Organizational Structures for Small Businesses

In life, we need to keep things organized so that we know what to do. When it comes to business, organization is important to keep everything flowing perfectly. Everybody has a role to play and these roles need to be made clear so that staff and employees know where to go if they need something. Organizational structures are formal systems that show the tasks and hierarchy of the people in the organization. It classifies the responsibilities and roles of the different positions and what relationship in present between them. A good structure coordinates and controls the organization’s resources and helps motivate employees in achieving the collective goal of the company.

Distribute Authority

An organizational structure should establish an order that determines each of the position’s responsibilities. It should also show how the different positions are related with each other. In management, people need to know who decides what; this is where authority comes in. Authority can either be centralized or decentralized. Supervisors can make decisions for the majority or a collective decision must be made.

DeterminesSpanor Range of Control

Even in a small business, there should be a guideline that sets how many people a supervisor or manager takes charge of. This span or range of control varies greatly between different organizations. Some manager might have narrow spans and only manage a few people whereas others might have wide spans and manage a big group of people. Either way, this helps set management to prepare how they will manage these people.

Organizational Height

There is always a hierarchy in any organization. Think of it as a cake with different layers. However, an organizational structure’s height is what sets it differently. Some organizations might be tall, which means that they have narrow spans of control while others flat with wide spans of control. Organizations with a more flat organizational height tend to adapt faster.

Staff or Line Structure

Highlighting and determining staff and line positions and tasks is one of the most important uses of the organizational structure. A line position is the most directly involved position to the organization’s main goal. For example, line positions inside a manufacturing business are the one that participate in producing the businesses products. Staff positions, like marketing officers, provide help.

Creates Departments

When small businesses decide to expand, an organizational structure can help with creating more specific divisions or departments for responsibilities and tasks. This process is called departmentalizing and can be done in different ways. A department can be made based on product, function, geographic location, and even by client.