Why Do Organisations Need Structure?

Every company has some form of organisational structure – whether it is formal or informal, organisational design is an important and challenging demand on top management because it influences and interconnects the key components of a business with its strategy, goals and guides leadership within an organisation (Newfoundland & Labrador, 2009). In this week’s blog post we aim to uncover some of the integral benefits of having a well-defined and clearly planned organisational structure.

Definition of Roles & Responsibilities

An organisational structure assists in defining the roles and responsibilities of all your staff within an organisation – being able to see “the bigger picture”. By taking the time to define your organisation’s formal and informal structure, you are able to provide your people with an understanding of what should happen within the firm and serve as a guide for employees to know their rights and responsibilities.

Communication

Who is in charge of what? Who reports to whom?

An organisational chart helps to establish efficient communication paths between employees, departments and divisions of the company (Root, 2014). The manager of each department becomes the departmental head or admin, and any information that is relevant to the department is given to the manager. The manager can either act on the information or delegate it to someone within their staff. Information can be effectively distributed through managers rather than trying to contact each individual employee. The manager's understanding of their staff and the structure of their department makes them the ideal person to improve communication to their department.

Authority

Within an organisational structure chart are departments with clear roles and managers (Ticoll, 2004). When a person starts a job they know from day one to whom they will report to. Most companies funnel their communication through department leaders and managers. For example, marketing employees will discuss various issues with their director. The director, in turn, will discuss these issues with the vice president or upper management. Employee development happens at all levels of an organisation. Employees look to the managerial staff to help develop work skills; the managers work with company executives to improve managerial performance; and the executives draw on the experience of company owners for business guidance. This is why competence at all levels is important (Root, 2014).

Accountability

A clearly defined hierarchy creates a conduit of accountability for every project and activity within the organisation. For example, an accounts receivable associate reports to an accounting manager, who reports to the operations manager. If the accounts receivable system is consistently reporting inaccurate information, then you can follow the hierarchy of authority to determine who is responsible for the errors. The accounting manager may be approving payment logs that have errors on them, or the operations manager may be failing to detect a problem with the accounting software during monthly audits of the system. From this, one is able to ascertain the point when and where the mistake occurred, fix it and then allow the responsible person to learn from the experiences (Root, 2014).

Overall

As a manager today, it’s important to not only be aware of the organisational structure in your workplace but also if you don’t have one already, help to create an organisation chart. Not having a clear or thought out structure, especially in larger corporate organisations, can result in unnecessary ambiguity, confusion, a lack of co-ordination among functions, failure to share ideas, slow decision-making, and often a lack of accountability.

Does your business follow an organisational chart? Can you think of other benefits by having an organisation chart in your business?

#performancebasedjobdescriptions #recruitmentstrategy #performanceobjectives #traditionaljobdescriptions #organisationalstructurehierarchyorganisationalrelationships