Organizing the structure of a company properly is one of the basic foundations of any business. Small and large companies all have a hierarchy. But where does a company start when it comes to organizing a structure? Does it grow organically? Is it based on geography? Or is it departmental? There is no one-size-fits-all structure. The answers to these questions typically lie in the size and type of company. Below we take a look at some of the different examples.
Common features that apply to every company
Big or small, local or national, someone has to be in charge and accountable. Whether it be the owner of a small company or the CEO of a multinational company, every business needs to have a boss.
The boss is the person with whom the buck stops. If things go well, the boss receives the glory. If things aren’t working out properly, the boss carries the can. The rewards or consequences for the boss will generally depend on the size and type of company.
Features of a small business
In small local companies, the boss could be the person who set up the company. This person could be a shop owner or own a local garage, who hired assistance as the business grew. In this instance, the boss would also be the owner.
For the boss of a smaller company, the structure should be easier to put in place. The best system to use would be a ‘flat organizational structure’ where staff might be required to cover multiple tasks, and not necessarily be in charge of anyone.
In general, with smaller businesses, the smaller the company, the easier it is to implement a chain of command. But this does not make the pressures of the job easier for the owner. Any small business owner could stand to lose far more than just their job if they get things wrong. Quite often, the owner’s property could be on the line. Or they could have used life savings to start the company or invest further in it.
Features of larger companies
In large national or multinational organizations, there may be a board with final accountability and shareholders who own the business. The board would appoint a CEO to run the company.
The CEO would have a structure beneath them, which may have grown organically as the company increased in size, but will very likely have been altered and adapted as the company expanded. This system would be known as a ‘hierarchical organizational structure,’ as it would have a recognized chain of command.
Beneath the CEO of a large company will be a whole batch of departments, all requiring their own respective hierarchies. One vitally important department would be that of finance. A finance department would be run by a CFO or a Chief Financial Officer. Typical CFO responsibilities would be allocating budgets, keeping track of expenses, and planning and analyzing future budgets. In short, the job of a CFO is to keep the company finances in order. And in the company chain of command, the CFO would report to the CEO.
Whatever the size of a company, having a solid and recognized chain of command is a must. Its importance is not something that is to be taken for granted and is something that probably isn’t even noticeable to the outside world. Remove the chain of command, or get it wrong, and the chances are it will certainly get noticed. And not for the right reasons.
