Organizations are established to attain different goals related to different interest groups. These goals are attained through the mutual contribution of all related stakeholders. The effectiveness and efficiency of the organization help in providing continuity and success to the business firms. The importance of organization can be realized in many ways, among which some are discussed as follows:
(i) Facilitates Administration: An efficient and sound organization makes it easy for the management to relate the flow of resources continually to the overall objectives. A sound organization helps in providing an appropriate platform where management can perform the functions of planning, direction, coordination, motivation, and control.
(ii) Facilitates Growth and Diversification: A sound organization helps in the growth and diversification of activities. The growth is facilitated by a clear division of work, proper delegation of authority, etc. In short, it helps in the organizational elaboration. In case of reasonable expansion of the organization, the functional types get replaced by a more flexible decentralized organization.
(iii) Permits Optimum Use of Resources: The optimum use of technical and human resources gets facilitated with sound and efficient organization. The organization can have the facilities of the latest technological developments and improvements. It also facilitates optimum use of human resources through specialization. The people in the organization get appropriately trained and get promotion opportunities. A sound organization provides all the desired potential and strength to the company to meet future challenges.
(iv) Stimulates Creativity: Specialization in the organization helps individuals in getting well-defined duties, and clear lines of authority and responsibility. It encourages the creativity of the people. The sound organizational structure enables managers to concentrate on important issues where their talent can be exploited to the maximum.
(v) Encourages Synergy Effect: When one ‘efficient’ team member is able to persuade and motivate all other average team-members to work more efficiently, resulting in the greater performance of the group than what it was before the motivation of all other employees, the effect is known as ‘synergy effect’ A sound organization helps in adopting efficient methods of selection, training, remuneration, and promotion for employees. It makes people work in a team with synergy. The organization helps in providing factors, like job rotation, job enlargement, and enrichment to its employees. A sound organization provides higher job satisfaction to its employees through proper delegation and decentralization, a favorable working environment, and democratic and participative leadership. It enhances the mode of communication and interaction among different levels of management.
(vi) Transfer and Adaptation of Technology: Any organization involved in the ongoing process of research enhances its level of services. In this course, it adapts the latest technologies available in the market and indirectly it also imparts these technologies to the society through its members.
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