Introduction to organisational structures

• All businesses, no matter how small or big, are organisations
• An organisation is a group of people brought together to fulfil a particular purpose
• All the members of the organisation combine their individual efforts, time and skills in order to achieve the organisation’s goals and objectives
• In the case of a business objectives might include:
  1. Profit
  2. Survival
  3. Growth and Expansion
  4. Provision of a service etc
• All organisations are structured in a certain way
• This means that the individuals that make are the organisation are systematically/logically arranged in a certain pattern/order or hierarchy
• An organisation’s structure refers to the relationship between its members,
• The authority of each member, communication lines,
• the organisation’s hierarchy,
• the roles and duties of each member and
• how tasks are allocated within that organisation.
• Organisational structure-The typically hierarchical arrangement of lines of authority, communications, rights and duties of people within the organization.
• A drawing of an organizational structure is known as an organisational chart

The need for an organisational structure

• Small businesses such as typical sole traders and startups have no particular need for an organisational structure
• The sole trader is the sole authority and the few employees that exist report directly to him/her
• He/She is in direct command of all his/her employees
• They communicate directly
• As a business grows for example into a Partnership relationships become more complex
• To avoid confusion,
• For example what would an employee do after receiving two contradictory commands from two different partners
• There is need for a formal organisational structure,
• Organisational structures become essential as businesses grow bigger
• There is also a need for these structures to be flexible so that
• They can suit each business organisation and help it achieve its objectives and
• Suit the business’s environment and needs at any given time.
• A flexible structure ensures that the right people are where they are needed and can do most good without hinderance

Importance of organisation structures

• They help with:
  1. organising and allocating tasks
  2. Coordination of activities
  3. Formulating strategy
  4. Controlling activities
  5. Make it clear who reports to who thus eliminating confusion
  6. Makes clear what each individual’s duties, authority and responsibilities are
  7. Makes it easier and practical to be able to evaluate each individual’s performance based on their stated authority, duties and responsibilities
  8. Makes clear what communication channels to use for a given case
  9. Give members a sense of purpose and direction

To access more topics go to the O Level Business Notes page.