The framework which companies use to figure out their management authority, and internal and external communication processes is known as organizational structure. The structure includes policies, duties and responsibilities of each and every individual in the organization. Organizational structure is influenced by several factors, both internal and external. Business owners are responsible for creating the organizational structure framework of their company.
Size is one of the driving factors for a company’s organizational structure. Smaller businesses do not need a vast structure but larger business organizations generally require a more intense framework.
Companies require more managers for supervising employees if the employee base is large. Highly specialized businesses require a more formal and specialized organizational structure.
The company’s life cycle affects the development of an organizational structure. Business owners who usually tend to grow and expand their operations develop an organizational structure to outline their business mission, vision and goals.
Businesses that reach peak performance generally have a detailed and more mechanical organizational structure. This occurs due to the fact that chain of command goes on increasing from the top to bottom. Organizational structure can also be a tool to improve efficiency and profitability. Such improvements may be required as more competitors enter the marketplace.
Business strategies influence the development of organizational structure. High-growth firms generally have smaller organizational structures to quickly adapt to changes in the business environment. Business owners are often reluctant to reduce managerial control in operations.
Smaller firms looking to illustrate their business strategy may usually delay creating an organizational structure. Business owners are found to be increasingly interested in setting business strategies rather than creating an internal business structure.
The external business environment affects the organizational structure of the company. Dynamic environments having rapid and constantly changing consumer behavior are often more turbulent and shaky than stable environments.
Companies that seek to address the consumer demands can struggle while creating an organizational structure in a rapidly changing and dynamic environment. More time and capital can also be spent in dynamic
A good organizational structure allows its workers to focus on creating quality products and awesome services. Productive organizations offer opportunities to its employees to create and use new skills. This allows constant improvement in business operations and ensures that the company maintains an edge to sustain in a dynamic global marketplace. Following are the steps to keep in mind while creating an organizational structure −
Step 1 − Analyze the plans, policies and procedures. Structure the management framework to help make efficient production processes. Align the various group’s performance goals with the company’s strategic objectives. Develop and/or revise the organization’s mission, vision and goals. Keep account of social and economic changes taking place in the external environment.
Step 2 − Keep record of and document the company’s hierarchical structure and do not forget to publish it on the company’s website, via email or in print form. This helps everyone in the company to see the reporting structure, the roles and responsibilities.
Step 3 − It is wise to utilize the resources provided by the Society of Human Resource Management website to learn and keep track of industry trends. Ensure that the business adheres to the rules and regulations, such as annual leave laws or hours of rest required.
Step 4 − Annual survey is an important part. Initiate anonymous response by the employees to gauge environment support for employees. A survey allows to measure employee perceptions about the company and its operations. Annual surveys can let one compare results from year to year.
Step 5 − Identify the areas that need fast improvement to keep an organization healthy and safe for workers. Online tools, such as the Mind Tools Problem Solving Techniques website, can help you create cause and effect diagrams to identify problems.
Step 6 − Employees should be motivated to adapt to change by communicating regularly. Make sure that all of the employees respect and support the people around them. Facilitate cultural diversity, handle workplace conflict and respond to time management policies. Professional development can also enable employees to act and react appropriately in case of turbulences.
Step 7 − Encourage employees to share their skills and knowledge. Make meaningful connections with people who may not work in the same location.
Step 8 − Allow personnel to receive knowledge and mentoring to further their careers. A good organization recognizes and motivates for value of individual achievements. By providing feedback and advice, new personnel can be inspired to take on additional responsibilities.
Step 9 − Encourage performance-based management. Evaluation of employees depending on their ability to achieve their own goals affirm their personal accountability. By retaining and nourishing motivated employees, the company can keep its competitive edge intact.
Step 10 − Use professional and personal skills development programs to help the employees to do their jobs better. Encourage the employees to enroll in and clear performance related exams linked with professional credentials.