Organizational structure of the enterprise: types and schemes
The organizational structure is formed depending on the goals of the enterprise and the necessary units for this. It is the departments that carry out the functions that make up the business processes of the enterprise.
What is the organizational structure of an enterprise?
When we talk about organizational structure, we mean the conceptual framework around which a group of people is organized, the foundation on which all functions are held. An enterprise organizational chart is essentially a user guide that explains how an organization is built and how it works. More specifically, the organizational structure describes how decisions are made in a company and who is its leader.
Why is it necessary to develop the organizational structure of the enterprise?
Organizational structure elements
The organizational structure of any organization will depend on who are its members, what tasks it solves and how far the organization has come in its development.
Regardless of which organizational structure you choose, three elements will always be present in it.
A specific person or group of people who make decisions in an organization.
- The rules by which the organization operates
Many of these rules can be stated explicitly, while others can be hidden, but no less binding.
- Labor distribution
The distribution of labor can be formal or informal, temporary or permanent, but each organization will certainly have a certain type of distribution of labor.
Traditional organizational structures
In order to develop an effective organizational structure, you should define:
- functions that must be performed in the company;
- departments that the company needs;
- links between these departments;
- subordination in the company;
- level of detail in the organizational structure.
To do this, do the following:
Define the main functions of the company - Level I functions
It is necessary to record the main functions (functions of the first level), for example: production of products, sale of finished goods or goods, provision of services, purchase of raw materials, warehousing, delivery, customs clearance, management accounting, etc.
It is important to distinguish between primary and secondary functions. With the help of the main functions, the company receives (they are also called production) profit. Supporting functions support core functions. For example, these include marketing, finance, accounting. If the company has several different types of activities, then we advise, if possible, to immediately link the main functions to the types of activities to which they relate. The functions that are performed for the entire company (finance, accounting) do not need to be tied to the types of activities.
When writing functions, you should always ask yourself the question "why are we doing this?" If no one (!) Has an answer to this question or the answer to this question does not satisfy the head of the company, then this function either should not be performed, or this is a reason to think. However, this rarely happens at the first level of functions.
It is convenient to keep records in tabular form in an Excel file.
Define sub-functions - level II functions
Next, you should define subfunctions for each main function, that is, answer the question: "What subtasks must be solved in order for the main task to be completed?" For example, the functions of the second level to the main function "purchase of raw materials" can be: search for suppliers, conclusion of contracts with suppliers, formation of purchase orders, etc. Sub-functions can also be called job responsibilities.
We keep asking ourselves the question "why are we doing this?" The number of sub-functions to the main function should not be too large, but also should not be too small. The ideal number is 7 plus or minus 2. If there are significantly more of them, you need to reconsider the principle of grouping.
Define level III functions
If the company is large, then third-level functions should be defined, that is, sub-functions for second-level functions.
The results obtained during the development of the process architecture allow for the improvement of the organizational structure of the company. This is the next item on our roadmap.
The main purpose of the organizational structure is to service business processes. That is why it exists. How is this requirement ensured? - By correlating the functions of performers in business processes with the centers of responsibility in the organizational structure. This analysis was carried out during the development of the organizational concept. Based on its results, the functions of the company's divisions and their areas of responsibility should be clarified. At the same time, functions are often identified that are not assigned to any unit in the existing structure. In this case, it is necessary to form the missing responsibility centers, which will have to serve the “nobody's” processes. An example of such a situation was given in the previous article, when, based on the analysis of business processes, marketing processes were identified, for the maintenance of which a marketing division was introduced into the organizational structure.
It should be noted that the organizational structure is often identified with an organigram, which depicts the divisions of the company and the subordination relations between them. In this case, the development of an organizational structure is understood as the process of drawing rectangles with arrows.
In reality, the organizational structure is a system of division and coordination of functions, powers and responsibilities between the structural elements of the company. It is not described in one diagram. Indeed, after all, the diagram reflects only the subordination relations between officials and divisions of the company. But this is only a small part of the relationships that people enter into in the course of production activities. The main “engine” of business processes is the “client-supplier” relationship. It is these relationships that make it possible to transfer the results of labor from one link to another along the chain of processes. But these relationships are not reflected in the organizational chart.
How to describe the organizational structure of the company?
The organizational structure description should include the following elements:
- Organizational chart; it shows the composition of the structural divisions of the company and the reporting relationship between them.
- Description of the functions, powers and responsibilities of each structural unit, taking into account their roles in business processes. At the same time, it is indicated in which business processes the department is involved and how it is connected with its internal suppliers and customers. It is important that this description is process oriented.
- Conceptual description of the most significant backbone processes for the company, such as strategic management, annual planning, order management, management of development and launch of new products, management of company development projects.
Thus, the Regulations on the organizational structure are being created, which quite fully defines the mechanisms for managing the company.
How to develop an organizational structure?
As we have said, the basis for creating the organizational structure of a company is the architecture of business processes. It, in particular, determines the composition of the responsibility centers required to service business processes. The description of the centers of responsibility, formed during the development of the architecture of business processes, is the starting material for the description of the organizational structure.
The organizational structure differs from the organizational concept in a greater degree of detail and a certain degree of subjectivity. The fact is that the organizational concept is obtained as a result of a formal-logical process, while when developing the organizational structure, subjective factors should be taken into account, such as, for example, the readiness of a person to take a certain official position according to the level of competence of this or that person. Of course, the more detailed concessions to the “prose of life” we make, the worse the organizational structure. But it is impossible to do without this, because we have to work with the people that we have, and there is not always a choice.
So, let's list the main transformations that take place on the centers of responsibility in the course of building the organizational structure.
- Consolidation of Responsibility Centers. Recall that the centers of responsibility were formed on the basis of the principle of homogeneity of competencies (sellers with sellers, marketers with marketers, etc.). Therefore, unification is an undesirable trade-off that should be avoided whenever possible. However, in certain situations, this decision may be justified.
- Separation of responsibility centers as a result of additional specialization and separation of functions in business processes. For example, a sales department might be split into a front office that deals with customers and a back office that performs support functions in the sales process.
- Introduce an additional level of hierarchy. This is useful when it is necessary to divide competencies by level. A limited set of competencies should be assigned to lower-level performers, and experienced managers should be placed above them. For example, client managers can be divided into groups, each of which is headed by a senior manager who acts as a mentor and mentor for less experienced colleagues.