Establish What Your Team Should Look Like
“Structure is essential in building anything that thrives.”
Henry Cloud
🏗️ Organisational Structures
Following on from the need to build an organisational structure which will support your business as it grows… The principle of structure follows strategy means identifying the right organisation structure requires your clearly articulated business strategy.
While there are various types of organisational structures (each with its own pros and cons), the most effective and commonly used structures which take specialisation, departmentalisation, chain of command, and span of control into account are the following:
Functional
- Functional organisational structures are based on the concept that employees are grouped into teams according to the day-to-day work they do (their function) and report to the manager accountable for that function.
- The benefit of this structure is that it is highly scalable as your business grows.
- But, this structure becomes inefficient if you expand your product/service offering or if you expand into different markets.
Divisional
- Divisional structures are well-suited to businesses with diverse product lines or those operating in multiple regions. This model allows each division to focus its energy on driving the success of a specific product or market.
- From a marketing and sales perspective, this structure is ideal.
- However, it can lead to duplicated efforts, decentralised decision-making, strategic misalignment, and communication breakdowns.
Matrix
- A less traditional yet increasingly common organisational structure is the matrix organisation structure, where all employees have more than one reporting line.
- The solid lines in the diagram shows direct reporting relationships, whereas the dotted lines represent relationships secondary to the main reporting line.
- The matrix structure provides flexibility and the very compelling benefit of balanced strategy focused decision making.
- When implementing a matrix organisation, communication and decision-making channels must be clearly defined to minimise confusion amongst staff and maintain agility when making decisions.
Note ℹ️
Do not underestimate the importance of clearly defined reporting lines. To begin with you may find that the employees in your business perform more than one function, but as your business grows it is important to clearly define the reporting lines to help team members understand their responsibilities and to whom they are accountable.
“Mission defines strategy, and strategy defines structure.”
Peter F. Drucker
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