Business organisational structure

A business organisational structure is heavily dependent on the type of organisation that runs it. The organisational structure is very important for the healthy growth and success of a business. It forms the base upon which the business is built upon. The business prospers mainly due to the organisational structure. Basically, every business that comprises more than one person needs to have some kind of structure. This structure is not only the flowchart of employees, managers, subordinates, super-ordinates, etc but it also determines the flow of information from one end to the other.

Businesses may be structured in a variety of ways to bring out their advantages and hide out there limitations. One should choose structure after carefully consulting his financial adviser, accountant or banker. This is done to optimize the business. There are many types to accomplish the task of a business.

  • Sole Proprietorship: A single person owns this type of business. He is in control of everything. He receives all the profits and deals with every loss. He is held responsible for all taxes and liabilities of the business.
  • General Partnership: It is such a type of business where two or more people are the co-owners of a business where profit is divided by a certain percentage. This percentage is decided by oral or written agreement.

For a small local business, flat organisational structure is the best structure. These types of structures have fewer management levels. Communication is very fluid and fast. Reactivity to changes in the market is also very efficient. Since this type of structure is employed by local, small businesses, work is very efficient. With fewer levels, each controller has many persons at his disposal. They focus more on empowering employees rather than adhering to the chain of command consisting of vice presidents and managers etc. this structure utilizes the creativity and fast thinking of the employee, since freedom is given because of less supervision. This less supervision is caused by the amount of employees a single manager or controller has to oversee. Thus, they tap into employees basic talents to solve problems by collaboration.  The efficiency might be decreased since not strict supervision is presented to the employees, so one should always remain careful about this structure and the amount of subordinates and employees under a super-ordinate.

Human resources professionals are mostly asked by companies to make organograms for them to ease the work of managers and executives. This is done to accurately assess the organisation as it has been structured and could respond to frequently changing market conditions.

For multinational, large businesses, which comprise of complex organisations are better off with tall organisational structure. There is a long chain of command in this type of structure. This structure is ruled by CEO’s and presidents, then come Senior Vice Presidents, then VP’s and then the basic managerial level. This type of structure is perfect for big, worldwide businesses since it has a long chain of command and strict supervision in all departments. The rules and regulations are very tough. Some drawbacks of this structure are problems in communication among departments.