The concepts of organization and structure in small business refer to the systematic way in which company operations are set up. Organizational structure creates a foundation upon which a business operates and grows, formally delineating the lines of managerial authority, the decision-making structure and the grouping of employees. Organizational structures can look very different between small and large businesses, with small business structures generally including fewer layers of management and less employees in the organizational chart.
Layers of Management
Smaller business generally have fewer layers of management, and fewer managers in general, than larger businesses. Small business organizational charts are often flat; they look like two or three stacked rows of bricks with one or two bricks on top. Tall organizational structures, by contrast, look like pyramids, with several management layers that reflect a more complex reporting structure. Small business structures are necessarily flat, due to the relatively smaller size of their workforces. Because of this, employees on the front line are generally responsible for a wider range of work tasks than employees with similar job titles in larger businesses. Many of the tasks normally assigned to managers in corporate businesses are often given to regular employees in a small business.
Strategic decision-making is generally more centralized in smaller organizations than in larger companies, again due to the relatively fewer number of managers found in small companies. In the first one to five years of a business, it is not uncommon for company owners to make virtually all the business decisions. When a company reaches a certain size, however, it becomes impossible for a single person or team of owners to make every decision, so decision-making authority begins to spread out among the various layers of management.
Larger businesses often have wide and well-defined structures wherein each employee has a specific operational role. In smaller companies, each employee is more likely to take on a wider range of tasks than would someone with the same job title in a large company. An accountant in a small company, for example, might be responsible for opening the mail, answering phone calls when the receptionist is out, attending meetings with clients and responding to customer emails. This can create confusion in organization charts, as seeming gaps in work tasks are actually filled by people with unrelated job titles.
The number of office locations, retail outlets, service centers and other premises of a large business is generally greater than small businesses in the same industry. Organizational structure for large businesses must take geographic considerations into account, creating redundant positions in different outlets and coordinating work among physically-distant employees. Small businesses are more likely to work out of a single location with very few human resource redundancies.
Formal lines of communication, or flows of operational information, are a part of an organization's structure. In small businesses, communication between employees is handled in-person much of the time, especially when the business only operates in a single location. Small businesses often provide opportunities for front-line employees to speak and interact directly with executives, whose offices might be only a few steps away; this situation becomes more rare as companies grow. In larger businesses, a greater proportion of the communication takes place over large distances via phone or email, with co-workers in far-flung locations rarely or never meeting each other in person.
- Visage/Stockbyte/Getty Images