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Organizational structure is the blue print of the internal structure of an organization, which maps the workflow. As per the latest Global Human Capital Survey, trends in 2016 indicate that organizations have identified organizational structure as 92% important for current business scenarios. Have we woken up suddenly? The answer is no!
Organization galore, large or small, have been talking about people engagement is the key for any business. Almost all of our clients have also highlighted the same issue, as one of their key challenges. And organizational structure is particularly important for people engagement and decision-making. Most companies either have a tall or flat organizational structure. Flat structures enable companies to make quicker decisions, leading to higher responsiveness and flexibility.
Companies in different industries require different mixes of talent and a relatively greater emphasis on certain management functions. This will change in each and every organization depending on its structure and offerings, because no single organizational structure can fit well for all businesses. As it is said, one size doesn't fit all!
Aspect of organizational structure is very important for young organizations, as it is always good to begin on right footing rather correcting and restructuring later. Below are the key action points for sustainable and effective organizational structure:
Give a clear direction
A proper structure helps in streamlining and guiding all the employees by laying out the official reporting relationships that administrate the workflow of the company. Organizational structure improves operational efficiency by providing clarity to team members at all levels by giving clear line of command. By paying mind to the organizational structure, departments can work more.
Identify clear roles and responsibilities
Proper communication channels within the organization help in work segregation. As soon as the person joins an organization from the day one itself, he should have the clarity of whom to report. This is possible only if the person is conveyed effectively about his roles and responsibilities and what is expected from him. Most companies conduit their communication through department leaders.
Design Value Stream based Structure, if possible
Traditionally organization structures are more functional, where there are several departments like human resource, accounting, production etc. Value Stream based structure of having factory within factory concept can do wonders and create several leaders. If the structure fits correct it may lead to economies of scale. Also, several layered structures might be apt for larger organizations, however may lead to chaos in smaller organizations.
Use it for evaluating employee performance
Correct organization structure can help in evaluating and managing the performance of the employees. Since managers and leaders have been designated for each department they can evaluate and improve employee performance by linking organizational goals to functional goals to individuals. Right policy deployment tool coupled with effective organization structure has changed fortunes of companies. Furthermore, this analysis helps in annual appraisal and performance analysis.