hi i would like to know how do i go about building a organisational structure for a IT company. can anyone suggest few tips
From India, Bangalore
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1From India, Bangalore
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You will need to sit with top management and work out the functional demarcations first. For example, 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 skill sets, experience, and involvement, and they would have to 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.
Best Wishes
From India, Mumbai
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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 skill sets, experience, and involvement, and they would have to 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.
Best Wishes
From India, Mumbai
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The organizational 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 on the number of levels in the organization and the functional verticals.
Structure Development Process
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 senior level in terms of the relevant competence and the level of the person heading it.
To start with, draw the first-level structure, i.e., of the CEO and his reporting managers, and then unfold every department in terms of the level and number of people. The suffix of each title should reflect the broad responsibility of the slot.
A comprehensive organizational structure would have a job description and a person specification for each slot.
Collaboration in Structure Development
The structure should be developed jointly by the CEO and HR, and for the functional verticals concerned, heads should also be involved.
The structure specifying the number of people, especially at the lower levels, should be based on an assessment of the workload through a suitable job evaluation or work study.
Thanks and Regards,
J C Jhuraney
From India, Calcutta
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Similarly, before working on the structure, you should decide on the number of levels in the organization and the functional verticals.
Structure Development Process
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 senior level in terms of the relevant competence and the level of the person heading it.
To start with, draw the first-level structure, i.e., of the CEO and his reporting managers, and then unfold every department in terms of the level and number of people. The suffix of each title should reflect the broad responsibility of the slot.
A comprehensive organizational structure would have a job description and a person specification for each slot.
Collaboration in Structure Development
The structure should be developed jointly by the CEO and HR, and for the functional verticals concerned, heads should also be involved.
The structure specifying the number of people, especially at the lower levels, should be based on an assessment of the workload through a suitable job evaluation or work study.
Thanks and Regards,
J C Jhuraney
From India, Calcutta
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Hi, J C Jhuraney, thank you. I shall go by this process.
Organizational Structure
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, employees work in departments based on what they are doing, i.e., we have the engineering department, maintenance department, finance department, research department, warehouse department, and purchasing department. This structure enhances the experience of each function. For example, all the maintenance engineers work in the same department, allowing them to exchange knowledge and support each other. This structure saves money because of economies of scale. However, it makes coordination between different departments more difficult than other structures and does not allow for flexibility due to centralization.
The divisional structure divides employees based on the product/customer segment/geographical location. Each division is responsible for a certain product and has its own resources such as finance, marketing, warehouse, maintenance, etc. This structure is decentralized, allowing for flexibility and quick response to environmental changes. It also enhances innovation and differentiation strategies. However, it results in duplication of resources, as each division needs its own resources, hindering the exchange of knowledge between professionals working in different divisions.
The matrix structure combines both functional and divisional structures. For example, we can have a functional structure and assign a manager for each product. Some employees may have two managers: a functional manager and a product manager. While this structure attempts to derive benefits from both functional and divisional structures, it can be challenging to implement due to dual authority. The matrix structure is particularly useful for multinational companies.
It is essential to consider the pros and cons of each managerial decision. Writers may suggest that divisional or matrix structures are the latest trends and that organizations need to reengineer their structures immediately. However, many organizations still successfully operate with a functional structure. It is crucial to choose a structure that best suits your needs based on your strategy, the number of products, technology used, and the size of your company/organization.
Management should take steps to mitigate the disadvantages of the chosen structure and enhance its positive effects. For instance, if a divisional structure is deemed suitable, tools should be implemented to facilitate knowledge exchange among engineers in different divisions, such as LAN forums and conferences. Conversely, with a functional structure, cross-functional teams can be formed to solve problems and enhance product development.
Developing countries often lack research on organizational structures, with most studies focusing on Japanese, American, and European companies. This poses a challenge for managers in developing countries as cultural differences can impact the effectiveness of certain structures in various regions. Companies may struggle to achieve consistent results across different countries, highlighting the need for tailored approaches.
Companies may adopt a combination of functional, divisional, and matrix structures. Even decentralized companies may centralize specific departments like human resources or marketing.
Regardless of the structure chosen, the most crucial aspect is the results achieved. Companies should measure their performance against similar organizations, assessing factors such as decision-making speed, employee motivation, product development pace, and strategy execution effectiveness.
Regards
From India
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Organizational Structure
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, employees work in departments based on what they are doing, i.e., we have the engineering department, maintenance department, finance department, research department, warehouse department, and purchasing department. This structure enhances the experience of each function. For example, all the maintenance engineers work in the same department, allowing them to exchange knowledge and support each other. This structure saves money because of economies of scale. However, it makes coordination between different departments more difficult than other structures and does not allow for flexibility due to centralization.
The divisional structure divides employees based on the product/customer segment/geographical location. Each division is responsible for a certain product and has its own resources such as finance, marketing, warehouse, maintenance, etc. This structure is decentralized, allowing for flexibility and quick response to environmental changes. It also enhances innovation and differentiation strategies. However, it results in duplication of resources, as each division needs its own resources, hindering the exchange of knowledge between professionals working in different divisions.
The matrix structure combines both functional and divisional structures. For example, we can have a functional structure and assign a manager for each product. Some employees may have two managers: a functional manager and a product manager. While this structure attempts to derive benefits from both functional and divisional structures, it can be challenging to implement due to dual authority. The matrix structure is particularly useful for multinational companies.
It is essential to consider the pros and cons of each managerial decision. Writers may suggest that divisional or matrix structures are the latest trends and that organizations need to reengineer their structures immediately. However, many organizations still successfully operate with a functional structure. It is crucial to choose a structure that best suits your needs based on your strategy, the number of products, technology used, and the size of your company/organization.
Management should take steps to mitigate the disadvantages of the chosen structure and enhance its positive effects. For instance, if a divisional structure is deemed suitable, tools should be implemented to facilitate knowledge exchange among engineers in different divisions, such as LAN forums and conferences. Conversely, with a functional structure, cross-functional teams can be formed to solve problems and enhance product development.
Developing countries often lack research on organizational structures, with most studies focusing on Japanese, American, and European companies. This poses a challenge for managers in developing countries as cultural differences can impact the effectiveness of certain structures in various regions. Companies may struggle to achieve consistent results across different countries, highlighting the need for tailored approaches.
Companies may adopt a combination of functional, divisional, and matrix structures. Even decentralized companies may centralize specific departments like human resources or marketing.
Regardless of the structure chosen, the most crucial aspect is the results achieved. Companies should measure their performance against similar organizations, assessing factors such as decision-making speed, employee motivation, product development pace, and strategy execution effectiveness.
Regards
From India
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Organizational Structure.doc