Guide to Establishing an Organizational Structure

Business.com / HR Solutions / Last Modified: February 22, 2017

Establishing a strong organizational structure can increase a company's efficiency -- whether it consists of two employees or 200. ...

Establishing a strong organizational structure can increase a company's efficiency -- whether it consists of two employees or 200. Organizational structure identifies the positions in an office, determines who manages departments and defines individual job roles. Organizational charts or "org" charts are often used to display the org structure.

Very small companies may have a simple organizational structure, with one manager making decisions. Larger companies may divide the company into groups to distribute responsibility. Putting an effective organizational structure into place can increase productivity, improve operating costs and employee satisfaction. If your business has grown beyond its initial structure or your current organizational design just isn't working, it may be time to rethink the roles your managers, departments and committees play and move toward a better  company structure.

Options to develop a company organizational structure include:

1. Design your own simple organizational charts.
2. Allow a human resources department to outline your company's org structure.
3. Use software to help map out an organizational structure.
4. Hire management consultants to determine your organizational design.

Create your own org structure

If your company is very small (for example, five employees or less), a simple organizational structure -- identifying the owner or president and supporting staff roles -- may work. However, you still need to assess your current resources and consider future needs. Who will be in charge when the main decision maker is out of the office? Who will take on new responsibilities as work increases?

Empower your HR department to create a company organizational design

If your company is large enough to have a human resource department, consider giving it a large role in determining your organizational design. As the entry and exit point for all employees, HR staff members should be able to assess worker needs and resources.

Consider purchasing software to create your organizational charts

Not only can organizational structure software help create org charts to visually show where current staffing needs exist, some versions help track staff changes and can provide quick employee totals. A number of software options exist for creating organizational charts for both small and large companies.

Hire a consultant to produce an organizational structure

Management consultants can help assess your company's needs and establish a new, more cost-effective organizational structure. Although hiring a consultant is an added expense, many firms will provide a project estimate before starting to help you budget for the service.
  • If your company has recently grown or its organizational structure is outdated, consider developing and instituting a new organizational design.
  • Even extremely small companies can benefit from implementing a simple organizational structure after assessing resources and needs.
  • Organizational charts can help set responsibility and establish a chain of command, improving communication and staff relationships.
  • Share org charts with your company so that everyone knows which employees are responsible for various functions, who should be contacted for information and how the internal positions relate to each other.

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