--By Vaijayanti Khare
There is no excuse for a stuck structure, and yet more and more of our medium and big organisations are stuck! The people, roles and way of working has ossified. All talk of redefining, restructuring, renewing is just that: Talk. Adding boxes, cutting lines, crossing or shuffling boxes on paper, on your organisation chart, if you have one at all, is just a display: nothing really changes where it matters most. The truth: it is a stuck organisation.
An organisation structure is a model that defines a hierarchy within an organisation, identifies each role, function and inter-relations within the organisation. This structure is developed to establish how an organisation operates and directs critical paths to the goals and future growth and is illustrated by a chart, ‘Organogram’ as it is commonly called.
What then is this organisation structure? As a structure, it is a network of internal authority, responsibility and relationships. As a Chart it is the Map of the relationship of persons operating at various levels, to accomplish the very objectives of an organisation’s existence! It shows the systematic combination of people, functions and physical facilities, definite authority and clear responsibility.
The ‘making’ of an organisation structure and the Chart that represents it, is best done through inclusive management. It reflects the culture and robustness of the organisation. There could be a formal and an informal way in which the Structure/Chart takes shape. One is pre-planned and defined by executive action: top-down. The latter is laid down by the common sentiments, interactions and other attributes of the key people in the organisation: so made through robust debate and discussion. Both these methods result in a formal structure, accepted and understood by key functionaries and then cascaded to all levels in the organisation. The main features of a good organisation structure are a clear line of authority, adequate delegation of responsibility, managerial levels, and proper span of control.
Although the traditional hierarchy of the industrial age is rapidly disappearing, the new organisational structure of the information age has not yet emerged, although there is significant amount of experimentation. A structure or the chart is not sacrosanct and rigid but dynamic and flexible.
Looking beyond the lines and boxes, an organisation chart speaks of expansion, communication, job description, remuneration scales, performance evaluation, decision-making and achieving goals.
The structure shows the room for growth and direction of expansion. This includes adding additional layers of management, new divisions, expanding functional areas or appointing top executives. When the structure is reorganised for expansion, it provides the foundation to revise strategy and job descriptions quickly and efficiently with minimal disruption to operations. So, the chart speaks volumes of the strategy, executive planning and future growth.
An organisation structure is particularly crucial for communication. It enables the channels of authority. When a person starts a job, she knows from day one who she reports to, the lateral and matrix communication lines. Most companies funnel their communication, up, down and lateral, through department leaders. An employee is happy to see his ‘location’ in the scheme of things and his ‘path’ of growth and self-realisation.
When an organisational structure is designed, job descriptions can be developed to meet current goals and for employee growth. Internal equity and employee retention are key to successful operations. Recruitment is also one of the highest investments for organisations, so ensuring employees have promotional opportunities and job security can assist in reducing recruitment costs. A good chart thus shows career graphs, succession plans and incentive to perform.
An organisation chart directs performance evaluation. The linear structure of function and product guides supervisors as to the required skills, competencies and knowledge areas to evaluate. Supervisors can evaluate behaviours and efficiencies effectively. Consequently, supervisors can more readily complete performance appraisals that then feed back into building a robust department structure.
Organisational structure is core to creating remuneration packages. Once the structure is established, salary ranges can be created for each job. In most cases, each job is aligned to a salary grade, and each grade has a specified salary range. This allows an organisation to meet its financial goals and ensures salaries are distributed fairly within financial budgets. Just a look at the organisation/department chart should give the indication of the financial outlay of departments.
Decision-making is another important spin-off of a good organisation structure. Most companies either have a tall or flat structure. Flat structures enable quicker decisions. Research and practice says that companies with less than 15 employees can do away with a formal structure and be ‘agile’ in decision-making. A creative way to use this is to make departments/units within an organisation ‘flat’ with autonomy to function independently.
A well-made organisation structure defines management, leadership, delegation and team style. It captures the culture and the differentiator of an Organisation. The Chart speaks volumes of the people-process-philosophy in your Organisation.
This map, the organisation chart, of your Organisation, is a matter of pride. It is more than the territory. Display it with pleasure on the corporate communication tools and in the offices of departments and key personnel. It will add to the employees’ feeling of ownership and belonging and the confidence of the industry, the customer base and the world at large, in your Organisation.
Vaijayanti Khare is known for her dynamic engagements in the corporate, academic, social and development fields in Kathmandu over the past decade. Her writings are a reflection of her hands-on work, insights, studies, success and challenges.
