Business plan organizational management structure
Previous Steps of Starting Your Own Business Guide
Now we find ourselves in a completely different part of business planning - management and organizational structure of the business.
Don't neglect the organizational plan when writing your business plan
Management is a really important element of any business. As a business goes through different stages of the life cycle, so will the need for business management grow, and this is directly related to the efficiency of the business. If your business is in the process of initiation and planning, and if you plan to work in your business alone, you probably think that there is no need to do the Organizational Plan section of the business plan. But I recommend doing this with the aim of further planning personnel management in your business, because it is difficult to do business alone.
Also, by working on this section as part of the planning process, you will do a good job preparing for financial planning.
What should the “organizational plan in the business plan” section contain?
Again, in the business plan, the section begins with a chapter summary. It will be at the beginning, but you do it, as always, after completing the entire chapter.
An organizational chart is a hierarchy of people in an organization. It will show who is responsible for what, who performs the tasks, who controls the implementation, who regulates communication between employees, etc. It is important to understand that this is a serious section, because you are planning the basis of what should meet the requirements for a long time time. You cannot change the hierarchy and structure of the organization every month, which, for example, is permissible with some other sections of the business plan.
Among all sections of the business plan:
- Cover Page
- Confidentiality Memorandum
- Executive Summary
- Investment Plan
- Marketing plan
- Production plan
- Organizational plan
- Financial plan
- Risk analysis
it is the organizational plan that describes the project staff, initiators, their shares in project management, qualifications and remuneration of project managers, as well as staff motivation.
If you are writing a business plan to receive investments for the development of an already operating enterprise, you will need to prove to potential partners that its organizational structure is as effective as possible. If you are just planning to open a company, production or retail outlet, you will need to describe in detail how you are going to ensure the operation of the new business.
All information related to the management of the enterprise should be presented in a section called "Organizational plan". Moreover, it is this point of the business plan that will prepare the ground for writing the financial section of the project.
Business Plan Organizational Plan Structure
First of all, in this section it is necessary to justify the choice of the form of activity. Indicate whether you are an individual - individual entrepreneur, or the founder of an organization - LLC or JSC. In the latter case, it is imperative to list the governing bodies and their powers, the composition of the founders and their rights and obligations. After that, it is necessary to describe the organizational structure of the enterprise.
Organizational structure is the composition, system of relationships and functions between the various departments of the enterprise, each of which is responsible for its own area of activity and is part of the hierarchical system of the organization.
Balanced and productive interaction between departments within the enterprise or between the head office and branches depends on the chosen form of management.
Organizational structure of the company is a management tool developed taking into account market conditions and business specifics for optimized execution:
- definitions of terms, scope and priority of solving problems and carrying out work;
- distribution of labor and material resources;
- debugging relationships between departments and executive positions in the firm.
Hierarchical organizational structure of the company - clearly defined functions, rights and responsibilities of employees, the central node is responsible for management. System types:
With this form of management, areas of competence are clearly delineated, and responsibility for the result is personified, but decision-making becomes a multi-level procedure.
This structure decentralizes management and allows you to optimize the response to changing market conditions and adapt to it, but increases the likelihood of difficulties with the distribution of funds between divisions.
Teamwork on specific tasks contributes to both concentration of efforts and an integrated approach.
The use of the matrix form of the organization allows to ensure the creation of well-coordinated project teams, stimulates creativity and reduces the workload on top management.
Vitaly Kochkin, author of the book “Effective Development” in his article dated 01. 1.016, emphasizes that an organic network organizational structure of a company based on the opportunities provided by globalization and hyper-connectivity is the key to a balanced and profitable business ...
Subcontracting increases adaptability to market changes, rationalizes costs and guarantees cooperation only with professionals in a narrow field.
A proven way to find partners is to become a participant in industry-specific B2B events, for example, international exhibitions and business programs organized by the Expocentre Fairgrounds in Moscow.
Features of the organizational structure
All of us in our life have repeatedly encountered such a phenomenon as bureaucracy. Many times they tried to fight him, but to no avail. The reason for this lies in the fact that we do not know very well what bureaucracy is and where it comes from. And the origins of this phenomenon can be found in organizations built on a bureaucratic principle. There are a number of definitions of bureaucratic organizations, here are them:
- Bureaucratic organizations are characterized by a high degree of division of labor, a developed hierarchy of management, numerous norms and rules of behavior.
- A bureaucratic organization is viewed as a vertical pyramidal structure, functioning as a whole on a scalar basis (it is assumed that the amount of authority and responsibility delegated to each official in the linear chain of subordinates decreases in proportion to his distance from the chief executive officer (president of the company) , i.e., scalar).
These types of organizational management structures (OMS) are characterized by the fact that most employees do not know each other and feel limited in expressing personal views. The organization has a commitment to a variety of formalities and traditions. The management structure of an organization of this type is, as it were, frozen in time, loses flexibility, that is, the ability to quickly adapt to new rapidly changing external and internal conditions of existence. All these observations naturally need to be reflected in the definition of a bureaucratic organization:
A bureaucratic organization is an organization based on linear connections that tend to "freeze", it looks like a vertical pyramidal structure, it has a very developed adherence to various formalities and traditions.
There are two main types of organizational structures for enterprise management, built according to the bureaucratic principle: linear OSU, functional OSU.
Fig An example of a linear type of organizational structure
An example of a control structure of this type is shown in Fig. 1. The main feature of a linear OSS is the presence of exclusively linear relationships, which determines all its pros and cons:
- very clear system of "boss-subordinate" relationships;
- explicit responsibility;
- quick response to direct orders;
- simplicity of building the structure itself;
- a high degree of "transparency" of the activities of all structural units.
- lack of a process approach, work for a result;
- excessive load on the highest level of management;
- lack of support services;
- lack of the ability to quickly resolve issues arising between different structural divisions;
- high dependence on the personal qualities of managers of any level.
Fig An example of an organizational structure of a functional type of management
If direct and reverse functional links between various structural units are introduced into the linear organizational structure of management (Fig. 2), then it will turn into a functional one. The presence of functional links in this management structure allows different departments to control each other's work. Plus, it becomes possible to actively include various service services in the OSU. For example, the Service for ensuring the operability of production equipment, the Service for technical control, etc. Informal relations also appear at the level of structural blocks. The organizational structure of this type of management has its advantages and disadvantages:
- removing most of the load from the top management level;
- stimulating the development of informal ties at the level of structural blocks;
- reducing the need for broad-based specialists;
- as a consequence of the previous plus - improving the quality of products;
- it becomes possible to create headquarters substructures.
- significant complication of communication within the enterprise;
- the emergence of a large number of new information channels;
- the emergence the possibility of transferring responsibility for failures to employees of other departments;
- difficulty in coordinating the activities of the organization;
- the emergence of a tendency towards excessive centralization.
Fig Example of a divisional type of organizational structure
A division is a large structural subdivision of an enterprise with great independence due to the inclusion of all the necessary services.
Organizational design is the process of developing or improving management systems for an organization. In the course of this process, the design of organizational structures is carried out, associated with the distribution of management functions by divisions. The result of the design of work in the organization should be a time-stable system with the potential for self-renewal, which involves going through four main stages:
- stage of analysis of the existing organizational structure of the company,
- the actual design,
- implementation of best practices,
- stage of the final assessment efficiency.
Since an organization is a complex mechanism with intertwined personal and group interests, a system of incentives and restrictions, a combination of discipline and creativity, with unique cultural and contextual characteristics, each of these stages should work to create an organizational structure ideal for specific company.
Tasks and principles of organizational design as an element of the social system
who interact and maintain regular informational communications. Their goal is the joint implementation of management activities. The very design of work in the organization is aimed at building
stable interaction between divisions of the company, as well as distribution of rights and responsibilities between them.
Goals and objectives of the organizational structure
Well-coordinated structural interaction is necessary not only to create an effective control system at the moment, but also to maintain it in a working condition for a long time. In addition, such a system should contain reorganization potential, which will manifest itself in the event of a significant metamorphosis in the paradigm of the organization's functioning.
To solve this problem you need:
- create a management structure for the organization,
- develop (for an organization being created) or revise (for an existing organization) documents regulating its activities.
- to select personnel and normalize their labor activity,
- bring the workflow and functioning of the working team to the system level,
- evaluate the effectiveness of implementation.
All proposed changes can be carried out both in the whole organization and in its individual divisions or structures. The design challenge is to account for the scale of change. For this, work is being carried out in the following areas:
- Building a composition. Here, a general structural diagram is being developed that would take into account the technological, social, informational and other interrelationships between individual employees within the unit and the units themselves. Here, the requirements for the mechanism of interaction and functioning must be formed, a hierarchy of subordination, principles for the selection of personnel and their promotion through material and non-material incentives must be established.
- Structuring. In this process, based on the correlation of general goals and applied tasks, the composition and internal structure of the divisions is determined.
- Regulation. Within the framework of this direction, rules, instructions, procedures and standards are developed, which are guided by workers in their daily work activities. For this, there are a number of documents: the charter and position of the organization, job descriptions, work schedules and schedules for receiving visitors, staffing, etc. Next, the scope of the duties of each employee is determined. A separate object of the regulatory process is information management - the format of submission, frequency of receipt, content, etc. The general goal of regulatory actions is to create a uniform and repetitive management process, independent of the specifics of specific performers.
- Orientation. The procedures are reduced to creating the conditions necessary to streamline the movement and position of subjects of the labor process (employees) and material objects related to the field of activity of the organization. Orientation can be carried out by means of various information systems:
- numbering (for example, archive codes),
- verbal (for example, an employee's title plate),
- graphic (for example, fire evacuation scheme),
- the symbolic system, as well as through a combination of these and other systems.