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Organizational Structure

Accounting Department Organizational StructureI've asked this question before in LinkedIn, and always receive interesting results probably about a 50/50 split. I am curious though to ask a bunch of finance professionals their opinion. Currently my direct reports include Accounting Assistant, Human Resource Coordinator (HRC) and the Inventory and Purchasing person. I have fairly strong checks and balances in place but they are spread out throughout the positions since we are smaller (we all wear multiple hats). We are planning to hire a Director of Sales and Operations and my CEO thinks the inventory and HRC should shift to this new person. The new role will be in charge of eleven retail locations and two DM's. What are you're thoughts?

Answers

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

Christine,

I look at this in a matrix structure. One direction is the value chain that leads to the external customers. The other direction is the value chain that serves internal customers (from shareholders to the mailroom). There are always gray areas, but....
"Sales" screams "external" to me.
"inventory" could well be external. Purchasing is often centralized as an internal function, but if you are small enough, it may well be more of an operations function.
HR seems totally internal. Case in point, if there is a employment discrimination lawsuit, is it a customer issue or a shareholder issue?

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Here's another interesting discussion on how Payroll, HR and Finance are often organized:

https://www.proformative.com/questions/does-payroll-report-to-hr-or-finance

Best... Sarah

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Agree with Keith on HR. It is internal. Our company's HRC reports to the Controller. We are a smaller company and our CFO is focused on things that are not related to the operations side. Whereas the company I used to work for was very large. The HRC was actually a HR Director and reported to the CFO and CEO.

How is the CEO defining operations? Are operations how the company operates internally, referring to what Keith mentions above, or does it refer to the vendors and customers for which the company operates with?

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Operations would be external - customers. I guess I have just always dealt with vendors as an accounting / finance "internal" function. I understand both sides of it. I really didn't understand the HRC reporting to the DSO, except in the CEO's mind she is primarily staffing the stores, so he is probably thinking that doesn't have anything directly to do with my role.

We've been in the growth stage but have just sort of toppled over the edge where many positions can no longer functionally wear multiple hats without starting to see systems falter.

This new position is going to have a full plate coming on board as well; effectively overseeing eleven stores will not be an easy function. We have eleven differing level of leadership and our DMs are still learning to be effective with their current leaders. We have a strong need to re-design our front line training, which will take some work.

I have a strong team and strong processes in place and of course I am going to be concerned splitting my team and not having such a tight grasp on the dynamics of how it will work has me a little nervous. I would almost be more comfortable getting this person trained and observing their capabilities before transitioning inventory & purchasing to them.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

A matrix like reporting structure seems reasonable. I would add for the HR role to be more effective in supporting operations, it would typically "reside" in the function/department of the "internal customers". You want them to have a pulse of what is going on with the client group. Having solid line to ops and dotted line to Finance/Corporate support department for policy/compliance guidance would be recommended. Hope this helps.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Three thoughts come to mind in this discussion:

1) "Eleven differing levels of leadership": Uh oh! That's way too many in an organization your size. Things should be tightened up.

2) The CEO seeing the new DSO as "primarily staffing the stores" and thus taking on the HR function. I sense trouble ahead Will Robinson. HR's goal is to protect the organization from employment related issues. Having a hiring manager fulfill that role is fraught with peril. The HR function should remain distant from direct hiring and train the managers to make good hiring and employee management decisions that protect the organization.

3) Matrix reporting: BTDT. Not a fan. Employees cannot serve two masters. In my experience, this stresses out high performing employees, leads to conflict amongst the managers and ends up with good employees leaving to find employment where their role is more well defined so they can get something constructive done and not feel like the rag doll being pulled from several sides by aggressive managers seeking their labor.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Anon,

I am confused by #1. "Eleven differing levels of leadership": Uh oh! That's way too many in an organization. I'm not sure what you mean.

We actually made some changes since I posted this. We hired a Director of Sales (left the operations to the CEO for now). I actually posed the same argument as you state in #2 and it was agreed to leave HR alone.

Hoping for a great 2014!

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