To operate efficiently and effectively, a company must have a well-designed structure that dictates interactions and how work gets done. The company needs to put forth a formal system that clearly explains the terms of decision-making, task completion, and overall communication to complement the needs of the organization.
There are five main characteristics an organizational design should have to be efficient:
1. Defined and Documented Structure
Any company structure, whether large or small, should have a set framework that defines the hierarchy within its body. The structure should clearly define each job, explicitly stating the function of that job, the scope, and the senior management the role reports to.
The structure should be clearly communicated to each employee so that they understand it and see the benefits of its existence. It should encourage employee growth and innovation by allowing employees to contribute to decisions that affect their job.
The company structure should also be well documented and easily accessible to all employees to avoid people getting confused about their tasks and roles, or spending time on tasks that are out of their scope, which slows down production.
A good organizational structure will have a set communication hierarchy that decrees how staff communicates with each other in different situations. It will outline how tasks are delegated and communicated to employees, how employees keep management updated on tasks, and how they report or lodge complaints about issues. This will help improve day-to-day communications, which in turn will improve overall performance, as 97 percent of surveyed employees believe that communications impacts their tasks daily.
An ideal communication structure will have a documented chain of command that guides employees in their daily interactions. The chain of command should not be rigid; it should just be a guide on who to approach about an issue in the company. This communication structure should also take advantage of tools like Skype and WhatsApp, where company messages can easily be shared to all employees.
A clear communication structure allows leadership to improve interactions in the company. Upper management should champion knowledge sharing and transparency to encourage a healthier internal communication system.
3. Employee Engagement and Development
A healthy organizational structure will have proactive systems set forth to engage and encourage employees to give their best in their daily tasks. Engaged employees are committed to organizational goals and work towards achieving organizational success. They are motivated, and have a high productivity level. A Gallup employee engagement poll found that companies with fully engaged employees outperform their peers by an outstanding 147 percent.
Unfortunately, the research goes on to say a staggering 87 percent of employees are not engaged, which means companies are missing out on increased productivity and high performance. To improve employee engagement and help employees develop their careers, a company should offer growth opportunities. Management should have discussions with employees about their career plans and how their current roles fit into those plans. If the employees feel their skills are not used to the best of their ability, evaluate their job scope and talk to them about revised job functions.
Give employees meaningful work that contributes to the growth of the company, and set up a rewards and recognition system to commend good work. Encourage a hands-on leadership style among managers, and have an open communication platform where employees can voice their ideas.
4. Clear Vision
Every company should have a vision. It serves as a foundation for establishing company goals and objectives. Without a vision, a company is like a ship drifting aimlessly at sea; it has no destination, therefore any direction. This will lead to jumping from task to task just to stay afloat, which reduces productivity and impacts revenue.
Your organizational structure should be created based on your company vision. Clearly outline what you stand for, what you want to achieve, and your moral and ethical bounds. The vision should be concise and provide direction for the business. It should motivate employees and give them something to look forward to, helping them execute their tasks in a manner that contributes to the overall company goals.
5. Strong Leadership
Without strong, united leadership to implement and enforce all the above points, the organizational structure is headed to failure. Management is the key to an effective and efficient organizational structure, and without their effort, even the best structure will collapse. According to a Gallup study, 75 percent of employees leave their jobs because of their bosses and another study says 70 percent of employees lack confidence in the abilities of senior managers; they are not fully engaged, and as discussed above, lack of engagement affects performance.
This shows that managers are the keystones to your company performing better and increasing revenue. Train managers to lead in an ethical way that respects and uplift employees. Create a structure where employees can openly communicate with managers without fear of repercussions. Most importantly, lead by example, treating management well and actively help them grow.
An organizational structure is the backbone of your company. Without a solid structure, your company success will be much more difficult. Use the points above to create the right conditions for everyone in the company, to motivate them to give their best for the success of the company. Management needs to be at the center of the structure implementation and enforcement to make sure it takes effect and provides the best result for the company.