Company Needs a Structure – driving towards discipline, accountability, adherence and incredible organizational growth
Company structure is the formal and informal policies and procedures used for governing business operations which is a useful tool for management as well. Smaller and home-based businesses typically do not use company structures because, the business owner usually is responsible for completing the majority of business functions. Larger businesses/ companies use an organizational structure to effectively manage business functions and employees. However, it is the method by which a company communicates, distributes responsibility and adapts to change.
The starting point for any organizational design is a realistic company structure that is based on a well-thought-out strategy. If the management team develops a clearly understood strategy and a company structure to accommodate it, the management system has a better chance of being effective. In an effective company structure, there may be hierarchy of senior management, management and mid-level management to run the entire system smoothly. Every positions even from lowest level (e;g- worker) to upper level are integral part of the entire business to achieve company success.
Necessities of structure
It helps in defining the roles and responsibilities of all your staff within a company – being able to see “the bigger picture”. By taking the time to define your company’s formal and informal structure, you are able to provide your people with an understanding of what should happen within the firm and serve as a guide for employees to know their rights and responsibilities.
An organizational structure lays the foundation for how a company operates. It is a set of policies and rules that determines:
• How an organization controls and delegates tasks and responsibilities
• How decisions are made and implemented throughout every part of an organization
• How information flows within an organization
Types of structure
There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure.
1. Functional Structure
Functional structure is set up so that each portion of the organization is grouped according to its purpose. In this type of organization, for example, there may be a marketing department, a sales department and a production department. The functional structure works very well for small businesses in which each department can rely on the talent and knowledge of its workers and support itself. However, one of the drawbacks to a functional structure is that the coordination and communication between departments can be restricted by the organizational boundaries of having the various departments working separately.
2. Divisional Structure
Larger companies that operate across several horizontal objectives sometimes use a divisional organizational structure.
This structure allows for much more autonomy among groups within the organization. One example of this is a company like General Electric. GE has many different divisions including aviation, transportation, currents, digital and renewable energy, among others.
Under this structure, each division essentially operates as its own company, controlling its own resources and how much money it spends on certain projects or aspects of the
Additionally, within this structure, divisions could also be created geographically, with a company having divisions in North America, Europe, East Asia, etc.
This type of structure offers greater flexibility to a large company with many divisions, allowing each one to operate as its own company with one or two people reporting to the parent company’s chief executive officer or upper management staff. Instead of having all programs approved at the very top levels, those questions can be answered at the divisional level.
3. Matrix Structure
A hybrid organizational structure, the matrix structure is a blend of the functional organizational structure and the projectile organizational structure.
In the matrix structure, employees may report to two or more bosses depending on the situation or project. For example, under normal functional circumstances, an engineer at a large engineering firm could work for one boss, but a new project may arise where that engineer’s expertise is needed. For the duration of that project, the employee would also report to that project’s manager, as well as his or her boss for all other daily tasks.
The matrix structure is challenging because it can be tough reporting to multiple bosses and knowing what to communicate to them. That’s why it’s very important for the employees to know their roles, responsibilities and work priorities.
4. Flatarchy Structure
While the previous three types of organizational structures may work for some organizations, another hybrid organizational structure may be better for startups or small companies.
Blending a functional structure and a flat structure results in a flatarchy organizational structure, which allows for more decision making among the levels of an organization and, overall, flattens out the vertical appearance of a hierarchy.
A benefit of this system is it allows for more innovation company-wide, as well as eliminating red tape that could stall innovation in a functional structure. As for the negatives, the structure could be confusing and inconvenient if everyone involved doesn’t agree on how the structure should be organized.
Universal benefits exist from the structures
• Organizational structures can help companies streamline business operations
• Companies can use organizational structure to improve their business decision making process
• As small businesses continue to grow and expand, they may open multiple locations in local, regional or domestic economic markets
• Employees may undergo a training period to improve performance and they learn the company’s organizational structure.
• Companies may also focus on increasing sales revenues and profits from business operations by meeting consumer needs and wants.
Assessing effectiveness of organizational structure
We need to assess the effectiveness of the current and design the future organizational structure. These eight criteria are:
• Strategy/Structure Alignment
• Functional Contribution
• Clarity and Contribution of Individual Roles
• Clarity and Structure of Reporting Relationships
• Appropriate Span of Control and Number of Organizational Levels
• Appropriate Management/Leadership and Technical Skills
• Effective Coordination
• Appropriate Supporting Systems
Why Organizational Structure is Important?
• A restoration company’s organizational structure is what maintains the hierarchy in the business and provides guidance and clarity on specific employee issues, such as managerial authority. Its purposes are to:
• facilitate internal communication
• make business decisions
• perform required tasks
• provide exceptional customer service
• and keep the company running smoothly.
Creating an Effective Organizational Structure for your Company
Determine what your company’s organizational structure looks like today. Create an organization chart that lists all your current key functions and management positions. Include the order in which they supervise and are supervised by others, and titles and job descriptions. Review this chart and determine whether your employees know their exact duties, who they supervise, and whether they are being used to their maximum potential.
Mahabub Sadik – HR manager at icddr,b
We like this Mr. Sadiks post. We hope it will help few companies to look over their company structure.
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