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Let’s talk about the Organizational-Functional Structure, or OFS, the backbone of any regular management system.

What’s the typical problem with an OFS? It’s frequently quite unreasonable. How do companies decide which positions they need, especially in their early days? Spoiler: it’s often a mix of random circumstances, temporary fixes, and putting out fires.

For example, one co-owner knows finance, another knows sales – voilà, we suddenly have a Finance Director and a Commercial Director. Then, a “bright young fella” shows up with a few clever ideas, and bam! we create a “Development Manager” position just for them. Next thing you know, documents are late, and logistics are a mess, so we slap together a “Document Control Manager” role, and before you know it, that person’s drowning in work, and now we need an entire department under them!

Sounds familiar? If it does, don’t worry – you’re not alone.

A sensible OFS should have two main sources: 1) strategic plan and 2) business process descriptions.

Strategic Plan: Here’s a quick self-check: Are all your strategic development areas supported by the right top management positions? If not, it might be time for some structural tweaks. For instance, maybe you’ve always been a manufacturing-focused company and left product delivery as an afterthought. But now, to strengthen your market position, you want delivery to be a key part of your unique selling proposition. Suddenly, you realize a mere Head of Department won’t cut it – you need a Logistics Director with some serious clout.

On the flip side, you might find some top-level positions that aren’t really pulling their weight. Often, these are in support functions. Do you really need a Chief Innovation Officer among your top brass? How about a Chief of Staff? Or that Director of Development… what do they even do, anyway?

Business Process Descriptions: As you move down the hierarchy, optimizing your business processes will inevitably lead to changes in your structure. Some positions might reveal themselves as unnecessary; others might be glaringly absent. You might find roles overloaded with tasks they shouldn’t be handling, while their core responsibilities languish. In some places, you’ll find a managerial vacuum (lots of workers, one overwhelmed manager), while in others, you’ll spot an unnecessary layer of management slowing things down and adding costs.

In a nutshell, describing your business processes and building your organizational structure are really two sides of the same coin. As you refine and optimize processes, the structure naturally starts to take shape and crystallize.

Remember, a well-thought-out OFS isn’t just about filling seats – it’s about creating a structure that supports your strategic goals and makes your business run like a well-oiled machine.

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