A well planned organizational structure results in better utilization of resources. In general, “organizational structure” refers to the way individuals and groups are arranged with respect to the tasks they perform, and “organizational design” refers to the process of coordinating these structural elements in the most effective manner.
A good organizational structure is needed so that:
a) Each individual in the organization is assigned a role, responsibility and necessary authority, each person who is assigned to an activity must know his position, his role and his relationship with others. He is further responsible for efficient execution of his role and his duties and is given the authority to do so.
b) The activities of all individuals are coordinated and integrated into a common pattern in order to achieve the organizational objectives. Organization is needed for the purpose of integration of diverse activities in a cohesive manner.
c) The optimum use of human skill and efforts is achieved. It is said that half of the work is done when you know what you have to do and how you have to do it. A good organization does that. A good organization assigns the right person to the right job and this avoids misapplication of human resources, thus resulting in optimum utilization of employee efforts.