A frequent issue facing entrepreneurs and executives alike is how to organize an enterprise. There are many options including those based upon product lines, business lines by markets, and business units by industry. However the process starts by properly identifying the functions - areas of subject matter expertise that are relevant to earning value.
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The
domain competencies of individual employees represent the
specific knowledge and technical skills that are required
to perform activities. Domain subject matter areas include
legal, finance, human resources, information technology,
program management, engineering, operations, and business
development. These knowledge-related activities can be
grouped together to form the first level of organizational
structure within an enterprise - the enterprise function
model.
Processes and functions are components of the infrastructure of an enterprise. Functions house the knowledge and technical skills of an enterprise; processes represent the activities to turn knowledge and skills into value. Processes are horizontal, flowing through the enterprise, and functions are vertical. Macro processes cross functions whereas micro processes are contained within functions.
Enterprise function model...
Every enterprise has three macro functions: Governance, Administrative, and Operational, whether management chooses to specifically identify them or not. They form the basis for the enterprise function model. Each macro function decomposes into micro functions, which in turn can further divide into subfunctions.
The Governance function, which consists of the board of directors and the chief executive of a corporation, the members of a limited liability company, or a sole proprietor, has the ultimate responsibility for the enterprise to its investors.
The Administrative and Operational functions are headed by top-level executives.
The Administrative functions include legal, finance, human resources, and information technology; the Operational functions include operations and business development.
The finance function includes the treasury (funds management) and control (financial, managerial, and regulatory accounting and reporting). The operations function includes procurement, manufacturing (or its equivalent in non-manufacturing enterprises), and distribution. The business development function includes marketing, sales, and service.
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There
are two additional functions that must be considered in any
organizational design - the "enterprise" function and the
research and development function.
The
enterprise function (Administrative) is where activities
such as support for planning and policy development and
performance measurement, brand management, facilities
management, relations (community, government and investor),
ombudsman, and internal audit are housed. It provides
support to the Governance function. It may be consolidated
as one, or split into many. It is rarely called the
"enterprise" function, so that term is purely
descriptive.
The
research and development function (Operational) houses
program management and engineering expertise. It relies
upon "cross-functional" participation from elsewhere in the
enterprise. It is heavily "project-oriented" focusing on
market, product and/or service, and infrastructure-related
activities. Employees should be rotated in and out of the
research and development function so that a real-world
orientation is always present, as opposed to purely a
laboratory environment.
Any of
these functions can be insourced or outsourced depending
upon the core competencies of the enterprise, although the
ultimate responsibility must remain in-house. An argument
can be made that the responsibility for marketing must
always be in-house, because without marketing, nothing else
in the enterprise matters. This is why there is a tight
relationship between strategy and
marketing.
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Organizational
structure...
A functional organization is suitable for emerging
enterprises and small businesses. As an enterprise grows
into multiple markets and product lines, more complex
organizational structures are required.
As
organizational structures become more complex, so does the
risk of the formation of "silos." Silos create barriers to
communication and teamwork between
functions.
In
larger enterprises, organizational units may be made up of
divisions, departments, branches, and plants. Units may be
further be organized into product lines, business lines by
geographic and demographic markets, and business units by
industry.
Domestic
geographies include North, East, South, West, and Central;
and global geographies include Americas; Europe, Middle
East and Africa; and Asia-Pacific. Demographics include
individuals (consumers) and enterprises (commercial,
corporate, industrial, financial, and government).
Industries include (but not limited to) manufacturing,
merchandising, credit, and services.
In
general, it is better to keep a segregation of duties
between the Administrative functions and the Operational
functions to avoid conflicts of interest. The exception is
the research and development function, which should involve
cross-functional participation. Whereas the program
management and engineering subfunctions may be staffed
permanently, all other employees should be rotated in and
out to encourage the sharing of experience across the
enterprise.
Every
employee should have the opportunity to rotate among
functions over time so to broaden knowledge and skills, and
build cross-functional teamwork.
For
example, the activities of the finance function should be
kept separate from the operations and business development
functions, so that all payables and receivables processing
is kept separate from the individuals that generate the
transactions.
Enterpriship...
A key success factor in designing the enterprise function
model is to ensure that it embraces the knowledge and skill
requirements to deliver value in compliance with all laws,
regulations, and best practices, and that there is no
redundancy.
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Designing
and deploying the enterprise function model is an
enterpriship (entrepreneurship, leadership, and management)
competency and is usually performed in conjunction with
enterprise process model design to ensure that value is
earned effectively and efficiently.
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From Nigel A.L. Brooks
http://www.nigelalbrooks.com
Article Source:
http://EzineArticles.com/?expert=Nigel_Brooks
http://www.scribd.com/doc/31290083/Organizing-Functional-Knowledge-and-Technical-Skills-to-Deliver-Value
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