Implementing a well-thought-out organizational design is crucial to the success of any business. Let’s take a look at a few of the reasons why organizational design is important:

It creates clear lines of authority. Every employee has at least one person of authority that s/he must answer to. Even the CEO of a large public corporation is responsible to the authority of the company’s stockholders and board of directors. We’ll discuss the concept of authority in more detail later, but it’s important for everyone in an organization to know who his/her supervisor is. A strong organizational design makes it plain.

It improves communication within the organization. Let’s say you’ve just started a new job at a local clothing store. A customer comes in and asks you when the next shipment of a certain brand of jeans will arrive. You don’t know the answer, but because the business has a clear organizational design, you know exactly who your direct supervisor is and can get the answer to the question quickly without having to ask several other employees. In this case, good organizational design helped communication to flow smoothly within the business.

It encourages innovation. When a business’s employees enjoy an excellent flow of communication, they are more likely to share ideas and help each other solve problems. This spurs innovation, meaning the creation or discovery of something new—perhaps a new product, a new process, or a new strategy. Can you think of a time when you thought of something new or figured out a workable solution because you were able to communicate your thoughts with others?

It increases productivity. When employees know what their jobs are, know to whom they report, have good communication with their colleagues, and work in an innovative environment, it’s natural that they will be productive. Without a strong organizational structure, resources are wasted as employees attempt to figure out who’s in charge and what’s going on.

It allows a business to better compete. Increased innovation and productivity make a business more competitive. An innovative organization comes up with new products and ideas before competitors do. An organization with high productivity keeps costs down and is more likely to be profitable. In addition, a well-structured business can better attract and retain high-quality employees who can keep the business competitive for years to come.

To learn more about the benefits of good organizational design, read this article (Links to an external site.)Links to an external site. by Smriti Chand titled “10 Benefits of a Good Organizational Structure—Explained!”