When you build a house, you don’t just start stacking bricks with some cement between. Before you start construction, you have an architect draw up plans, right? The same fundamental truth applies to business – just like everything else in life – you need a plan for your company. Start with its organisational structure. An organisational chart is a crucial part of your company strategy. This is the architecture of the business and must have a solid structure (just like a house needs a solid foundation).
Three areas are significant with an organisational chart:
Function – What are the critical activities? (I.e. HR/finance/sales)
Location – Where in the chart should the function be located?
Authority – Who has the ability to make decisions?
According to Lex Sisney, these are 5 things that we do wrong.
1. The strategy changes but the structure doesn’t.
Change is inevitable. As your business strategy evolves, the structure must be constantly realigned. Sometimes you’ll even need to make a clean break from the past to get a fresh perspective.
2. Making functions that focus on effectiveness report to functions focused on efficiency. For example, the sales team should not report to the quality department.
3. Making functions that are focused on long term strategy report to functions with short term results.
For example, departments that strategise should not report to operations.
4. Not looking at the difference between autonomy and control.
Those closest to the clients should have autonomy. This includes the sales and customer services departments. Control should be reserved for the finance, legal and HR departments.
5. Having the wrong behavior style in the right functions.
It is important to consider each employee’s natural style. For example, it is not a good idea to place a person with a reserved disposition in a sales role. Or somebody with no emotional intelligence in HR.
By recognising where you may have gone wrong, you have a base from which you can start designing your organisational structure correctly. As you will have noticed, this can get tricky and it may be prudent to call in a professional. We offer a FREE 1-hour consultation to discuss your organisational chart. Talk to us.