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A company’s structure consists of the functions necessary to conduct business. It’s less about who and where the people are than the functions that have to be provided. Even if you’re a sole proprietor, you structure – what has to be done and who does it – is a useful exercise. You can never be too small and it`s never too early to begin thinking about your corporate “structure” and the professional associations you have.
What has to be done?
Almost all business haves certain basic functional requirements. These include the following:,
- Sales and marketing – who gets customers?
- Customer Delivery of Services or Goods – who delivers the goods and services to the customers?
- Research and Development – who thinks up new things to provide customers?
- Customer Service – who services the customers after the sale?
- General Administrative and Accounting - who handles all the bookkeeping, collections, accounting and legal work?
- And in manufacturing organizations there is a Manufacturing function – who makes the goods?
Generally, it doesn’t matter how many people you have – these functions have to be performed whether it’s the same person that does them all or different people or departments that handle the task.
Variations…
Of course there are many different variations in how these six functions are implemented. Often this is a factor of size. For example, in large organizations, it is not uncommon for the sales and the marketing functions to be separated. In mid-sized organization, it is not uncommon for the Research and Development organization to also provide post sale technical support. It almost doesn’t matter how the various functions are grouped or handled, as long as they are!
The important part of structure
What is important in a corporate structure – particularly the larger ones – is how the functional groups interact and to clearly define the boundaries of responsibility for each group. Invariably, failure to do this well results in inter-function squabbles and “politics”.
Size, complexity and planning
The more complex an organization, and the larger the organization, the more difficult it is to establish meaningful plans coordinated between all the functions. Overall corporate planning must be parsed into objectives for each functional group, planned in detail, and then coordinated between the groups. As organizations become larger less wieldy, this becomes more difficult to do well and often results in execution problems and the different groups try to synchronize their activities to the overall company goals.
Burning questions about your organization
Key questions to ask yourself about your organization include the following:
- Is my organization too flat or too deep?
- Is my organization effective?
- Is it nimble?
- Is it becoming more or less competitive as the company grows?
- As an organization do we execute well?
Ask these questions before you start growing. It’s always easier to anticipate issues than to resolve them in a fire fight. In fact, it’s often a good idea to plan your organization in advance – what does your organization look like today? What will it look like if it grows by 25%? What will it look like if it grows by 50%? And so on.
Staying a step ahead on your corporate structure will always be worthwhile.
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