How to build a company structure
January 18, 2020

Productivity

How to create optimal company structure

By Alexander Sergeev

Every businessman sooner or later grows out of the format of “working alone” and moves to a new category – “company”. And he immediately faces the question: “How to organize the business?”.

When you work alone, you do not need any organizational structure for your small business. All the functions that must be performed to make money seem so obvious and clear that there is no need in further description or explanation. So, the entrepreneur knows all his work very well and know how it turns into money and has no problem.

When does a company need a clear structure?

Problems arise when the first employees appear “to help the entrepreneur”. During the very first days of their work, the entrepreneur can’t stop being shocked by the employees’ stupidity in the company’s matters. They do not understand the obvious things. But in most cases, this stupidity is seeming. You’ll be surprised how much their look at the work of your company differs from your own. You just start looking at the same company from different points of view. It’s obvious.

For you, it’s much easier to understand your company. At least because your company is very close to you, it is in your mind. When you look at how your business is organized, what functions should be implemented and which flows must exist, you use the information, which is, in fact, contained only in your mind. And your mind is usually the only carrier of the information about your business.

Unlike you, your employees do not have access to your mind. Fortunately!.. Fortunately, they don’t need it, let them develop their own minds. But they need access to information. For the normal operation of the organized company, you and all your staff need to work in cooperation.

It seems obvious. But until you describe your company’s work in the form of charts and documents and make it well-known to all the employees, they will work in a company, the structure, and principles of which they’ve invented themselves in their own minds. Every employee has its own picture of the company. These pictures can be very different from each other, and, which is most unpleasant, from your own picture.

This leads to misunderstandings, conflicts, the poor performance of the team and, of course, to insufficient income. It is your responsibility to give the necessary information about the company to your staff.

Where to begin?

Draw a diagram of your company structure. Even a simple scheme will be much better than the absence of any scheme. It can be discussed with the staff, improved and detailed. This scheme will give you a starting point for the creation of the optimal structure. And most importantly, each employee will see the same scheme of the company and understand it better. In fact, it is only the beginning of the organization, but it is a very good start.

Here are some guidelines and criteria for the creation of the optimal organizational scheme of a company. They are not structured in order of priority or importance, we just advise you to pay attention to them.

  1. When creating a structure, think about the final result of your company. What is the company designed for? A good company scheme is actually a description of the conveyor (a mechanism) of the creation of the company’s product.
  2. Try to create a structure without reference to the specific employees. It is not always easy. Consider the features you need and not the existing staff. Do not dispose of function only because no one can perform it now. Do not combine diverse functions in one unit because now they are performed by one person.
  3. Place the units in order they appear in the production process. For example, first sale, then accounting, warehouse, etc. It would be logical and it will be easier for new employees to understand the work of the company.
  4. Do not allow several managers to be the heads of one unit. It’s obvious. But in some cases employees can receive different orders from different managers, become confused and not do anything.
  5. Create a structure “for growth” of the company, not to alter it in the near future. Try to predict the functions that may become useful in the near future.
  6. Be sure to print the scheme and inform the staff about it. It will be useful if you write a story about the developed structure. It will save your time in the future because you will be able to give this story to all new employees and not retell everything again and again. The scheme itself should be easily accessible to all employees, for example, posted in the office.
  7. Revise the organizational scheme of a company at least once a year. Add new features or units which appear with the growth and development of the company and inform the employees about them.

The organizational scheme is, so to say, the construction of a company. And when we construct something we become engineers. Engineers have one professional trick that they routinely use in their work. They are happy to discuss this in their professional environment but try not to make it well-known. The trick is that engineers rarely invent something really new, something that did not exist before. The development of engineering science is, as a rule, the evolutionary process, simple improvement, and modernization of the existing things. Solving the task, an engineer always explores the existing solutions, prototypes. And then improves them depending on the task.

People call this approach “do not reinvent the wheel”. This fully applies to the creation of an optimal structure of the organization. It is already “invented”.

It was developed by L. Ron Hubbard in 1965 as a result of the research of the successful development of various civilizations, past and present. He discovered the natural laws of development of the group and described them in his works. He also described the organizational scheme and principles of its creation.

Since then, there is no need to reinvent the “wheel” called organization, you can simply use it for the needs of your company. Hubbard’s works on management are publicly available and you can apply them in your business and in the creation of an optimal organizational scheme of your company. Also, you can use special tools, that will make managing processes clear and convenient.

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