People Are the Heart of Every Business

The quality of the people determines the success of the business. Many investors base their investment choices almost entirely on the strength of the people involved in the enterprise. They know that the experience, skills, and personalities of the management team have a greater impact on the long-term fortunes of a company than the product or service provided. For this reason, investors and lenders are likely to review the management portion of a business plan before they read many other sections and make decision on investment. They read this section thoroughly, carefully scrutinizing (внимательно рассматривать) the qualifications of the people behind a business. They look not only to see if the management team has the experience necessary to run the business, but also if the internal structure makes maximum use of talents of team members. Most entrepreneurs give serious thought to choosing people for key positions. They often undertake extensive recruitment efforts, to find just the right person.

There always exist many questions that a manager should ask him/herself. Some of them are: How to actually run the company? How will decisions be made? What are the lines of authority? What voice do employees have when company policies and goals are set?

Even the very best people will only do their best work in a system that encourages, recognizes, and re­wards achievement. Two main areas in management are the people who run your business and your own management structure and style. They shape both the daily working atmosphere and the future of the company.

Formal structure. When examining their organization, managers usually begin with the formal structure – the official lines of authority. They decide how employees will be supervised and how job functions will be allocated (распределять). Perhaps the quickest and clearest way is through a graphic organizational flow chart (блок-схема). You can use two kinds of charts: one describing responsibility (1), and the other outlines reporting or supervisory relationships (2). Examples of each are shown below. Flow charts describe a formal organizational structure.

Informal structure. Every business also has an informal structure which is important too. A manager should look at less formal relationships within the company when undertaking inter­nal planning. If examining the informal structure the following questions should be asked:

- Which managers have the most impact on decisions?

- Which managers have ready access to the president or members of

the Board of Directors?

- Do others effectively translate decisions at the top into action?

- Which subordinates have substantial influence on their superiors?

- Which divisions or groups of employees have the greatest morale

problems? Who do they report to?

Examples of Flow Charts:

(1) Areas of Responsibility

(2) Reporting Relationship

3.2. Answer the questions:

1. Who determines success in every business?

2. What do investors pay special attention to before they make

decision on investment?

3. What kinds of organization charts are there?

4. What problems does the formal structure of the company help to

decide?

5. What problems does the informal structure of the company help to

decide?

6. Study (1) Flow Chart and say who is responsible for each function

or department in the company? Who is he/she responsible to?

7. Study (2) Flow Chart and say who reports to whom in

the company?

8. Which subordinates have substantial influence on their supe­riors?