Organisational structures for SMEs

Why is structure important in a small business?

- Employees need to know where they and others fit in an organisation. Lack of clarity can be confusing and de-motivating
- Growing and changing the business will be simpler if you already have a disciplined and open approach to reporting lines and responsibilities
- The process of formalising an appropriate structure will force you to address inconsistencies, gaps and duplications – and to consider how effective your people and processes really are

How do you decide on an appropriate structure?

- There are some basic principles that you need to embody in your structure

    o Single reporting line – every employee should report to one and only supervisor. (Do not confuse reporting lines with providing a shared service; for instance an administrator can support several managers but should only report to one person for pay and rations issues). Avoid dotted-line reporting lines
    o Division of labour or specialisation – group similar activities and skills together in departments or sections
    o Each post should have clear responsibility for outputs or results which is matched with appropriate authority over the resources necessary to achieve this
    o Span of control – no more than eight direct reports to each position
    o Lean organisation – keep the total number of levels including the leader and the front line to a minimum – in most SMEs this will be between two and four

- Start at the second level with three main responsibilities

    o Winning business
    o Delivering the product or service
    o Getting paid and admin tasks

- There should be one position responsible for each of these roles (but this may not be three separate people in a small business)
- Almost all small businesses should use this functional structure. Larger business may adopt a divisional or matrix structure
- Do not design a structure to cope with or work around individual inadequacies or historical accidents – deal with them
- Generally, but not always, a superior should be better rewarded than their employees. It is worth questioning why if this is not the case

Implementing the structure

- As with all HR-related activities, the process is as important as the result
- It is an opportunity to communicate with (ie listen to) your employees. Effective consultation will achieve a better result and more buy-in
- It should be done in conjunction with job descriptions and, if relevant, the incentivisation scheme
- The structure should be published as an organisation chart and kept up-to-date

My workshop programme covers this and every other key part of running a business, from strategy through to invoicing. For more details of this comprehensive and affordable course visit my business advice website.

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Is your business direction clear?

Clear direction - a vision, mission and strategic objectives - is essential for any successful business.  Business owners ned to know:


· The importance of a motivating and guiding vision for any business and how to construct one
· Ways to turn your Vision into a compelling Mission for your staff and customers
· How to identify and set concrete Objectives that will keep you on track towards your goal whatever happens
· Why growth is not optional - and why unplanned growth will damage your business – and why growth itself brings challenges
· What successful business owners spend their time doing – and not doing

If you'd like to learn how to do this then this seminar is a must:  The Road To Growth

More information on my website:  http://www.nickbettes.co.uk/

Thinking about selling your business?

Preparing in the right way could get you 2-3 times as much for your business.

Getting your company fit for sale could mean the difference between getting nothing and getting a great multiple.

It's not about numbers.  It's about strategic positioning and generating competition between the right buyers.
It's what you as a business owner should spend your time doing.

Make a start.  Come to this business advice seminar.

More information on our business advice website

Feeling the management strain?

As your business grows it doesn't just get bigger.  It gets more complicated.  More staff,  Bigger, more demanding customers.  More rules.  Trying to manage through other people.  Delegation.

You'd go mad trying to run it the way you used to run a small business - or give yourself a heart-attack.  And you'd fail, and go back to being small.

There is an alternative.  Learn how to manage a big business at this business advice seminar.

Or take a look at our business advice website.