You will need to sit with top management and work out the functional demarcations first. E.g. HR/ Operations / Finance / Facilities/ Logistics etc. Even under operations there could be various verticals that you will have to specify.
At the same time, you will need to draw up a reporting structure in a pyramid form. This can be a top down approach so that at every stage there is clarity as to who is the reporting head and who are the people reporting to that head.
The designations and managerial levels will have to be then decided by top management since it is possible that different departmental heads would have different skills sets, experience and involvement and they would have be suitably differentiated
Hope this broad outline will help you draw up a rudimentary organizational chart and then be able to suitably tweak it to meet the management’s expectations.
4th June 2010 From India, Mumbai
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5th June 2010 From India, Lucknow
The organization structure is an enabler to achieve the business strategy. Therefore, you should first develop the business strategy and then work on the structure. Some organizations make the mistake of developing the structure independent of the business strategy which should be avoided.
Similarly, before working on the structure, you should decide about the the number of levels in the organization and the functional verticals.
The structure should be drawn from top to bottom. The key levers of the strategy which will make or mar the success of the organization should be adequately manned at the at the senior level in terms of the relevant competence and level of the person heading it.
To start with, draw the first level structure i.e of CEO and his reporting managers and then unfold every department in terms of level and number of people. The suffix of each title should reflect the broad responsibility of the slot.
A comprehensive organization structure would have job description and person specification for each slot.
The structure should be developed jointly by CEO and HR and for the functional verticals concerned heads should also be involved.
The structure specifying the number of people specially at the lower levels should be based on assessment of the work load through a suitable job evaluation or work study.
Thanks and Regards
J C Jhuraney
5th June 2010 From India, Calcutta
As you may know, there are three main types of organizational structure: functional structure, Divisional structure and Matrix structure. Each structure has its own strong and weak points.
In the functional structure, above, the employees are working in departments based on what they are doing i.e. we have engineering department, maintenance department, finanance department, research department, Warehouse department, purchasing department. This structure enhances the experience of each function. For example, all the maintenance engineers are working in the same department and thus they will exchange knowledge and support each other. This structure saves us money because of the economies of scale. This structure makes the coordination between different department more difficult than other structures. It also does not allow for flexibility becasue of the centralization.
Divisional structure divides, shown above, the employees based on the product/customer segment/geographical location. For example, each division is responsible for certain product and has its own resources such as finance, marketing, warehouse, maintnenace..etc. Accordingly, this structures is a decentralized structure and thus allows for flexibility and quick response to environmental changes. It also enhances innovation and differentioan strategies. On the other hand, this struture results in duplication of resources becasue, for ex., we need to have warehouse for each division. Obviuosly, it does not support the exchange of knowledge between people working in the same profession because part of them are working in one division and the others are working in other divisions.
Matrix structure, shown above, combines both structures. For example, we can have a functional structure and then assign a manager for each product. Some employees will have two managers: functional manager and product manager. This type of structure tries to get the benefits of functional structure and also of divisional structure; however, it is not easy to implement becasue of the dual authority. This struture is vey useful for multinational companies.
It is important to keep in mind that each managerial decision has its pros and cons. Sometimes, writers will convinve you that divisional or matrix structure are the recent trends and that you need to reengineer your structure tomorrow morning. Obviuosly, this is not true. Many organizations still has functional structure and is doing very well. It is very important to select the structure that best service your condition. What is your strategy? How many products do you have? What type of technology are you using? How big is your company/organization?
Management should take necessary actions to decrease the disadvantages of the chosen structure and to enhance its the positive effects. For example, if we think the divisional structure is the best type for our condition then we should have tools to exchange knowledge between engineers working in different divisions. These tools can include forums on the LAN and conferences to exchange knowledge. Conversely, if we adopt functional struture, we can form teams from different functions to solve problems and develop our products.
Developing countries suffer from the lack of research. Most of research on organization structure based on studying Japanes, American and European compoanies but it is rare to find a research based on a sample of african companies. That is a challenge for managers working in developing countries because the research does not really tell them what to do and what to expect. The differences in cultures can affect the results of adopting certain structure in certain part of the world. Sometimes, you deal with the same organization in different parts of the world and get very different standard of service. This shows that this multinational organization failed to reach the same results in the developing country.
Management should not think they are going to double their profits because they adopted flat structure (less number of management layers). If this structure reengineering is not part of a certain strategy, it will not work. For example, if we adopt flat structure and then transfer the authorities of the middle management to the top management then we are increasing centralization and decreasing our flexibility. Similarly, if we adopt functional structure and allow for the duplication of resources, then we will get the disadvantages of the functional structure and will lose one of its main advantages which is economies of scale.
Many companies have combination between functional, divisional and matrix structure. Many of the decentralized companies will have one or two department centralized such as human resources or marketing.
Whatever structure you have, the results are the most important. The results are not your perception that you are the best. Measure yourself compared with similar companies. Do you need one week to take a decision that they make in one hour? Are your employees motivated more than those in other companies? Are you devloping new products and services faster than other companies? Are you achieving your main strategy?
7th June 2010 From India
No of employees
Do you work in teams - project wise, or have you divided employees into function wise groups.
Start with the CEO and the managers under him - function wise like Operations, Business development, HR, Finance and Accounts,etc.
If you work project wise, then each team will have a Project Manager and a heirarchy. Depending on the no of employees in each project, you can give designations according to the responsibilities of that position.
If you want to do it this and need some help write to me
7th June 2010 From India, New Delhi