Organizational Structure Development

Best Practices in Organizational Structure Development

Role of Organizational Structure

Developing an organizational structure involves defining the framework around which the business operates and provides guidance to all employees by laying out the official reporting relationships that govern the workflow of the company. It is therefore important for every organization to have a well-structured organizational chart indicative of how an organization functions, how it is managed, how information flows and is processed within an organization, and how flexible or responsive the organization is.

The development of the organization structure highly impacts other aspects in the company such as communication, corporate governance, operations and procedures, organizational strategies, customer relations, and job satisfaction.

"Tall" organizations use many layers of management, whereas "Flat" organizations use fewer levels, and managers often have a wider span of control. At HOJCMC, the organization was at its development stage which required a simple structure showing clear lines of communication with other factors illustrated below:

  • Functions and responsibilities of each unit.
  • Lines of authority linking units.
  • Lines of communication between units.

Step by Step

Developing the organization structure starts with defining the objectives of each department as this is crucial in determining the organization"™s direction through goals, objectives, values and/or missions. The strategy defines the criteria for selecting an organizational structure and helps guide decision-making by:

  • Establishing an agreed-upon definition of objectives and strategies that is relevant to the business and its success.
  • Once defined, integrating those strategies into the corporate vision and linking to the organization's mission, values, job descriptions, corporate beliefs and goals.
  • Focusing on developing strengths by understanding that the organization has areas where it may lead, and others where it may lag.
  • Establishing accountability by encouraging people to set their own targets and report regularly.
  • Building on what already exists since HOJCMC is a part and subsidiary of HOJDC.

The second input for the design of the organizational structure is the mega processes. Within each of the mega processes many different departments, units and divisions are involved which need to work together. By using both the mega processes and the company objectives, the main departments will be identified with clear functions and divisions under each department.

The development of the organization structure then identifies clear roles and decisions in job descriptions which are key resources for all staff members. For managers, job descriptions are important to clarify levels of authority, and reporting relationship of each particular job. It is also an effective tool to be used in preparing performance standards and conducting performance appraisals, and can also be used for Hiring, Supervision, Training, Orientation, and Workplace coordination.

For other staff members, a job description is vital to clarify job duties, tasks, roles, and responsibilities. It spells out the skills, qualifications, personal qualities, and supervisory channels (to whom the staff member reports, or who is being supervised).

Once all these ideas are aligned, an organizational structure adaptive of change and indicative of communication lines and reporting relationships will be formulated.

How MENTOR can help

As Aiming toward differentiation is a core value at MENTOR, helping optimize structures and procedures stays one of our top objectives. MENTOR utilizes the latest in the global HR & Talent Management subject matter research and top multi-national organization's best practices to develop an efficient organizational structure aligned with each company's mission, vision, values, and objectives.

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