10 Benefits of a Good Organizational Structure – Explained!

Some of the beneficial outcomes of optimally designed organizational structures are:

While there are many different structures that organizations can adopt, depending upon the type of organization including whether it is a service organization or a manufacturing organization, a well structured organization has many benefits.

Organizational Structure

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1. A good organizational structure facilitates attainment of objectives through proper coordination of all activities:

It has a built-in system of “checks and balances” so that the progress towards the attainment of objectives is evaluated along the way so that any required adjustments can be made and any new decisions required can be taken.

2. In a good organizational structure, the conflicts between individuals over jurisdiction are kept to a minimum:

Since each person is assigned a particular job to perform, the responsibility of performing that job rests solely with him. It results in traceability of outcomes and the work interdependency of that particular task is reduced to a minimum.

3. It eliminates overlapping and duplication of work:

Duplication exists when work distribution is not clearly identified and the work is performed in a haphazard and disorganized way. Since a good organizational structure requires that the duties be clearly defined and assigned, such duplication of work is eliminated.

4. It decreases likelihood of “runarounds:”

The runarounds occur when we do not know who is responsible for what and we are not sent to the right people in the first instance for getting some work done. However, in a well organized company where the responsibilities are clearly established, this does not occur.

5. It facilitates promotions of personnel:

Since the organizational chart clearly pinpoints the positions of individuals relative to one another, it is easier to know as to which level a person has reached at any given time in the organizational hierarchy. Furthermore since each job is well described in terms of qualifications and duties, the promotional stages can be more clearly established.

6. It aids in wage and salary administration:

A fair and equitable wage and salary schedule is based upon the premise that the jobs with similar requirements should have similar benefits. If these requirements are clearly established and the yearly increments or the cost of living increments for each type of job are properly and clearly understood, then compensation administration policies are easier to implement.

7. Communication is easier at all levels of organizational hierarchy:

Since the lines of communication and flow of authority are clearly identified on the organizational chart, the inter­communication is both clearer and easier and it eliminates ambiguity.

8. A well-structured organization provides a sound basis for effective planning:

Since the goals are clearly established and resources clearly identified, both short term as well as strategic planning becomes more focused and realistic and such planning contains the provision to permit changes to be made in the right direction including expansion and contraction of facilities, operations and activities when it becomes necessary.

9. It results in increased cooperation and a sense of pride among members of the organization:

An employee is given sufficient freedom within the domain of his responsibility and his authority. Since the authority and the extent of exercise of such authority is known, it develops a sense of independence among employees which in turn is highly morale boosting.

10. It encourages creativity:

Because of a sense of belonging and high morale that a well-structured organization develops among employees and also because of clear-cut accountability, recognition of skill and appreciation for their contribution towards organizational growth, the employees develop their own initiative and a spirit of innovation and creativity.

Submitted by : Professor Anastasia, Category : Management, Tag : Organization