What is the importance of an organisation?


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Phil Newton answered

The importance of an organisation really depends upon the size of a business. A very small business is much less likely to depend upon the structure of an organisation for success than a large business. 

I've outlined some of the reasons for this alongside the benefits of an organisation below.

Small businesses and the importance of an organisation

Although it may seem pretty obvious that all businesses benefit from becoming an organisation, this isn't actually the case with many smaller businesses.

What's known as a "tall organisation" works on the basis that a large number of employees have a variety of individual roles.  Each individual can report to someone higher within the organisation. 

The significant factor that reduces the importance of a tall organisation within smaller businesses is the fact that employees will often have a variety of different roles to perform on a daily basis, and will commonly report directly to the owner of the business. 

In this instance, there is much less need for an organisational structure, as communication between employees and the owner is much less complicated.  There is no confusion about individual employee's roles.

Larger businesses and the importance of an organisation

The importance of an organisation is greatly increased with a larger business.  This is due to the fact that there are a lot more employees fulfilling individual roles, and as such, management positions are filled to oversee different departments. 

It would be very difficult for an owner of a business with 1000 employees to know at all times which particular employee was responsible for each business task.  In this case, employees would report to their department manager, who would then convey that message to either a manager above them, or directly the the owner.

What this ensures is that communication isn't misinterpreted or lost, and enables the performance of different departments to be analysed individually.

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