Elements and Importance of Organisational Structure

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Essay Title:
“The Importance and Elements of Organisational Structure”

By Peter Kambona: pkambona@gmail.com

Date: 18 February 2013

Table of Contents
1.0Introduction3
2.0Importance of good organisation structure3
2.1Accountability3
2.2Revenue Growth4
2.3Product Development4
3.0Main Elements of Organisation Structure4
3.1Designing jobs4
3.2Creating a Hierarchy5
3.3Span of Control5
3.4Forming departments and work units6
3.5Coordinating and integrating activities6
3.6Differentiating between positions7
4.0Conclusion7
5.0References8

1.0Introduction
Jones, George and Hill (2011) define organisation structure as referring to the formal systems of task and reporting relationships that coordinate and motivate organisational members so that they work together to achieve organisational goals. There are six elements of organisational structure according to Barney and Griffin (1992:315) which include designing jobs, forming departments and work units, creating a hierarchy, distributing authority, coordinating and integrating activities, and differentiating between positions. Thompson, Strickland and Gamble (2008:363-382) point out that the benefits of having a good organisation structure among others include enhanced accountability, revenue growth and shortened product development. This essay will discuss the importance of a good organisation structure and will also describe the main organisational structural elements.

2.0Importance of good organisation structure
Organizational structure is made of the different elements that create a flow of communication and ideas throughout a company. The employee hierarchy helps to create a chain of command and responsibility. The communication structure of an organization helps ideas and information to flow from one department to the next. Each of these forms of organizational structure serve functions that allow the company to move forward and continue to grow.

2.1Accountability
A company hierarchy serves as a vehicle for accountability within the organization (Thompson et al, 2008). When something goes wrong within a company, the management structure allows the executive team to determine who was accountable for the issue, and then the company can set out to solve the problem. By the same token, a hierarchy structure also allows the company to see where productive ideas are coming from and work to encourage that flow of positive information.

2.2Revenue Growth
The structure of an organization dictates how the company will grow. When a dynamic structure is in place, an organization can grow quickly and accommodate all of the changes that may be associated with fast revenue growth (Thompson et al, 2008). When the organizational structure in place is not equipped to handle rapid revenue growth, it can be overwhelmed and problems will arise. When a company with a good organizational structure increases revenue the company bills get paid on time, invoices are issued to customers without problem and the company is able to make payroll for its employees. A weak structure could mean bills are paid late, invoices are lost and payroll is delayed.

2.3Product Development
A strong communication structure can help to facilitate the development of new products that can keep a company competitive. When communication through the various departments is structured properly, engineers are given the information they need in a timely manner to help bring new products to market (Thompson et al, 2008). When the structure is weak, development gets slowed down and new products take too long to get released. A weak product development structure can leave a company constantly chasing the competition and falling behind in market share.

3.0Main Elements of Organisation Structure
Whatever the case, every type of organizational structure contains certain common key elements or characteristics. As Barney and...
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