Organizational Structure and Its Importance in Business

Organization: A Key Phase in the Administrative Process

Defining Roles and Structure for Operational Success

Organization is the second phase of the administrative process. Through it, the system determines the division of labor and the structure necessary for its operation.

With its principles and tools, it establishes levels of authority and responsibility and defines the functions and duties of units, individuals, or groups of people.

Who will do what? How will they relate to others? By what authority? In what physical environment? The organization leads to the last detail what planning has pointed out regarding how a social organism should be.

Organization is continuous, as it is subject to constant change.

Benefits of Effective Organization

• Reduces or eliminates duplication of effort
• Determines roles and responsibilities
• Identifies and eliminates inefficient activities
• Reduces costs and increases productivity

Organization is a means, not an end, since it is a phase of the administrative process to achieve the purposes of a social organism.

Understanding Organizational Entities

Organizations are:

• Social entities driven by goals
• Activity systems designed as deliberately structured and coordinated
• Linked with the environment

Grouping the activities necessary to achieve certain goals, assign each group an administrator with the authority to supervise and coordinate both horizontally and vertically throughout the company's structure.

Structure of the Organization

The organization and structure originate from the need to set levels of authority and responsibility within the company.

The purpose is to organize certain objectives; organization without goals is an unproductive effort.

The structure serves to connect individuals to each other and to provide the formal communication that is needed in all organizations.

Key Components of an Organization

• Leadership: Directs and coordinates the various parts of the organization. Provides guidance, strategy, goals, and policies.
• Technical Support: Includes engineers and researchers.
• Administrative Support: Includes human resource activities.
• The Technical Center: Comprised of people doing the core work of the organization. It is where the processing of inputs and outputs takes place.