What is Organizational Unit?

Last updated: 2025-08-01

An organizational unit (or department) is a part of a company that groups employees into manageable teams (see organizational structure). An Org unit could be a team, department, or any group formed to handle specific tasks or functions that support the company’s goals.

  • It’s an important part of the company’s setup, enabling specialization, coordination, and effective management of resources and responsibilities.
  • Organizational units are usually created based on factors like processes, functions, services, products, or location.

What Are Typical Elements of Each Organizational Unit?

  • Manager: Each Unit has a manager or team lead who oversees day-to-day operations, makes decisions, and ensures the unit’s work aligns with company goals.
  • Scope of Work: Each Unit has a clear focus that defines the specific tasks, services, or functions it handles, contributing to the company’s overall strategy.
  • Team Members: Each Unit includes employees with the skills needed to complete the work within its scope. The size and makeup of the team depend on the tasks and their complexity.
  • Resources: Each Unit needs access to necessary resources like budgets, tools, technology, and facilities to perform effectively.
what is organizational unit

Organizational Units and Organizational Structure

What are Most Common Organizational Units in SMBs?

  • In small and medium-sized businesses (SMBs) organizational units are typically tailored to the size, industry, and operational focus of the company.
  • Below are examples of common organizational units in SMBs

Core Business Organizational Units

  • Sales: Focuses on acquiring customers, managing client relationships, and generating revenue.
  • Marketing: Manages branding, advertising, social media, and market research to support customer acquisition and retention.
  • Customer Support or Service: Provides assistance to customers, resolves issues, and ensures after-sales satisfaction.

Supporting Organizational Units

  • Human Resources (HR): Handles recruitment, payroll, employee relations, and compliance.
  • Finance and Accounting: Manages budgeting, bookkeeping, tax compliance, and financial planning.
  • Operations: Oversees production, logistics, supply chain, or service delivery.
  • IT Support: Handles technical infrastructure, software, and data security.

What are The Main Reasons of Dividing the Company into Organizational Units?

  • Functional Units: HR, Finance, Marketing, IT.
  • Geographic Units: Regional offices (e.g., North America division, European division).
  • Project Teams: Temporary groups focused on specific projects or initiatives.
  • Product-Based Units: Divisions organized around product lines or services.

Summary of Key Takeaways on Organizational Units

  • Arise from the Division of Labor: Organizational units are created to facilitate the division of labor.
  • Management: Each unit has its own manager who supervises and manages the work of its members.
  • Resource Allocation: Resources such as personnel, budget, and tools are assigned to the unit to fulfill its functions.
  • Defined Purpose and Responsibilities: Each unit has a clear role or responsibility contributing to the overall objectives of the organization.
  • Hierarchy Exists Among Them: Units often have designated leadership, reporting relationships, and internal processes.
  • Interconnectedness: Units work independently but are part of the larger organizational framework, collaborating with other units to achieve shared goals.

How to Set up Organizational Units in Aptien HR