\u2705 Download Our Organizational Chart Template<\/strong><\/a><\/p>\n \u2705 14-day Free Trial of HR Software to Organize Your Business<\/strong><\/a><\/p>\n A bird can\u2019t fly with clipped-wings. Good organizational structure functions as a business\u2019 \u201cunclipping,\u201d which, developed correctly, will put the company on the path towards success. So what are the benefits of a well-thought-out organizational structure?<\/p>\n With a clear organizational structure, employees clearly understand their role and function within the company. It defines his or her job in absolute terms, which helps eliminate confusion, and connects their position to the overall system, which creates a sense of belonging.<\/p>\n Employees of all levels understand to whom they report and who reports to them, simplifying communication, speeding up the decision-making process, and reducing frustration.<\/p>\n A forward-thinking organizational structure maximizes productivity by enhancing coordination between departments, eliminating work duplication, and encouraging initiative behaviors and creative thinking.<\/p>\n Having an inadequate structure \u2014 or none at all \u2014 will lead to reduced productivity, high employee turnover, and clipped growth, all of which will impact a company\u2019s competitiveness.<\/p>\n Communication suffers in companies with bad organization because employees don\u2019t know where to turn with problems or what information they need to share with others. The employee may also have several bosses who may give conflicting instructions.<\/p>\n Without a clear chain of command, low-level employees may step up to perform tasks they are not qualified to do. Senior employees may step down to perform tasks for which they are overqualified.<\/p>\n For businesses to be profitable tomorrow, they have to plan today. Without an organizational structure that routinely brings together various departments, no strategic planning (that\u2019s valuable at least) can take place<\/p>\n The confusion, chaos, and frustration of working for a disorganized company can reduce employee engagement, impacting employee retention and performance.<\/p>\n As you\u2019ll see further on down the page, there are plenty of different\u00a0structures to choose from, so how can you select the one that\u2019s right for your business? Consider the following factors.<\/p>\n The number of people within the company determines the kind of organization needed. Are you running a sole proprietorship business of which you are the only employee? Have whatever structure you like. Just jumped from five employees to thirty? You\u2019ll need to think about the best way to organize and structure your blossoming team.<\/p>\n Some organizational structures are better suited to some industries than others. Cutting edge, rapidly changing industries will require highly-adaptive systems; more stable industries (such as, say, domestic cleaning products) may prefer more traditional structures (on the basis of \u201cif it ain\u2019t broke, don\u2019t fix it\u201d).<\/p>\n A company\u2019s organizational structure influences company culture. What do you want from your employees? Or perhaps the better question is: how do you want them to feel when they arrive at work? If you value their autonomy and want to encourage innovation and organizational agility, then a flat organizational structure would work better than a hierarchical structure.<\/p>\n Things never stay still for too long in the business world. Indeed, change is about the only thing that business leaders can be sure of; it is always there, especially in fast-moving industries such as finance, manufacturing, and IT. So how can businesses ensure their organizational structure ensures they remain competitive when the market, customer expectations, or employees\u2019 needs change? It\u2019s all about incorporating dynamism into the structure<\/p>\n But first: why is agility important? Because it drives a company towards continued success. It\u2019s the attribute that allows an organization to change quickly to meet new demands, to adapt and renew itself, a flexible attitude that permits the company to shift when circumstances call for it. It\u2019s also bold and aspirational and full of confidence \u2014 a company will not fear the changing winds if they can simply adapt their sails.<\/p>\n However, while most business leaders want organizational agility (and especially the benefits it can bring), most companies are not agile. A Gallup poll found that 59% of US workers viewed their company as \u201cNot Agile,\u201d<\/a> while a further 24% said their employer is only \u201cpartly agile.\u201d So what\u2019s the issue? It might be partly down to the leadership mindset, but more likely, it\u2019s down to a static and outdated organizational structure model. Anything other than a shift to a structure that can more readily adapt to changes could prove fatal to a business, especially today, when the speed of change is accelerating. The organizational structure you install today should exist for as long as it serves its purpose; once it no longer does that, the system should adapt to meet new demands.<\/p>\n Hierarchical is the \u201cclassic\u201d organizational structure. There\u2019s a chain command that runs from the top (CEO) to the bottom (entry-level employees). Every employee has a supervisor or manager.<\/p>\n A functional organizational structure is similar to a hierarchical structure, only divided into separate departments, such as marketing, sales, and customer service.<\/p>\n The divisional organizational structure is suitable for larger companies with multiple divisions (such as Sony, which has electronics, entertainment, and financial services sectors). Each division is autonomous of the other and runs as a de facto individual company.<\/p>\n Flat organizational structure is the antithesis of hierarchical organization and lends itself to organizational agility. There are few (if any) chains of command, with minimal supervision of employees, who are encouraged to work independently<\/p>\n More complex than other structures and generally suitable for engineering, manufacturing, and construction businesses, Matrix organizational structure deploys an employee\u2019s skills across the organization, wherever it\u2019s needed. An engineering employee may have two or more managers, one in the engineering department and a special assignment \u201cproject manager.\u201d<\/p>\n The human resources department will play a significant role in determining the right organizational structure for a business.<\/p>\n During the development stage, the HR team should produce HR reports and analytic insights<\/a>, providing an assessment of the current employees\u2019 skills, experience, and productivity. They may also conduct surveys relating to staff performance from employees and supervisors. Insights from HR can help determine the best way to structure the business moving forward. With tools like an organizational chart<\/a>, HR teams can visually represent how changes will affect the company.<\/p>\n The organizational restructuring may alter existing positions, such as increasing or reducing work assignments and work hours. In this instance, the HR team will be responsible for increasing\/decreasing pay (if required) and analyzing any change in the employee\u2019s legal status (for example, if it affects their exempt\/non-exempt employee status<\/a>).<\/p>\n Finally, the HR department will guide the employees through any company changes brought about by the new structure. Corporate changes can be an unsettling time, but a company can ensure it\u2019s a smooth process by involving the HR team. HR is a vital part of change management<\/a> and can help employees excel in challenging new environments.<\/p>\n Developing your company\u2019s organizational structure is not an easy process, but it is a worthwhile one. It pushes you to rethink your existing practices and ask: how can we do things better? Get it right, and your company can soar.<\/p>\n<\/a>\u00a0Why Good Organizational Structure Is Important<\/strong><\/h2>\n
Sets Clear Functions<\/strong><\/h3>\n
Establishes Chain of Command<\/strong><\/h3>\n
Maximizes Productivity<\/strong><\/h3>\n
<\/a>\u00a0Consequences of Bad Organizational Structure<\/strong><\/h2>\n
Poor Communication<\/strong><\/h3>\n
Misuse of Talent<\/strong><\/h3>\n
Future Problems<\/strong><\/h3>\n
Hire Employee Turnover<\/strong><\/h3>\n
![\"\"](\"https:\/\/factorialhr.com\/wp-content\/uploads\/2021\/03\/03110155\/organization-300x103.png\")
<\/a><\/h2>\n<\/a>\u00a0What Factors Influence Organizational Structure?<\/strong><\/h2>\n
The Size<\/strong><\/h3>\n
The Industry<\/strong><\/h3>\n
The Company Culture<\/strong><\/h3>\n
<\/a>\u00a0The Importance of Organizational Agility<\/strong><\/h2>\n
<\/a>\u00a0Different Organizational Structure Types<\/strong><\/h2>\n
Hierarchical<\/strong><\/h3>\n
Functional<\/strong><\/h3>\n
Divisional<\/strong><\/h3>\n
Flat<\/strong><\/h3>\n
Matrix<\/strong><\/h3>\n
<\/a>\u00a0HR\u2019s Role In Organizational Restructuring<\/strong><\/h2>\n
![\"\"](\"https:\/\/factorialhr.com\/wp-content\/uploads\/2021\/03\/03104934\/demo-300x103.png\")
<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"