The Importance and Benefits of Organizational Structure

Author:

Aaron Westbury

Senior Consultant

Managing a business is a lot of work. It is easy for business owners to be pulled in a million different directions, taking up all of their time and making their life far more chaotic than necessary. Organizational structure is a way to reduce the burden on the owner. In fact, a successful organizational structure allows the business to essentially run itself daily, allowing the business owner to focus on scaling their company and making big picture decisions. This review discusses the importance and benefits of organizational structure for businesses within the service industry. 

What is organizational structure?

Organizational structure is the system in which a business delegates responsibility, carries out work processes and communicates. It provides consistency and a level of day-to-day predictability with work operations. Without organizational structure, employees may not succeed in their role due to not understanding responsibilities or bad work processes. A healthy organizational structure allows the company to run smoothly. This leads to improved performance among employees and the ability to make better decisions in regard to the future of the company. 

Why organizational structure is important

Organizational structure is the foundation of your business. It refers to the way the company runs on a daily basis. Every business has risks. The risks become greater, however, if your company has a bad organizational structure. These risks may include:

  • Poor communication
  • Reduced productivity
  • Low employee retention
  • Poor customer service
  • Inability to scale the company
  • Poor decision-making

Often, these issues lead to conflicts in the workplace as well. Utlatimely, the final result from a poor organizational structure is reduced profits. If there are signs of concerns, then addressing them promptly is important. This should include empowering employees with the resources and tools they need to learn and succeed in their role and continually finding ways to adapt in an industry that constantly changes. 

The benefits of organizational structure

The absence of organizational structure often leads to business failure or the inability to scale the business. The benefits of organizational structure, however, include the ability to make sound hiring decisions, successful employee training and improved work processes, among other notable benefits that are discussed below. 

Understand your company needs

An organizational structure involves clearly defining roles. This includes understanding your company needs, such as what positions you need to fill, what materials, tools and resources you need, etc. With sound structure for your business, you can easily assess breakdowns in your work processes and areas where your company is not performing well to continually reassess your company needs. This allows you to make better decisions to improve workplace culture, employee happiness and the overall customer experience.  

Helps with employee onboarding

Employee onboarding is crucial to company success. In fact, one of the main commonalities the top one percent of businesses have is the ability to train employees and empower them to succeed in their role. When you have a sound structure with your organization, you can easily onboard new employees, which can reduce employee turnover and allows for a better work culture overall. It also allows you to better assess employee performance as well. 

Improves workflow and efficiency

Bad work processes lead to inefficiency within your business. Often, work gets duplicated if employees are unfamiliar with their job role within the company or if you do not have the proper system in place to record information. On the other hand, a healthy organizational structure allows for proper record-keeping and effective processes. 

Allows for better company communication

One of the main signs of a poor organizational structure is bad company communication. This can lead to duplicate work, slow work process, poor workplace culture and poor customer service. Establishing an organizational structure allows for easy communication between departments. This can include the utilization of platforms such as Slack. If there are breakdowns in communication, then you should be able to detect and properly fix them when there is a structure within your organization. 

Eliminates the need for micromanagement

Business owners that do not have an adequate workplace structure may feel as if they need to manage daily operations. Micromanagement can lead to a decrease in your employee retention rate, leading to the need to continually hire and train new employees. It also takes time away from your ability to focus on more important aspects of your business. Businesses with organizational structure do not have a need to micromanage as the company can operate smoothly with little oversight from the owner. 

Improves the customer experience

The customer experience should be the primary focus of any business. If your organization cannot operate efficiently and your services suffer as a result, then you are likely to see a decline in customer satisfaction. With good structure, you can improve your business reviews, which can increase the number of new customers and subsequently help you scale your business. 

Increases the likelihood of company growth

Your company is unable to grow if you are constantly having to manage daily operations, recruit and hire new employees and deal with the soft costs related to broken processes. Through technology, automation and improved employee training, you can focus your sights on company growth and sustainability. You can also create more time for yourself to enjoy the things you love away from the office as well. 

How to create an ideal organizational structure

The goal of an organizational structure is to ensure everyone within the workplace understands their role and is in a position to succeed each day. Work processes break down when employees feel unprepared or are not sure of their responsibilities. You can create an ideal organizational structure by assessing each area of your business and assessing where improvements can be made. Through the use of software, marketing tools, data and analytics technology and more, you can create an organizational structure that works. 

FlowPatterns provides software to help you establish organizational structure

Is your business lacking ideal organizational structure? If so, then get in touch with us at Flow Patterns to find out how a business management platform can help you improve workflow and business operations and establish a successful structure within your organization. 

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