Basic Principles of Organizational Structure
Organizational structure is the framework of a company through which individual work can be effectively coordinated and managed. A good organizational structure should be developed based on the following principles:
- Strategy oriented. The ultimate goal of organization design is to achieve the strategic objectives. Therefore, the design should aim on serving to reach the goals. It should be designed with the optimal position arrangement that make the most benefits for the final goals.
- Position oriented. Make sure that you design the organizational structure around positions, not people. The organizational structure is composed of functional positions that contribute to the business aims. These positions are basic units of the organizational structure. Find suitable people to fill the positions and make optimum effects. Although some people play important roles in the business, you could not organize your business around their needs, since it might overemphasize the function of people and make the company structure disorganized.
- Stable and flexible. First, the corporation structure must provide a solid and stable working environment for everyone. This is the prerequisite to run a company. Avoid frequent changes because it will bring chaos. Second, the corporation structure must also be flexible enough to adapt to the internal and external environment changes.
- Strengthen accountability. A good organization design will promote accountability. It should make the supervisors assess their subordinates’ performance easily, so as to conduct adequate guide and control. Every point person must be clearly identified per unit of the organization, so that there is less confusion as to whom should be responsible for which part, and on whom should be coordinating the efforts. Make sure the hierarchy is reasonable and smooth, and the information flows rapidly and clearly from the executive committee to business units, functions, and departments.