Fri 17 Nov 2006
Our family's business has grown and now we have to rearrange our organizational chart. Should we rearrange it by function? By our newly developed regions? By product line-up? How?
Unfortunately, this isn't an easy question to answer because every industry is different. I think that functional organization charts can often create unnecessary bureaucracy in a company, reducing customer service in the long run. Regions are a good way to do it, especially if you are looking to expand even further or if those regions have a lot of unique business requirements.
Another way to consider changing it is by customer base, if you serve more than one type of customer. However you decide to do it, don't think about tomorrow… think about ten years from now when you've grown 100 times the size. Will you still be able to operate with the same chart?
While changing your organizational chart from time to time is okay, it does reduce your efficiency and your ability to serve customers for a time while everyone figures out who answers to whom and whether there are any gaps in service, so having a scalable chart now is best. And, to help drive down costs, think about what common aspects are shared by all departments (such as administrative functions) and create a department to deal with that.