resource allocation.

5. Job Satisfaction: Organisation is a source of satisfaction to people. since organization provides relatedness among tasks and responsibilities and among people, those who work for an organization sooner or later come to evaluate the nature of those relationships and of their own relationships to the organization and to their jobs. The organization structure provides for each person a place of status which confers a certain standing among his fellows.

Importance of Organizational Structure:

The functions of Organising and organization are important in several ways, which are:

1. Specialization: In the process of organizing, care is taken to see that the activities are divided and subdivided into compact and convenient jobs. Organizing thus promotes specialization, speedy performance of tasks and efficiency.

2. Well-Defined Jobs: The jobs of managers and non-managers are clearly defined and differentiated. This helps the process of looking for and selecting the employees and fitting the right person to the right job.

3. Clarifies authority and Power: A clear-cut definition of authority enjoyed by each manager and his jurisdiction of activity minimizes conflict and confusion about the respective powers and privileges of managers.

4. Avoiding Duplication of Work: Organising helps in avoiding duplication of work and overlapping in responsibilities among various employees and work units. This is because specific jobs are assigned to individuals and work groups.

5. Coordination: The organization structure serves as a mechanism for coordination and unification of efforts of people. Harmony of work is brought about by higher level manages exercising their authority over interconnected activities of lower-level managers.