A company’s organizational structure can determine its success or failure upon entry into the market. The decisions a small-business owner makes in choosing management and employee roles within the company help determine the organizational structure and can have a large influence on the culture within the business. If structure doesn’t reflect the owner’s business goals, employees may have a hard time working successfully for the company.
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Size of Business
As a small-business owner, the size of your company can have a significant influence on the organizational structure of your company. If you’re running a sole proprietorship with a few employees, you may not even need a well-defined organizational structure if you perform all the management functions of the business. A larger organization requires more structure to allow its different components to communicate effectively with one another. For example, a full-service restaurant requires a kitchen manager, floor manager, bar manager and general manager to run each division within the establishment and keep the employees in each division working to task.
Stage of Development
The stage of your company’s development can dictate its needs regarding organizational structure. The youth stage of a company’s life cycle emphasizes growth and the needs of the customer. This may require you as a business owner to develop an organizational structure around increased customer service, including a system to handle complaints and develop better service strategies. At this stage you’re still very much in control of the majority of the company’s day-to-day business decisions. By contrast, in the midlife stage of development, your company may require more levels of management to handle the growing departments with the company. Organizational structure may feel more mechanized with you as the owner somewhat removed from the day-to-day running of the company.
Reflecting Organizational Culture
The business culture you wish to project to your employees can dictate aspects of your company’s organizational structure. For example, a company with multiple redundancies in the management infrastructure may prize procedure- and rule-following, whereas a company with a more lax management approach may encourage a culture of personal ownership among employees. Each culture has its place and benefits. A construction or manufacturing company has greater need of organizational structure and redundancy in the management infrastructure than a law firm where employees are working independently under the loose rubric of senior partners in management roles.
Overall Business Strategy
How your company intends to enter the market and become successful can play a role in how you choose to set up its organizational structure. For example, an aggressive marketing and product-placement strategy may require multiple department heads to coordinate efforts and ensure no portion of the company’s larger plan lags behind the rest. Alternatively, a more methodical development strategy may require a smaller, more focused organizational structure, so you can actively monitor all the details of a plan and survey progress.
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Topic: Factors Affecting Organizational Structure
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