wardell books

Organizational Structure

How do your various operational components relate to each other? Do you run a tightly controlled assembly line, or do your employees use their personal expertise to create one-of-a-kind masterpieces? Different scenarios will require different organizational Structures. Individuals creating one-of-a-kind masterpieces, for example, may need more autonomy than those working on an assembly line.

Review your company's organizational chart and relationship diagram from Management, this time focusing on operations. Are they still relevant?

Following are a number of “operations focused” organizational structures. Check the one or two that apply most directly to your business and explain your reasons.

Organized by product (Product Method) — This method organizes your operational systems around individual products or product categories. In other words, product A, product B, and product C are all manufactured separately.

Organized by market (Type of Customer) — This method organizes your operational systems around your customer categories. For example, this could result in separate wholesale and retail production departments, or separate facilities located according to target market clusters such as metropolitan areas.

Organized by skill set (Process Method) — This method organizes your operational systems around various skill sets. For example, a manufacturing facility might be divided into cutting, drilling, and assembling departments.

Organized by any combination of the above.

No division. Operational departments are completely versatile.


Make sure everyone understands your organizational structure, not just upper management. Your employees will be happier and work harder once they understand their connection to the big picture. So get them involved and keep them informed.

Based on the notes you made previously, update your Organizational Structure as necessary.

Transition Plan

Set out the steps you will go through to move your Operations Department from its present structure to its future structure.

1Outsource all deliveries beyond 15 milesJanuary
2Hire a production managerMay
3Develop Training SystemsJune