What Are the Functions of Organization in Business?

Businesses use organization to help employees understand how their jobs relate to the company's business strategy. How employees relate to one another and to their supervisor dictates the organizational structure of a business. Organization can be achieved through intentional design, or a company might evolve as it establishes its business position in the market.

For a large business, one function of organization is to achieve an economy of scale. A small business may find it difficult to achieve this benefit, such as ordering supplies at a bulk discount or selling products by volume to consumers. However, a small-business owner can arrange employee tasks so that each person performs a necessary function. The structure may require that employees wear multiple hats. As long as tasks are completed by employees efficiently and customer needs are met, the structure can support the business's mission.

A small business must adapt its organizational structure to fit shifts in the market, such as radical changes in a supply network or types of consumers served. According to Harvard Business Review blogger Gill Corkindale, "When organizational strategy changes, structures, roles and functions should be realigned with the new objectives." A business owner can change the business strategy but cannot afford to overlook this concept of realignment. If an organization cannot adapt its structure, it could lose its market share to other companies who can adapt.

The roles of employees are not the only factors to consider in choosing how to organize your small business. As the business owner, you can examine workflow arrangements. You want work tasks to be completed through a logical progression, flowing from one worker to another. You also can analyze all of the steps in the workflow of a task and eliminate duplicate steps and unnecessary work. you want to be sure that the work-flows you create also support the goals of your business.

Organization also serves the function of information sharing. You want employees to use the most efficient means for communicating about their work tasks and projects. For example, you can organize workers on a shared email system and instruct them to use email to report the completion of a task or project to their manager or request assistance from another worker.

For some kinds of work that your employees do, you should implement managerial controls, which comprise another function of organization. You can establish control in different ways. For example, assign managers to oversee all work outputs of their direct-report employees. Another approach is to create managerial controls in workflow processes. Managers inspect work tasks at specific points in workflow processes. Managerial controls should support your business goals.