Explanation of the Company's Organizational Structure

The organizational structure of your small business will reflect the ways you differentiate employees into different jobs. Each person will have assigned duties that you expect her to achieve in support of the company's mission. You will count on everyone to do their jobs to maintain smooth operations. If your business market changes significantly, you might update the organizational structure, but this requires changing how employees think about the structure and the routines that keep it stable.

A simple way to define organizational structure is to think of what your company's organizational chart would look like. You might have an arrangement of employees' positions beneath you or the management position you've created for the company. Employees who hold the same level of responsibility are ranked at the same level on the chart. Employees with the lowest level of responsibility are located at the bottom of the chart. Individuals on a team may be linked on the chart to each other as well as to their manager.

If you don't have any employee ranked above any other, then your business has a flat structure. Even in this structure, your business might demand that employees have different tasks. It could be confusing to give everyone the same job, unless there is just one kind of task. You can give each person a specialty and a small amount of responsibility, or you could create teams. The structure you pick should provide for efficient flow of information. If you're the manager, you should give employees enough information and learning opportunities to do their tasks, and then they must take charge of activities delegated to them. Seek a balance between employees being self-directed in their work and coming to you for directions.

Some businesses require a vertical hierarchy, perhaps because of the nature of the work, the ways that the business market is already arranged between suppliers and customers or the owner's management style. You are at the top and you have employees arranged below you in a clear chain of command. You can count on your orders to be passed down the ranks, but you also need a way for information and ideas to flow back up the chain. This requires building an organizational culture.

Your organizational culture will help employees understand their position in the organizational structure. The culture refers to the beliefs and norms of accepted behavior that employees use every day. In a vertical structure, people might give more formal treatment to employees at the top of the hierarchy out of respect for their rank. In a flat structure, each person might be an equal, and so there is little need for formality in the interactions among colleagues. You can teach employees the values that you want to govern their relationships at work. For example, you might require a high degree of formality for all employees, regardless of position, because this is the atmosphere that you feel is best for serving your customers.