Organizational design is the way in which you set up your business (employees, information and technologies) to best meet your business objectives. How you structure your organization has a major impact on how well it functions. There is no single best organizational design for all small businesses. Each business structure is as unique as the organization it represents.
Here are some key factors that you might consider when planning the design of your business:
What is the purpose of your business? Your first step is to clearly recognize what it is that you want to achieve. Think of the big picture. Take a step back and get a bird's eye view of your operation.
What strategy can you implement to reach your goal? You want your employees to make decisions based on clear guidelines directed to achieve your purpose. You need to have administrative systems, technology and information in place that will help your employees succeed.
Division of labour
How can you divvy up employees' responsibilities to best meet your needs? Once you've determined the departments and roles that are needed to fulfill your purpose, you'll want to consider where to position your employees in order for them to thrive.
Authority, responsibility and control
Once your departments are set and you have your employees in place, how will you structure your chain of command? Ultimately, there is only one boss — you. However, you will have to delegate decision-making responsibilities to department heads, managers, forepersons, etc. Be sure to limit your number of decision-makers. Employees should always be clear about their roles and responsibilities, and who their supervisor is.
How can you best facilitate communication? It is vastly important that the entirety of your team is on the same page. When employees feel they are in the loop, they recognize that they are an important part of the organization. Communication is central to the achievement of your purpose.
How will you coordinate employees, information and technologies? Job descriptions can help to ensure your employees' understanding of their responsibilities and accountabilities. It is important for your team to understand exactly where they fit into your grand scheme.
When planning your organizational design, it is important to do your homework. Creating the blueprint for your business is not a decision to be taken lightly. You might take the time to find out how other businesses similar to yours are organized. As there isn't one clear-cut organizational model for all successful small- to medium-sized businesses, you'll want to analyze all of your options and decide how to tailor the best ones to work for you.
Many business owners find it helpful to create an organizational chart. This will provide you, your employees and outsiders with a visual representation of the organizational roles and relationships. Internet search engines are a good place to discover a bevy of examples for creating your organizational chart.
- Corporation, partnership, or sole proprietorship?
Find out which type of business structure is right for your business: incorporation, a partnership, a sole proprietorship or a cooperative.
- Governance and partnerships
Many business owners set up an advisory board or board of directors to help streamline the decision-making process. Explore both options and decide if either is right for you.
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