Building an organizational structure is one of the hardest things I’ve worked on as an entrepreneur. It requires many hours of work and design, and the efforts must be constantly adjusted as the context and the way the company operates changes. The organizational structure is the skeleton over which all company responsibilities are built. When it is clear what team is responsible for what and how each role fits into the grand scheme of the company, work is more efficient, and the probability that an important task will get lost is greatly diminished.
How a company is organized depends on its industry, but I’ve found some overarching concepts that I’ve applied to Celaque. These ideas have held ever since I implemented them and have only become more relevant with time.
Responsibilities should be grouped by function. Everything that pertains to invoicing, for example, should be handled by one team. Therefore, sending out the invoices, providing customer service related to those invoices, and ensuring that the payments come in should be one team’s responsibility. When functions are handled piecemeal across different teams, tasks may be reproduced, or actions may be left out.
Duplicating functions across various roles is also something we avoid at Celaque because although this may provide accuracy or may be serving different departments, it makes the overall design inefficient. I’ve seen companies that have two Human Resource (HR) departments in different business units that work independently from one another. I would rather group HR into one single department so that all the best practices and knowledge are accumulated in one place. Also, when the work is only held in one place, it is always clear who is responsible.
At Celaque, we are organized by departments. Given that we are a real estate development firm, our groups are structured based on our specific needs and they are: Corporate, Finance, Projects, Properties, Sales, and Developments. Three of these departments are specific to the real estate industry, while the following are common in others:
Corporate: this department houses strategy, reporting to the Board of Directors, systems and processes, and HR.
Finance: handles accounting, legal, and relationships with banks.
Sales: responsible for finding new clients and selling or leasing our portfolio of properties.
Each function is clearly defined within the departments and grouped in a way that makes sense for our company. Each team member knows where each operating process resides and whom he or she needs to speak to if there is a question or issue to resolve.
I designed our structure so that each person is responsible for all the operative pieces of his or her work. Consequently, everyone is responsible for his or her work calendar and calls. Organizing responsibilities in this way results in a flatter, more streamlined arrangement.
This same concept applies to more complex responsibilities, such as producing reports and leading improvements in each area, where each team is responsible for managing these tasks. A flatter structure has an advantage in that the information is as close to the user as possible. Each person can then take the reports and work with the information to modify and improve it. Also, innovative capabilities are spread across the company, and the team can then take ownership of new initiatives within the group.
Eliminate unnecessary barriers to the free flow of information. Each person should have access to all the data he or she needs to perform the best work. I’ve found that boundaries keep cropping up where I don’t expect them to, so it’s important to continue preventing them.
Of course, there are instances when it’s appropriate to erect digital fences such as around HR, accounting, and other departments where there may be competitive or confidential information. Here, these privacy practices should be in place and protected. Everywhere else, however, we continue the process of removing barriers. I’ve found that people tend to honor their roles and care for the information that is entrusted to them.
Sometimes some responsibilities can fit in with more than one department. In this case, the function can be built around an individual or team’s strengths. In our case at Celaque, we’ve been experimenting with the best department in which to place our marketing team. It could live within corporate or sales, for example, but for now, the marketing team is currently handled by our developments manager who has a natural affinity with the department.
The overall structure should be flexible enough to allow for occasional movements that improve the entire scheme. If the organizational configuration is strong enough, it can withstand some shifts in smaller functions.
Changes in the Team
When an employee leaves a company, it’s a good chance to revisit the organizational structure, so it still makes works. Sometimes people accumulate responsibilities that are not necessarily properly structured around the current company’s lines of reporting, especially when an organization is growing. Over time, the team learns how things can be more efficiently structured, and sometimes, because someone is already there, it is simply easier to leave the structure as is. When a person leaves their current responsibility, it is an opportunity to improve processes that could work better.
It is also a chance to shake the tree of responsibilities to see what was working and what wasn’t. I tend always to find adjustments that need to be made, like processes that need clearer operational direction or department sharing (please refer to my blog post How to Improve and Grow Your Business with Effective Processes for more on the topic).
The benefits of designing a clean, flat organizational structure are immense. The teams become more autonomous because they can then control all the responsibilities that contribute to how their final product is built. Additionally, knowledge is accumulated in the right places. Each team starts to develop policies and best practices that are passed to other members and stay within the team. Finally, a well-designed structure improves the efficiency of the overall company. Both those on the outside, including clients, consultants, and suppliers, and the team inside know who is responsible for what. Issues are resolved faster, and as a result, the company operates more smoothly.