It helps determine how your products are produced, distributed, marketed and sold. A centralized organization concentrates power at a single point; that could mean a single person or a board.
Entrepreneurs and executive leaders for large companies understand the six elements of organizational structure and the critical role those elements play in developing and sustaining a successful enterprise.
Because your human resources - the people who work for your company - are your most valuable commodity, the six elements are fundamentally tied to workforce development and planning.
The elements range from job design to configuring organizational hierarchy to determining how certain positions differ from others. Job Design Job design begins with determining who does what.
Focus on the division of labor, meaning certain specialization areas such as accounting, sales, purchasing, transportation and human resources.
In all fairness, human resources should be involved in constructing the organizational design, because so much of the design is focused on workforce planning.
Job design also entails establishing teams and work groups, as well as the cross-functionality of certain jobs. For example, there may be cross-functionality between your in-house legal counsel and the HR director, particularly if you hire counsel who is well-versed in labor and employment law.
Job Grouping Here is where you sketch the organizational design - create an organizational chart so that you can visualize where employees work and in which departments. The job grouping element of organizational structure enables illustration of the office of the director, operational departments and administrative departments.
An example is to determine the group and qualifications of staff who support the director - the typical configuration might include a vice president, chief executive officer, chief operating office, chief financial officer and administrative support for these roles.
Departmental Design Departmental design is actually your operational design. Which departments are necessary for you to run your business? The answer to that depends on the type of business you envision.
For example, if you are a provider of goods to the federal government, you will require a governmental sales executive, who may be a business development expert, since government contracting is largely proposal-based.
In addition, your departmental needs would include, at a minimum, accounting, quality control, shipping and transportation. If you are a service provider, you are unlikely to need shipping and transportation; however, you will need a program manager or a project manager who monitors the allocation of resources, namely, the subcontractors or consultants who deliver services to your clients.
Establishing Organizational Hierarchy Now that you have established the organizational leadership, as well as the roles and departments, and you have identified your company as a product or service provider, the next logical step in developing the organizational structure is to determine who reports to who.
Some organizations have nonsensical reporting relationships, which is confusing for both employees and customers. In this case, it could make sense for the purchasing manager to report to the CFO, since most of purchasing is dependent on company budget. Another example is whether the HR director should report to the CEO or to the in-house legal counsel.
Either one could be logical, but be sure your in-house legal counsel, in this instance, is qualified to oversee HR operations and strategy. Authority Designations Avoid having too many people who have conflicting or duplicate authority. For example, in designating authority - the fifth element of organizational structure - determine how you delegate authority.
In this case, you are delegating certain levels of authority to the accounting manager and the CFO, as well as the duties that come with that authority.
Much of this element of organizational structure depends on the type of business and on the interdepartmental communication.
The operations of these two departments are inextricably tied to one another, which requires some degree of coordination.
It is up to you to design the organizational structure that requires collaboration among and between departments and staff.Creating an organizational structure for your company enables your communication path, workforce planning, leadership grouping and ultimately, .
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Designing the Organization: From Strategy to Organizational Structure from University of Illinois at Urbana-Champaign. In this course you will understand how firms are organized, what factors must be taken into account in making critical design.
Departmentalization, Organizational Authority and Job Design: Dakkota Integrated Systems - Organizational structure, along with the different elements it encompasses, is a significant factor in the overall design of any business.
The organisational structure in any business is important. To survive, all organisations have to be able to accomplish tasks and this requires carrying out certain duties.
Structure splits the tasks of the whole organisation into smaller and more practical chunks, and allocates them to sections of the organisation that are held responsible for.