The importance of strategy should never be underestimated. It decides which companies succeed, and which companies fail. Even if you have the greatest service in the world, it means nothing without a good strategy.
The organisational structure of your business is the ground on which you build a plan. It tells you which tactics are feasible and how you should go about implementing them.
Ultimately, your strategy and structure should work seamlessly together. But what factors shape this relationship?
- Decision By Design
Before any structural assessment or reform, ask yourself: Why does this organisation exist?
When you understand your company’s purpose, it’s easier to create a structure that supports this end. This doesn’t mean predicting every choice the CEO will make. It simply means gearing the processes you have to what you want to achieve. The long-term strategy of your business should be built into the DNA of the company. This will make day-to-day decisions a lot easier.
Once you’ve decided your aims, you need to look at the scale you’re working with. A start-up with five employees doesn’t need the same level of organisation as Amazon. In smaller companies, the whole team takes on a range of roles. For example, there might be one person in charge of all PR and Marketing. In this case, the CEO can implement strategic decisions by telling the team in person. As the company expands, there is a greater need for a clear structure.
The main goal of having a strong organisational structure is to improve the efficiency of the company. This will help you achieve other things like saving time and money. It’s impossible to run a sustainable business without efficiency. If twenty people are doing the same work, they waste the time they could be spending on other things.
Imagine someone in the Marketing department decides they want to target over-60s. They do research to assess the market. However, last year, someone in the Sales department did a full report on clients they dealt with from this demographic. Without good horizontal structure, these two useful tasks might never come into contact. The Marketing partner wastes time doing work that’s already been done.
It’s crucial that form follows function. Consider what works best for your business and build the structure around that. This means identifying core themes you will face and designing channels of communication to fit around them. Organisational silos might seem simple, but they only make things more difficult in the long run. An efficient structure allows for clear, consistent communication.
No matter where you work, the company is built on relationships. An effective structure is all about turning these informal relationships into formal relationships. Creating a formal, legal structure can help you to deliver policy in a way that is efficient and legally compliant.
As the company grows, more and more people have a stake in the results. When huge corporations make mistakes, there are real consequences for a range of groups. Numerous staff members, customers, and communities rely on the organisation to be responsible. As a result, it’s important that any strategic processes are clear and transparent: for ethical, practical and legal reasons.
Do not underestimate the amount of time and resources it can take to do this. Anything that is worth doing is worth doing well. Your shareholders and stakeholders have invested in you for a reason and they will expect a level of professionalism.
When structuring an organisation, you need to consider how centralised you want it to be. There is no single right answer. A centralised system has pros and cons. In general, a tightly-knit company allows for simpler decision-making. It’s easy to gain a consensus as there are not as many people who have to agree. This means decisions can get made faster and supports efficiency.
As we touched on, it’s easier for small companies to be centralised. The CEO can make a higher percentage of the decisions as there are fewer decisions to make! A florist at a market might notice it’s raining and make the strategic decision to close the stall within 10 seconds. This kind of instant decision-making is not possible (or desirable!) in every company.
There are some drawbacks to this kind of system. One benefit of a decentralised model is the level of checks and balances. A highly centralised company might end up making rash decisions which can be dangerous. When there is a more spread out structure, any drastic change has to go through numerous levels before being agreed. There will always be someone to debate an issue!
Another advantage of decentralisation is that everyone knows what they are doing. There is a greater separation of labour, so departments can become skilled in certain areas. It’s better for the Legal department to be experts at company law, than for them to know a little about Law, Sales, Finance and Marketing.
The Covid-19 pandemic has shown there’s no such thing as certainty. Strong structure does not mean rigid, unadaptable structure. Your company should be able to adapt to changes and face challenges. This will help you to deliver a strategy that is appropriate to your market and sector.
Part of this flexibility should come in the planning stages. Any structural reform you implement should take flexibility into account. You may wish to be flexible with the time-scale and budget of the reform, until you know what is reasonable for your company.
Sectors are always changing, so your company should be too! Staying on top of your metrics and KPIs will help you to remain active and evolve in the future. We don’t know what the world will look like in a year, let alone five years. Make sure you put in the effort to create a sustainable company.
A Board portal like Convene can support you in designing the best structure for your organisation. The comprehensive software was conceived to streamline communication. From crafting the meeting minutes, to creating a clear audit trail, our features can simplify your internal processes. Read our customer success stories or book a free trial today!