First of all, what is an organisational structure?
It is a fairly regular occurrence to begin working with a company and find out there is no organisational structure. Sometimes, business owners don’t understand what one is.
Organisational structure is a family tree. It’s a pictorial representation of reporting relationships, who manages who and who reports to who.
Company growth and organisational structure
A structure diagram helps you establish the reporting relationships that govern the workflow of an organisation. Therefore, a formal organisational structure diagram makes it easier to add new positions in the company. It can also identify which team the new post fits most closely with. As well as who will take responsibility for the new post.
A formal organisational structure makes it easier to understand where your salary costs lie and when do you stop recruiting? Being able to take a helicopter view of the company and the posts within it allow you to ask questions. Such as, which posts are fully utilised and where there may be spare capacity to absorb additional responsibilities. Conversely, where there is headcount which is not fully utilised and where savings can be made.
Significance for employees of having an organisational structure
As a business owner, you may know how all your people inter-relate and who is responsible for what, etc. However, without a formal organisational structure diagram, employees may find it difficult to know who has the final responsibility. An organisation structure improves operational efficiency by providing clarity. It’s surprising how many companies who draw an organisational structure for the first time discover that it has numerous job titles for people doing the same or similar jobs. For example, Administration Assistant, Office Administrator and Administrator being the array of titles in one company for people in different locations, doing the same job. But were being paid different salaries!
Explaining what an organisational structure is to employees
Just as some business owners don’t know what an organisational structure is, some employees don’t understand that it is used for identifying organisational relationships. An example of this was an Administration Officer who looked across the chart to find herself at the same level as a Cleaner. To say she took umbrage at this is an understatement! Although this example probably tells us more about that individual’s perception of their self-worth compared to another colleague. It also highlighted a real problem when introducing an organisational structure into an organisation that’s never had one. You have to issue a set of instructions about how it is to be read or run the risk of uproar!
Your Instructions and Structure:
- It should be read vertically not horizontally.
- Show lines of responsibility. It is not a job evaluation tool that visually depicts the worth of individual jobs. So, it should be read vertically not horizontally.
- Often, the challenges of drawing an organisation structure and keeping it on one piece of paper means that posts are slotted into the chart where there is space. Employees need to be informed of this.
- Therefore, it should be read vertically not horizontally!!!!
- Finally, allocate a ‘keeper of the structure’. One person in the company who is responsible for maintaining the organisational structure. They must add and delete posts to always have an up to date organisation structure that isn’t continually morphing.
Previous experience!
We signed up one client that had been trying for 5 years to have one organisational structure. For 5 years department heads changed reporting lines. They also recruited staff to posts that hadn’t been formally established or to posts that were doing the same job. At one point in time they had three different representations of their organisation structure. Together, they had an uncontrolled salary budget and lack of ownership and responsibility.
It’s not unusual, and completely understandable, that a start-up business may not have a formal organisational structure. However, before you grow too big, draw one out and issue it. Start before your workforce is too unwieldy. Therefore, your organisation can operate more smoothly and efficiently.
What to do Next?
Call Metis HR for help and advice. Metis HR is a professional HR Consultancy based in the North West of England supporting clients across the country. We specialise in providing outsourced HR services to small and medium-sized businesses. Call us now on 01706 565 332 to discuss how we may help you.
