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Business Structures: Learn How to Organize Your Business

No business can function without a proper company structure. For some businesses, the structure forms naturally and organically; for others, it needs strategic planning. The importance of business structure becomes more prominent with the company’s growth and the increase in the number of employees working in the company. 

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What do you mean by organisational structure?

Before we go into the details of how to organise a business, we must learn what exactly is the organisational structure. 

An organisational or business structure is the primary outline of a company, its teams, roles and employees. Following the structure will help you know the roles of the employees, their reporting heads, and most importantly, the decision-making process in the organisation. The structure also provides a sneak peek into the responsibilities of the employees and the workflow. 

Your business provides an enhanced customer experience with a well-designed company structure. Positive impacts are evident in company operations as well. 

Important factors influencing the organisational structure

Whether creating a new organisational structure or rethinking optimising the existing structure, you must keep certain things in mind. Let us take a look at these:

  • A long-term vision for the business

You must have a clear understanding of the purpose of your business. As a business owner, you must know what you want to accomplish in the future. 

Realising this vision will not happen in a day – it is a process that continues over a time span. And to make this vision a reality, the organisational structure acts as the blueprint. 

  • Commitment towards the customers of your business

Understanding your customer and target audience is a significant factor in determining the organisational structure. Every business commits to its customers – understanding that is also important. 

Today customers are highly interactive by nature and love interacting with businesses. As a result, they are the principal decision-makers of any company. While creating the organisational structure, look through the customers’ lens to take appropriate decisions. 

The organisational structure should be such that it supports customer promise and its expected delivery. 

  • Understanding the ways of being organised externally as well as internally

Cut-throat competition in the business world is evident. Every business thinks of innovative ways to outdo its competitors. In such a situation, being organised internally as well as externally becomes mandatory. 

Think about the functioning of your company for achieving the various goals. Try working on these lines:

  • Determine ways your teams and employees can work together to achieve business goals. 
  • Understand which kind of company culture serves your customers best. 
  • The ways in which business decisions are taken and if there is room for improvement.
  • The authority level required for making decisions. 

Basic elements of a business structure

No organisational structure can be made without aligning its fundamental structure. Depending on your business requirements, you can add more components and building blocks. 

Standard Organisation Chart

Source

Let us take a look at the basic elements of a business structure.

  • Departmentation

For the organisational structure, departmentation is a primary element. You can cluster your teams based on similar responsibilities and job roles. It also helps in understanding the connection of one department with the other. 

  • Chain of Command

The chain of command is regarding task delegation and work approval. With an organisational structure, you can understand the different steps and layers of a particular department or the business line as a whole. 

Precisely, it gives a clear picture of who assigns work to whom and what kind of work. Also, it helps in setting clear communication through the entire loop. 

  • Centralisation

Centralisation covers areas where ultimate decisions are made. When your chain of command is ready, you will need to choose people from each department responsible for taking decisions.

It ultimately depends on the business who will be the key decision-makers. Will the responsibility be endowed with one or two eminent entities, or will the final decision be taken by a specific department or team handling that particular work? 

  • Span of Control

The span of control stands for two things – which tasks come under management and which come under any department’s responsibility. This structure helps in avoiding double-works from different teams and departments. You can also identify the gaps, if any, in your business structure

How to create an organisational structure and organise your business?

Now you have a clear idea of the essential elements of a company structure. With this knowledge, you can start building your organisational structure or reshaping the existing system. 

Let us take a look at the process of creating the structure:

  • Planning the future

Try planning as much and as far as you can. If you are a new company, try planning for the coming 3-5 years. The planning should be done for ten years or more for older organisations. 

  • Take the past into consideration

If your organisation is old, consider how the various departments work and coordinate with one another. Check out things that did not work out between different teams. 

Repairing the gaps and then thinking of organisational growth and development is always better. Making progress is next to impossible until and unless the problems are sorted. 

  • Start building the organisational structure

Like a jigsaw puzzle, start organising a business structure. Concentrate on achieving the set business goals with efficient and optimal workflow so that customers are satisfied and happy. 

Organise your employees on the basis of region, function (different departments) or product line. You can check out various organisation planning software for further help. 

  • Hire people

With existing employees in your organisation, start adding their names for a defined role in the company. For a new organisation, start hiring suitable candidates for various positions. 

Employees might need to develop certain skills for a specific job role. An organisation often provides training programmes for such candidates. The new job role might be a more responsible one than the previous role. 

  • Striking a balance between responsibility and authority

An employee might not fit within the organisational structure. However, this shouldn’t stop you from endowing responsibility and authority to the employee. The lack of responsibility might make an employee feel disengaged and unmotivated. 

  • Include employee metrics and data in the organisational chart

With employee metrics and data, you have detailed information about a candidate in a particular job role. You can also include each candidate’s performance ratings and tenure in the chart. 

With this data in hand, you can plan for your organisation’s candidate. Employees who are sincere, hardworking and loyal can be endowed with more responsibility and authority. 

  • Make sure to review the company structure annually 

It is a must that you review the organisation structure annually. Along with ensuring relevancy, you can plan for the coming year. Your business structure should be dynamic and not static so that you can change the structure as and when needed. 

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The crucial decision-making process

The senior management and leadership team are the ultimate decision-making authorities in most organisations. However, suggestions and ideas must be taken from all company strata. 

All the employees should be encouraged to put forward their ideas and suggestions in the crucial decision-making processes of the organisation. Employees handle the daily work in the company and know the team dynamics and other intricate things. 

This employee feedback is crucial, and you might get a strategic vision for the future. Again, there are certain areas that senior leadership and management of an organisation can handle and understand best. 

For best results, feedback and suggestions from all levels of the organisation are taken into consideration. 

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Conclusion

For any successful company, you must have an organisational structure. With a proper business structure in place, you can work on your business goals successfully and have satisfied and happy customers. One company structure might differ from the other; it is not a one size fits all concept. Look for the most suitable structure for your business and implement the same. 

Professionals interested in learning about various business structures can take up an Executive Post-Graduate Programme in Human Resource Management from upGrad. Along with personnel development, the course focuses on HR Analytics, creating positive organisational work culture, people management, reward and performance management and other topics. Designed for working professionals, the course has 300+ hours of learning with 30+ hours of live sessions, practical hands-on Capstone projects, case studies and assignments and many more. 

Apply now for the programme and earn a prestigious certification from LIBA.

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You can also check out our free courses offered by upGrad in Management, Data Science, Machine Learning, Digital Marketing, and Technology. All of these courses have top-notch learning resources, weekly live lectures, industry assignments, and a certificate of course completion – all free of cost!

What do you understand by organisational structure?

A business structure or an organisational structure is the basic outline of a company, its employees, the various teams in the organisation, and the employees' roles. The structure also covers the workflow of the employees.

What are the fundamental elements of a business structure?

Every business structure has some fundamental elements. Some of the prominent ones include the chain of command, departmentation, the span of control, and centralisation.

Is there a standard organisational structure for all businesses?

No, there is no standard organisational structure for all businesses. Businesses vary from one another, and so do their structures. Choose the structure that is most suitable for your business.

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