What Is Organizational Management? (Importance and Steps)

By Indeed Editorial Team

Published May 26, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Planning, organizing, and executing the leadership and resources of a company are critical factors in its success. Organization management (OM) refers to leading a business and managing its assets and resources. You can assist organizations in achieving their goals more efficiently by understanding how OM works and why it's important.

In this article, we explore what organizational management is, discover its importance, review how to implement the strategy in the workplace, and answer a few frequently asked questions about the topic.

What is organizational management?

Organizational management is a strategy that enables optimum resource utilization in the workplace through meticulous planning and control. The primary goal of OM is to ensure that teams of employees work collaboratively towards a common goal. OM can help business leaders develop plans and procedures to deal with challenges and determine solutions that help the companies and employees achieve their goals.

A company's OM strategy involves all its processes and resources required to achieve its objectives. Each business uses organizational management differently, depending on its unique circumstances. A company implementing OM typically develops a plan, monitors it, and adjusts in response to results and feedback to improve overall performance. OM also helps employees complete their tasks within the allocated timeframe.

Related: Definition of an Organization Type (With a List of Benefits)

Why is OM important?

OM is important because it helps optimize a company's financial resources, reduce costs, and increase revenue. Businesses can use OM to divide responsibility among divisions and gain a more comprehensive understanding of the various functions and resources for each department. OM also enables employees to share information and communicate internally within multiple departments. Through OM, managers provide employees with constructive direction. Employees can better understand their roles, responsibilities, and the organization's expectations using this method. The following are a few benefits of using the OM strategy:

  • Establishes clear goals for all employees

  • Defines the roles and responsibilities of each employee in the organization

  • Creates processes for achieving company goals

  • Evaluates the employee's and organization's performance

  • Promotes constructive feedback from all employees and departments

  • Calculates the most efficient use of resources

  • Adapts to various situations and environments

  • Provides security to employees

  • Coordinates activities between different departments

  • Enhances employee satisfaction and loyalty

  • Improves the working environment

Related: The Importance of Leadership and Culture in Organizations

How to implement OM within the workplace

Regardless of profession or industry, the following steps can help you implement OM strategies at the workplace:

1. Define and summarize your goals

It's important to know what the desired outcome is before beginning OM. An effective goal is typically measurable, such as reducing the percentage of on-the-job injuries or increasing productivity by a certain percentage. Establish goals based on the strengths and abilities of the company. For example, resolving communication challenges between departments, teams, or employees can be a necessary company-wide goal if production is low because of poor communication on projects.

2. Measure various aspects of company performance

Establish your organizational goals using defined numbers. For example, by ensuring employees complete a specific number of projects each month, you can increase the productivity. To improve safety, you can also emphasize rewards for employees. For example, you may provide events or special dinners once the team has had three months without an accident.

3. Identify existing or potential challenges

The policies, rules, and procedures of the workplace can have a significant effect on day-to-day operations and the ability to reach goals. If you're seeking to improve specific workplace challenges with OM, it's critical to investigate the potential causes. For example, you may find you can improve employee safety by enhancing employee training or reviewing the current condition of the equipment.

Solving company problems is key to meeting goals. For example, if you discover inadequate training is causing safety concerns, you may create a new training program to raise safety standards and create a more capable workforce.

Related: What Is Management? The Definition, Functions, and Levels

4. Review metrics and findings

While progressing through the OM process, it's imperative to review findings and metrics throughout the entire operation. Metric data is relevant at the start of the process, during changes, and after the completion of the changes. You can use the data to understand how the changes are affecting employees and the organization. Here are three areas for evaluation:

  • Behaviour changes: It's important to observe how employees and managers respond to changes by measuring the correlation between various aspects of the change. For example, an increase in meetings to communicate project progress can have a noticeable effect on employee satisfaction and productivity.

  • Treatment acceptability: The term treatment acceptability refers to evaluating whether team members are comfortable with change and if they're open to accepting further changes. Satisfaction with the changes increases the likelihood of employees adhering to the procedures.

  • Cost-benefit analysis: Performing a cost-benefit analysis provides an assessment of whether the costs, such as resources and employee time, are justifiable. For example, purchasing updated equipment may reduce employee injuries throughout the year and lowering the cost of workers' compensation can offset the cost of new equipment.

Organizational management FAQs

The following are some frequently asked questions about OM:

What is organizational structure?

A company's organizational structure connects and aligns parts of the company, enabling it to function at its highest level. An organization's success in achieving its goals depends on its type of structure. It's crucial that leaders understand the characteristics, benefits, and limitations of the different organizational structures to accomplish strategic alignment. When organizations apply all the following four elements, quick and strategic workplace adaptability is more likely:

  • Leadership: Individuals lead a team to develop strategies and monitor results.

  • Organization: This is the method of incorporating structure, processes, and operations into a strategy.

  • Jobs: Jobs refer to the employee roles and responsibilities within the organization.

  • People: This is the experience, skills, and competencies required to execute strategies effectively.

Related: Understanding a Matrix of Organizational Structure

What is organizational design?

An organization's design aims to implement structures and systems that align with its core strategy. Typically, the process of organization design or redesign occurs when a business grows or downsizes. Changing leadership, strategy, or an organization's broader environment can also cause organizational design or redesign. By creating an environment where people can work efficiently, good organizational structure and design improves communication, increases productivity, and inspires innovation. The following benefits may result from effective organizational design:

  • Improve efficiency

  • Accelerate decision-making

  • Enhance the quality of goods and services

  • Increase profits

  • Improve customer relations

  • Promote safer working conditions

  • Motivate employees

What are leadership styles?

There are a variety of ways of leading for business managers. Most managers have a dominant style that they use, while sometimes incorporating other styles as necessary. A company may employ managers with one primary style or may find managers with multiple leadership styles. There are six commonly recognized styles of leadership, including:

  • Directive leadership: A directive leader has a straightforward approach and expects employees to follow directions without question. It's a authoritarian approach and seen as outdated in modern business.

  • Visionary leadership: Visionary leaders motivate individuals at all levels, from the highest levels of management to the most junior departments, to work together for a common goal.

  • Affiliative leadership: Affiliate leaders build trust among employees through their daily activities and are often present with their team during the workday. This type of leadership is ideal for positions that require a lot of negotiations.

  • Participative leadership: Participative leadership is similar to a democracy because the leader involves employees in the company's goals and growth. To be effective, this strategy requires the team to be competent and self-aware enough to stay focused on the company's vision.

  • Pacesetting leadership: Pace setting leaders work well in new or inexperienced departments. They typically lead their departments with the most sales, productions, or financial negotiations.

  • Coaching leadership: The goal of coaching leadership is to build a team's skills and confidence. Like a sports coach, coaching leadership attempts to discover each team member's strengths and weaknesses and then creates action plans to enhance strengths while improving weaknesses.

If a leader is looking to hire people for a specific department, it's important to look at the individual leadership styles. For example, a pace setting leader may thrive in a highly competitive sales department rather than on an assembly line, as they always strive to exceed expectations.

As another example, visionary leaders inspire their employees, making them ideal leaders for creating company strategies and conveying mission statements to the public and private members of an organization.

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