What is Organizational Unit

Last updated: 2025-06-02

Definition of Organizational Unit

An organizational unit (Unit) is a division within a company that groups employees into manageable teams. (see organizational structure). An Org unit might be a team, department, or another group created to handle specific tasks or functions aligned with the company's goals.

  • It's a key part of the company structure, allowing for specialization, coordination, and efficient management of resources and responsibilities.
  • Organizational units are usually formed based on specific factors, such as processes, functions, services, products, or location.

Typical Elements of Each Organizational Unit:

  • Manager: Each Unit has a designated manager or team lead who oversees operations, makes decisions, and ensures the unit's activities support company goals.
  • Scope of Processes or Services: Each Unit has a clearly defined scope outlining the specific processes, services, or functions it handles, contributing to the company's strategic goals.
  • Members/Employees: Each Unit includes a team of employees with the skills to perform the work within its defined scope. The team's size and makeup depend on the unit's tasks and how complex they are.
  • Resources: Each Unit needs access to the necessary resources, like budgets, tools, technology, and infrastructure, to do its job effectively.
what is organizational unit

Organizational Structure

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.

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