Business Plan Preparation - Organization and Management Structure

INTRODUCTION TO ORGANIZATIONAL CHARTS AND STRUCTURES

• Definition of an Organizational Chart:     - Informally known as an "org chart."     - It is a visual tool that graphically illustrates the hierarchy, roles, responsibilities, and relationships among members within an establishment.     - It applies to diverse entities including business corporations, government agencies, and non-profit organizations.
• Structural Components:     - Hierarchy: Highlights positions from top executives down to lower-level employees.     - Reporting Lines: Provides a clear depiction of the decision-making hierarchy.     - Snapshot View: Offers an at-a-glance mapping of authority and responsibility throughout the organization.
• Communication and Flow:     - Beyond hierarchy, charts depict the flow of communication and decision-making pathways.     - Visual lines represent the chains of command.     - Acts as an indispensable guide for role clarity and effective resource allocation.     - Example: A typical chart shows the CEO or a high-level executive at the top, with lines extending downward to other executives, managers, and staff.

MAIN PURPOSES OF THE ORGANIZATIONAL CHART

• 1. Visual Representation:     - Provides a fundamental diagram of the organizational hierarchy.     - Offers a "bird’s-eye view" of the company in a graphical format that is easy to understand and quick to read.     - Serves as a primary tool to show employees and stakeholders how the entity is structured.
• 2. Role Clarity:     - Ensuresทุก member understands their specific duties and to whom they report.     - Illustrates how individual roles contribute to overall business objectives.     - Enhances productivity and job satisfaction while reducing internal conflicts or misunderstandings.
• 3. Communication:     - Acts as a blueprint for formal communication lines.     - Helps individuals identify the correct person to contact for specific queries or concerns.     - Prevents communication breakdowns and potential bottlenecks.
• 4. Decision Making:     - Clearly outlines which individuals hold decision-making power for specific business areas.     - Streamlines processes and prevents disputes over authority.     - Enhances organizational responsiveness and competitiveness through quicker decision-making.
• 5. Resource Allocation:     - Assists leaders in distributing budgets, manpower, and equipment effectively.     - Provides visibility into various departments and teams to ensure strategic resource distribution.     - Influences the overall productivity and profitability of the organization.

TYPES OF ORGANIZATIONAL STRUCTURES

• 1. Functional Top-Down Hierarchy:     - Starts with high-responsibility positions at the top, descending by skill and function.     - Departments are managed independently based on specialization.     - Pros: Encourages employee specialization, allows for self-determined teams, and is easily scalable for any company size.     - Cons: Can create organizational "silos," hamper interdepartmental communication, and obscure strategies for different products or markets.
• 2. Divisional Structure:     - Divisions operate like independent companies within a larger organization, controlling their own resources (e.g., individual marketing, sales, and IT teams).     - Suitable for large companies to empower local decision-making.     - Pros: Keeps large companies flexible, allows quick response to industry changes, and promotes autonomy.     - Cons: Leads to duplicate resources, muddled communication between headquarters and divisions, and potential internal competition.
• 3. Matrix Structure:     - Employees are divided into project/product teams led by a project manager while simultaneously reporting to a functional manager.     - Utilizes cross-functional groups instead of vertical silos.     - Example: Design Staff reporting to both a Product Manager and a VP of Design.     - Pros: Allows for dynamic selection of individuals based on project needs and encourages employees to use diverse skills.     - Cons: Creates conflict between department and project managers and can be prone to frequent changes.
• 4. Horizontal or Flat Structure:     - Characterized by few levels between upper management and staff.     - Common in startups to encourage involvement and less direct supervision.     - Pros: Grants employees more responsibility, fosters open communication, and facilitates speed in implementing new ideas.     - Cons: Can create confusion regarding reporting lines and may result in generalized rather than specialized skills; difficult to maintain as a company grows.

JOB TERMINOLOGIES IN PERSONNEL MANAGEMENT

• Organization Requirements:     - Business plans must indicate all job descriptions, duties, and responsibilities for all staff listed on the Organizational Chart.     - Proposed salary rates and benefits must be clearly stated.
• 1. Job Description:     - Organized, factual statements detailing the duties and responsibilities of a specific job.     - Defines what is done, how it is done, and why, establishing the authorized content of a role.
• 2. Job Specification:     - Statements regarding the minimum acceptable human qualities (qualifications) necessary to perform a job properly.
• Case Study: General Manager:     - Job Description of a General Manager: Responsible for all company aspects; manages operational and fiscal activities, including staffing levels, budgets, and financial goals.     - Job Specification of a General Manager: Minimum of five years of experience in business management/financial oversight AND minimum of five years in personnel management (hiring, supervision, benefits).

PERSONNEL AND ADMINISTRATIVE RULES (LABOR CODE)

• 1. Conditions of Employment:     - Hours of Work: Normal working hours must be stated (typically $5/6$ days a week).     - Example: $8\,\text{hours}$ per day, starting at $8:00\,\text{a.m.}$ and ending at $5:00\,\text{p.m.}$
• 2. Overtime and Night Shift:     - Overtime Pay Rate: $\text{Per hour rate} \times 125\% (\text{or } 25\% \text{ premium per hour exceeding normal hours})$.
• 3. Weekly Rest Periods:     - Mandatory rest periods based on a $5$ to $6$ day work week.
• 4. Holidays with Pay:     - Legal Holidays: $100\%$ of daily wage.     - Special/Local Holidays: $50\%$ of daily wage.
• 5. Service Incentive Leave:     - Must state company policy for: Vacation Leave (VL), Sick Leave (SL), Maternity Leave (ML), and Paternity Leave (PL).
• 6. Wages and Contributions:     - Monthly wages must be tabulated including deductions for SSS, Pag-Ibig, PhilHealth, and other contributions.
• 7. Payment of Wages:     - Wages must have specified payment dates (e.g., $15^{\text{th}}$ and $30^{\text{th}}$).     - Specific cut-off dates must be identified.

GENERAL CORPORATE POLICIES

• 1. Management Policies:     - Rules governing operations and employee-employer relationships.     - Compliance is required upon acceptance of employment; ignorance of rules is not an excuse for non-compliance.     - Changes must be posted for information and guidance.
• 2. Finance Policies:     - Transparency through recording all transactions.     - Use of databases and actual records for revenue documentation.     - Strict monitoring of cash inflows/outflows to determine profitability and avoid excessive expenses.     - Includes policies on overages/shortages.
• 3. Production Policies:     - Focus on quality and efficiency.     - Health and Safety: Sanitizing hands, observing hygiene, wearing hair nets, face masks, hand gloves, and prescribed uniforms at all times.
• 4. Marketing Policies:     - Disseminating product information via social media.     - Operating a "Bricks-and-Mortar" organization for both face-to-face and online customer service.
• 5. Termination Policy for Tardiness:     - Grace period: $15\,\text{minutes}$.     - Progressive Discipline:         1. $1^{\text{st}}$ Offense: Reprimand.         2. $2^{\text{nd}}$ Offense: Warning.         3. $3^{\text{rd}}$ Offense: Performance Improvement Plan (PIP).         4. $4^{\text{th}}$ Offense: Suspension for one week.         5. $5^{\text{th}}$ Offense: Termination of contract.
• 6. Misconduct Classifications:     - Policies must categorize and address "Minor Misconduct" and "Major Misconduct."

HIRING REQUIREMENTS AND ADMINISTRATIVE SYSTEMS

• Hiring Policy:     - Goal is to employ the most competent, qualified persons for job vacancies.     - Sequence of Action:         1. Applicant submits a resume.         2. Selection of applicant.         3. Submission of requirements: Birth Certificate, Medical Certificate, etc.         4. Mandatory orientation and one-month training period.
• Standard Administrative Forms:     - Employee Requisition Form: Used when the company needs additional hiring.     - Application Forms: Captures personal circumstances for worthiness evaluation.     - Attendance / Time Records: Tracks employee history with the company.     - Job Analysis / Evaluation Record: Files for job classification and wage rates.     - Physical / Medical Exam Record: Files for physical condition history.     - Employees Training Record: Tracks professional development and orientation completion.