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No matter what stage you are at in the development of your business it is inevitable that expansion will occur, and with expansion comes the need for increased numbers of employees, departments and responsibilities...
When scaling up an organization, structure is key – any weak links can lead to the collapse of the structure and the business. As you think about your organisational structure it is important to focus on your business goals and what kind of structure is best suited to amplifying them.
All structures have their pros and cons and no structure is correct or incorrect - as a business owner you need to decide which is best suited to you, and your goals. In this article we will look at 3 structures:
A Traditional Hierarchical Structure is most associated with larger organisations such as Government Bodies and the British Military where communications travel down through the leadership team from directors, to line managers to assistants. One of the benefits of this system is that it offers clear definitions of roles and responsibilities, who reports to who, and the different communication channels. However, it can impede innovation and creativity due to increased bureaucracy and process and cause employees to act in the interest of the department instead of the company as a whole.
Perhaps best suited to SMEs is the Flat/Horizontal Hierarchical Structure, having fewer chains of command which gives employees more responsibility and can facilitate more freedom in communications. This system improves coordination and speed of implementing new ideas, encouraging innovation via accessibility to key decision-makers, but it can be challenging to maintain once the company grows beyond start-up status.
The final structure is the Divisional Based Structure which splits employees into a few different areas. For example, if an organisation had several product categories each category would have it’s own structure including HR, Marketing, and Sales. This allows for a quicker response to industry changes or customer needs, promoting independence, autonomy, and a customized approach. However, you must guard against duplication of resources and mitigate for muddled or insufficient communication between the headquarters and its divisions.
Even if your business is in the start-up phase, growth should be your goal - having a determined vision of your organisational structure will be critical when hiring employees and building processes around your business. To help you clarify which structure will work best for you, the complete version of the above article can be read on our Knowledge Exchange Hub, alongside a host of other free resources and advice. It’s free to join, so register today.
No matter what stage you are at in the development of your business it is inevitable that expansion will occur, and with expansion comes the need for increased numbers of employees, departments and responsibilities…
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