Organizational structure is the foundation stone for setting up the new business. A formal layout of the business units, departments and tasks to be allocated to employees. It’s a structural flow that depicts the reporting relationships between the objects.
Authority travels downward from top and accountability from bottom, where the line represents the relationships between superior and subordinate, lateral relationships between different departments at same hierarchical level, staff relationships between a managerial assistant and other areas (can advise the line manager, have no authority on their actions) and functional between specialist positions and other areas (can insist that the line managers implement).
Objects identified to design the Organizational model of a business are:(Please refer the attachment for details)
Key elements of the business chart are:
a) Hierarchy – Identify the number of divisions, positions as per employees.
b) Span of control i.e. Manager – Sales & Manager – Marketing reports to GM – Sales & Distribution. Here the GM will have span of control for the two reportee.
c)Work Specialization – Identify the functional specialists for the business units.
d)Geography – Decentralization of various functional area, region wise, as the customer taste might vary from region to region.
There are three types of organization structure. Functional, Divisional & Matrix structure.
a)Functional Structure is categorised function wise, where the employees’ gets an opportunity to become a specialist, which leads into higher efficiency and in perfect delivery of products. It is ideal for small business where the business strategies are less inclined to change or dynamism. But this structure gets restricted to the innovative ideas, and as per the market scenario innovative ideas are required. In case of business expansion, units get added to the structure that increases the challenge to coordinate with units and even the relationship among the team gets complex.
b)Divisional Structure is suitable for business that operates the chain stores & subsidiaries within the country or globally. Decision making gets decentralized at the business unit i.e. target is to execute end to end cycle for a product and to accomplish it unit has manufacturing, quality and sales division to deliver the perfect product. Here the accountability gets a clear pattern of work, and creates the collaborative working environment for the employees’ to enhance their skills beyond their expertise. Coordination with units become structured without any complication.
c)Matrix Structure is used for multiple reporting i.e. HR manger reporting to HR director as well as Sr. Manager. However it gets complex for employee in a way to prioritise their work; take orders from etc.
From India, Delhi
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