Company Planning and Organization: Structure, Processes, and Strategies
Planning
What is Planning?
For companies to operate effectively, they need to plan, organize, manage, and control all available resources. This crucial task falls under the purview of management planning. Planning involves setting objectives, devising strategies to achieve them, defining policies, and establishing decision-making criteria. These objectives must meet three key conditions:
- Realistic and Achievable: Objectives should be attainable and grounded in reality.
- Prioritized: Clear priorities must be set among various objectives and sub-objectives.
- Cost-Effective and Efficient: Objectives should be achieved with the lowest possible cost and minimal unintended consequences.
Types of Plans
Company plans can be categorized by their timeframe:
- Long-term plans (5+ years): Focus on the overall company structure and strategic direction.
- Medium-term plans (1-5 years): Relate to specific departments and their operational goals.
- Short-term plans (less than 1 year): Specify immediate actions and tactical implementations.
Stages of the Planning Process
- Analysis: Analyze the company’s current situation and its external environment.
- Objective Setting: Define specific economic and social goals.
- Alternative Identification: Explore various options to achieve the objectives.
- Evaluation: Assess the strengths, weaknesses, costs, and risks of each alternative.
- Selection: Choose the most suitable alternative.
- Evaluation and Control: Monitor the chosen alternative’s progress, analyze deviations, and make necessary adjustments.
Organization
What is Organization?
Organization is the function that designs the company’s structure, defining roles, responsibilities, and authority for each employee. Designing an organizational system involves considering four key elements:
- Hierarchical Levels: Determine the levels of authority within the company.
- Specific Functions: Define the roles and responsibilities of each level and individual.
- Responsibility and Authority: Clearly establish the authority and accountability of each worker.
- Communication Lines: Create effective communication channels (vertical and horizontal) within the company and with external stakeholders.
Organizational systems vary depending on the business type, size, and leadership style. A company’s organization can be divided into two categories:
- Formal Organization: Defined by the company itself, outlining a structured hierarchy and reporting relationships.
- Informal Organization: Emerges spontaneously through social interactions and relationships among employees.
Formal Organization
A well-defined formal structure ensures that each employee understands their tasks, responsibilities, and reporting lines. Departments are typically created based on several criteria:
- Geographical: Based on location.
- Functional: Based on the type of work performed.
- Process-based: Based on the stages of production.
- Product-based: Based on the final product.
Companies often use a combination of these criteria. Relationships within the formal organization can be:
- Linear (Command): Direct reporting relationships.
- Staff (Assistance): Supporting roles.
- Functional (Specialties): Based on specific expertise.
Common organizational models include:
- Linear: Based on a clear chain of command.
- Functional: Specialists may receive instructions from multiple superiors.
- Staff: External executives provide advice but lack direct authority.
- Committee: Decisions are made jointly by department heads.
- Matrix: Combines two or more organizational criteria.
Informal Organization
The informal organization arises from personal and social interactions among employees, often driven by shared interests, the emergence of informal leaders, or the need to address workplace issues. It can be beneficial but also lead to conflicts if not managed effectively. Managers should understand and leverage the informal organization to improve communication and morale.