Question of the day

When you are about to start a new company, you need to know that there is a lot of things you need to know before and take care of. Whether you choose to use a specialist or not, it is important that you have all the information that helps you.

What is the organisational structure of firms

The organisational structure of a firm refers to a system that shows how certain activities are targeted to achieve the organisation’s objectives. These activities may include rules, roles and responsibilities.

The organisational structure aligns and links parts of an enterprise so that it can achieve maximum performance. The chosen structure fosters an organisation’s success in achieving its business strategy and objectives. A successful entrepreneur should have a business plan and its characteristics in place.

The importance of aligning the organisational structure with your business strategy

There are four elements of a business that are fundamental to any organisation:

management persons responsible for developing and implementing the strategy and monitoring the results;

organisation the structure, processes and operations through which the strategy is implemented;

jobs roles and responsibilities;

people experience, skills and competences needed to execute the strategy.

The key to high performance is the proper functioning of these four elements, which must “communicate” with each other effectively. It is wise for organisations to identify what they expect by establishing the new organisational structure. This usually requires recalibrating the following aspects:

— what work is critical to the mission, whether it can be reduced or should be deleted;

— existing role requirements while identifying new or modified roles needed;

— key values and responsibilities;

— critical information flows;

— decision-making authority depending on the level of organisation.

The structure of an organisation and the relations between the different entities of the firm can be found in the organisational chart, a key element for more and more companies. For those who have just entered the business world, the task of establishing an organisational chart can be made more efficient by means of payroll software. It is a tool that allows an organisation chart to be drawn up and informs you of the expenditure by department.

How many types of organisational structure of an enterprise

Four types of organisational structures are implemented in the business world. Before building an organisational structure from scratch, you need to know what everyone stands for.

♦ Functional structure The first and most common is the functional structure. It is considered bureaucratic, separating a company based on the specialisation of its workforce. Most small and medium-sized enterprises implement a functional structure. The division of the firm into departments, such as marketing, sales and operations, is the act of using a bureaucratic organisational structure.

♦ Divisional or multi-divisional structure — This structure is popular among large companies with many subsidiaries. A company using this method structures its management team on the basis of the products, projects or subsidiaries in which it operates.

♦ Flatarchy structure — Emerging recently, this structure is the third most used by start-ups. This type of organisational structure flattens hierarchy and chain of command and gives employees a lot of autonomy. Companies that prefer this type of structure have a high speed of implementation.

♦ Matrix structure — The fourth and last organisational structure is a matrix structure. This is the most confusing and least used by entrepreneurs in their businesses. The Matrix structure connects employees from different departments or divisions. An employee working for a matricised company may have tasks in both sales and customer service.

One important thing you need to know is that there is not the best organisational structure.Everything depends on the nature of your company and the industry in which you operate.

Source: bizlaw.md