The way a business is organized has direct effects on its effectiveness. A well thought out and strategic organizational structure of a business simplifies reporting relationships and promotes good communication, resulting in competitive products and services, and efficient workflow.
Structuring an Organisation
As a business grows in size, numbers, and responsibilities, the management should ensure to organize its people so that they know their aims and objectives within the organization. Organizational Structure also helps people of the company to complywith the company policies and ethics.
The people behind organizational structure:
In most companies, the board members or the senior members such as CEO, President, VP or the General Manager determine the organizational structure that would suit bestfor the internal operations, productiveness and chain of command. The reporting relationships can be both vertical and horizontal.
Determining the best organizational structure can be done by considering the following aspects:
1. The functional departments of the business
- Accounting
- Human Resource
- Marketing
- Operations
2. The functional groups of the work process
- Marketing and product development
- Marketing and media etc.
- Production and delivery
3. Any natural or ad-hoc groups, project units or teams
Organizational Structures of Business That Board Adopts
There are five common organizational structures that most business setups adopt:
1. Matrix Organizational Structure
- Vertical and Horizontal reporting levels
- Multiple job roles – members of different functions working together for a new development.
- Example: Engineer working for song recording also working with the album publishing team
- Pros: Employees take responsibility for their department as well as other organizational projects
- Cons: Work priority becomes an issue when dealing with two different managers
2. Product Organizational Structure
- Structure is formed based on specific product type
- Reporting structure of executive is formed by the product line
- Example: Kissan product executive responsible for every product with Kissan label – Jams, Sauces, Squashes, Crushes etc.
- Pros: Products can be organized by categories and create completely separate process
- Cons: More responsibility for executive for overseeing quality of different products
3. Functional Organizational Structure
- Most common structure where groups are created by specific functions performed.
- Common departments are considered such as Human Resource, Accounting, and Sales
- Organization of each department is independently operated
- Example: Managers of HRD, Operations, and Sales report to one General Manager
- Pros: Functions are overseen by experts in the field
- Cons: Department centric; focus on own department and no support from and to other departments.
4. Geographical Organizational Structure
- Covers a number of geographic regions
- Mainly structured to support logistic demands and fulfill different geography’s customer needs
- Reporting is central and suitable for business operating in multiple regions, states or countries.
- Example: Branch managers reporting to a south zonal officer, who reports to head of all zones.
5. Customer Organizational Structure
- Customised service approaches and form structures based on customer expectations
- It can be both ad-hoc or hierarchical structure
- Examples: In hospitals structures are created based on out-patients and in-patients or companies that are into specific project development.
- Pros: Need centric and specializes in that particular customer request
- Cons: Cannot serve different customer types and needs.