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5 Reasons why you need to RESTRUCTURE your ORGANIZATION to optimize your profits and turnaround your company

Many CEOS and Business Owners face problems due to no proper organization structure.  They might experience:

  • Chaos
  • No clear direction
  • No focus
  • Overlap responsibility
  • No clear accountability
  • No optimum internal control
  • No economy of scale

Many companies have their organization structure designed by Human Resources Dept.  Organization structure is not just the scope of Human Resources but it’s the responsibility of the CEO as organization structure has to align with the company’s vision and to support the company mission as well.  Organization structure is a foundation and part of infrastructure of a company.

When companies are managed orderly, responsibility and accountability is more easily tracked. 

I put a lot of emphasis in Organization Structure in my profit optimization and company turnaround.  Part of the solution to MASSIVELY increase your company profits is to have good organization structure and internal control.

Many CEOs and Business Owners might ask

Why ORGANIZATION STRUCTURE is IMPORTANT for Profit Optimization and Turnaround?

Many companies do not pay too much attention to organization structure.  The organization structure grows as the business grows without proper planning and design from the beginning.  As a result many group companies have many companies as independent companies and just grow the number of companies.  They do not take the benefit of economy of scale in managing the company.

Part of the solution for profit optimization and turnaround is better efficiency, better internal control and better business process.  This will lead to MASSIVELY increased profits.

Let’s dive in

To answer the questions why organization structure is important for internal control, we need to discuss the REASONS of having good and properly designed organization structure:

Reason #1: MORE FOCUS on the company’s vision

Organization structure lead to orderly and clear direction leading to good and proper supervision and more focus to the company’s vision

KPI (Key Performance Indicator) is clearly defined and passed down throughout the organization so that each employee knows what performance is expected of them.  The top management also do not need to micro manage their employees.

Reason #2: Greater ACCOUNTABILITY

Bottom Up Budgeting based on the organization structure lead to accountability. With proper organization structure, it can be structured to the smallest unit accountable according to what management think.

Reason #3: BETTER monitoring using budget

Budget vs Actual monitoring on monthly or quarterly basis. By comparing budget vs actual and analyze where the difference is, we can check how far the actual from the budget and why.

Reason #4: Clarity on LIMIT OF AUTHORITY

Limit of Authority can be structured and implemented which will lead to increased internal control.

This is key.  Many companies do not have this limit of authority so that it is not clear who has the authority on what.  Limit of authority should be based on 4 eyes principle so that no one has sole authority and there is always check and recheck throughout the  transaction end to end.

Reason #5: BETTER internal control by using shared services

Shared services organization structure can increase efficiency, uniformity in process and increased internal control.

Shared services will provide efficiency by having less people and less managerial position as 1 manager and supervisor can handle many different entities.  Furthermore, it increases internal control as there is one command center where to check and enforce the company with regards to money in and out.

Other Reason not mentioned above:

With the right organization structure, the company can focus to achieve its vision and mission which will lead to increase in revenue and sales.

How?  The organization structure for sales and marketing is designed by looking at what is important to the company, is it organized based on channel of sales, by products, by area of marketing?  It then focuses on those metrics which are important to CEOs or business owners.

SUMMARY

5 Reasons why you need to RESTRUCTURE your ORGANIZATION to optimize your profits and turnaround your companies are:

Reason #1: MORE FOCUS on the company’s vision

Reason #2: Greater ACCOUNTABILITY

Reason #3: Better MONITORING using budget

Reason #4: Clarity on LIMIT OF AUTHORITY

Reason #5: Better INTERNAL CONTROL by using shared services

With the right organization structure we can achieve:

  • Better efficiency
  • Better internal control
  • Better business process

This is key in our objective to massively increase profits.

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Organization Structure FAQ

Why ORGANIZATION STRUCTURE is IMPORTANT for Profit Optimization and Turnaround?

5 Reasons why you need to RESTRUCTURE your ORGANIZATION to optimize your profits and turnaround your companies are:
Reason #1: MORE FOCUS on the company’s vision
Reason #2: Greater ACCOUNTABILITY
Reason #3: BETTER monitoring using budget
Reason #4: Clarity on LIMIT OF AUTHORITY
Reason #5: BETTER internal control by using shared services

What can we achieve with the right organization structure?

* Better efficiency
* Better internal control
* Better business process

What problems are faced by CEOs and Business Owners due to no proper organization structure?

* Chaos
* No clear direction
* No focus
* Overlap responsibility
* No clear accountability
* No optimum internal control
* No economy of scale