A formal organizational structure is a necessity for any big or small business. It may seem unnecessary for small businesses to draft a formal structure because the workforce is small but without a structure.
Even if a small business may function without a structure, a company needs a good structure for it to grow. Here, you would understand why Organizational structure is important for your business.
Significance of having an Organizational Structure
Organizational structure provides guidance to employees and managers, making reporting relationships and the flow of information clear at all levels of the company. Structures also increase the efficiency of operations and help you know who you are reporting to. When an employee knows who he is reporting to, the productivity level is likely to increase.
Merits of organizational structure
The structure is important for growth: If a company brings too many employees onboard without a clearly defined reporting relationship then there would be confusion and inefficiency at all levels.
When a company becomes a medium-sized or large entity, it is even more important that it has a formal structure.
Demerits of organizational structure
When a company is still small and in its formative stage, taking time to create a formal structure can be a drawback. At that early stage, employees need to feel more like partners in the company’s vision than rank-and-file employees. Placing your employees in a rigid and defined role creates rifts between the business owner and employee.
Strengths and Weaknesses of formal and informal control structures in an organization
Formal Organizational Structure
A formal organizational structure is built upon different levels of management. The people at the top of the structure have certain decision-making responsibilities and power. The middle managers and workers have less power than those at the top management. In a formally organized company, there are defined job descriptions that each employee would abide by. Businesses of any size can operate with a formal structure.
Informal Organizational Structure
An informal organizational structure operates through networks of people. This is more applicable to small businesses and they are more likely to succeed with the informal structure. While large businesses may be better off with the formal structure.
Does your organization have a structure? Whatever the answer may be, you need to join Bixex to discover talents that can help your business grow. If you need your business to grow then you need a structure.