THE AUTHOR:
What is a ‘Company Structure’?
One of the most critical tasks for any CEO is to create and maintain an effective company structure. It is necessary to ensure the correct distribution of tasks and responsibilities, minimise risks and increase productivity.
In this article, I will talk about a company structure, how to develop and implement it, and what mistakes you can make during this process.
If the Company Lacks a Structure
In the context of a systematic approach to business, a lack of structure can lead to several problems:
1. Without a clear division of tasks and responsibilities, employees may have difficulty understanding what is required of them and how they can contribute to the company’s development.
2. The lack of an organisational structure can lead to duplication of tasks and inefficient use of resources.
3. A lack of organisational structure can lead to communication problems. Without clear roles and responsibilities, employees may have difficulty understanding who to contact to resolve specific issues.
To avoid these problems, a company must develop and implement an effective organisational structure.
Company Structure Advantages
A properly designed and implemented company structure as a systematic approach to business has many advantages. I will list the main ones below.
1. It defines the development direction
The company structure should define all the positions and departments necessary to achieve goals. Thus, the company structure helps to determine the direction of business development and allows you to more accurately define the roles and responsibilities of each employee in the process.
2. It shows the functions of each employee
The company structure helps distinguish each employee’s functions and tasks. It allows you to identify weaknesses in work and improve productivity. Moreover, each employee understands their duties and responsibilities, which reduces the possibility of conflicts and mistakes.
3. It facilitates data structuring
The company structure helps to organise the knowledge base, such as the names of certain types of transactions, accounting and document storage. It makes it easier for employees to find the information they need and improves the knowledge and experience exchange within the company.
How to Implement a Company Structure
Developing and implementing a company structure is a complex and essential process requiring all participants’ time, effort and understanding. An adequately organised company structure can ensure that all departments work effectively and achieve a common goal.
To do this, you need to follow the following steps.
1. Define the company’s product
The first step in developing a company structure is to define the company’s product and purpose clearly. It is necessary to understand what the company offers customers and what functional areas it needs to do so. Based on this, you can divide the structure into functional areas and products each unit will perform.
2. Build the first company structure iteration
Next, you need to make the first iteration of the company structure. It’s a cycle in which you create a prototype of the structure, which is tested and improved until the desired result is achieved. Use any tool that is convenient for you, from a notebook to particular software. At this stage, you should identify the main functional areas of the company and the products for each of them.
3. List out the products for each functional area
It will help you better understand how each function interacts with the others and how they can contribute to the overall goal. For example, a product for the HR department may be a new employee who has passed the probationary period and is already performing their duties. For the marketing department, such a product would be targeted leads transferred to the sales department, etc.
4. Communicate the need for structuring to employees
Explain why structuring the company is necessary and how it will help improve productivity and ensure more efficient work.
5. Study competitors’ experience
Look at how other companies in your industry are organised, how they have developed their structure and what products they offer. It can give you valuable ideas and help you avoid mistakes.
6. Motivate employees according to the function they perform
Employees must feel that their work is important and contributes to a common goal. You need to give them clear goals and objectives and support them.
7. Establish rules for dealing with standard work issues
Establish regulations and processes for which tasks should be handled at each level of the hierarchy.
Mistakes Made When Designing and Implementing a Company Structure
Many CEOs make common mistakes when designing and implementing a company structure. These can result in a lack of efficiency and unjustified costs. Below, I’ll discuss the most common mistakes and recommend how to avoid them.
• Double reporting
Most often, double reporting occurs in companies with a matrix structure. When an employee reports to two managers, conflicts and task mix-ups appear. The solution is to clearly define roles and responsibilities for each manager and employee and create a system that avoids confrontations.
• Too many functions for one employee
When an employee is responsible for too many different functions, it leads to overload and reduced productivity. The solution is to define specific tasks for each position and assign them to the appropriate specialists. By doing so, employees can use their time and resources more efficiently.
• Ignoring how to use the system
This problem occurs when employees are not familiar with the principles of the company structure and do not know how to use it. The solution is to train employees to work with the company framework during onboarding. They need to understand how the structure works to use it to achieve the company’s goals.
In conclusion, the company structure is an important element of a successful business strategy. If a company does not have a structure, it may face problems related to organisation and management. However, by using a company structure, you can gain many benefits, such as increased efficiency, better communication and reduced errors.
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