Functional Organization Structure
Every organization has a structure, either formal or informal. Newer and smaller companies usually have a less formal structure. As the company grows, the structure grows with it. Without focus, an organization may develop a structure which may not be functional nor in the best interest of the company. All personnel must abide by and enforce the functional organization concept. This is a team concept with each person knowing their responsibilities. By using the chain of command properly, communications improve, responsibility is properly controlled and the work of the organization is properly delegated.
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Incentive Compensation Plans
The purpose of an incentive plan is two-fold: On the one hand, it is designed to provide company employees with a form of compensation that encourages them to work together as a team, focusing on company profits, rewarding strong performance and ensuring positive motivation to increase profits. At the same time, the program must deliver a return to the company in excess of the amount paid out in performance bonus.
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Authority, Responsibility and Accountability
There is a definite relationship between authority, responsibility and accountability. Without a clear understanding of this relationship, effective functional management, with clear lines of reporting and communication becomes a distinct improbability. Authority and responsibility must never be dual, shared or overlapping. One person, and only one person, is responsible for the successful completion of every assignment. As long as there is singular delegation of authority and responsibility, the individuals with responsibility may be assigned accountability; however, when more than one person shares the authority and responsibility for something, neither can be held accountable for that which might go wrong.
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Accounting for Non-Financial Managers
Sometimes owners of companies are not well versed in accounting. This summary on accounting is not designed to make you an accountant but to give you a basic understanding of some accounting terms, principles and reports that will assist you in running your construction business better.
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