Reorganisations, restructures and other major changes

Different business structures: by product and project

Businesses can also be organised according to product and project.

Products

This involves organising the business into departments, each of which focuses on a different product. Employees too, regardless of the type of their duties, are also assigned according to the product their work relates to.

For example, in a business that distributes computer software for home and for business users, the employees working on software for businesses would be grouped together while everyone working on software for home users would be in a separate division.

The advantages of this type of structure are:

• the clear focus on market segments helps meet customer needs more effectively
• you can encourage positive competition between each department, ie provide incentives for the team that produces the most products

The disadvantages are:

• there may be duplication of functions, eg a different sales force for each division
• there may be a lack of central control over each separate division

Project management

Project based management, otherwise known as matrix management is becoming increasingly popular. A company that is divided by function takes a member of staff out of each department to form a temporary project team that will work on one specific task, eg develop a new product.

The advantages are that it:

• facilitates a multi-disciplinary or cross-functional way of working
• can flatten a business' hierarchy
• ensures a business is organised according to its core activities
• makes better use of employees' skills

The disadvantages are that it:

• can blur organisational boundaries
• confuses lines of accountability as employees may report to several different managers

See the page in this guide on different business structures: by function and area for information on organising your business according to function or area.

Subjects covered in this guide

• Introduction
• Reasons for changing the way your business is organised
• Different business structures: by function and area
• Different business structures: by product and project
• The importance of planning and communication
• Managing people
• Implementing change
• Systems for delivering change
• Financial considerations
• Special considerations for change
• Here's how I changed my management style as my business grew

 

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