How much of the restructuring we hear about in business is necessary? Certainly not all of it. The building blocks of any organisation are its people. Get them right and the organisation will work.

So does the structure of the business make much difference?

It does make some, and the trick is to know which restructuring is useful and which is superfluous window-dressing – or, worse, pure politics. It varies from one business to another so guidelines need interpreting but there are some general rules worth observing.

The efficient maximum number of people one person can manage is eight. If you are the boss of a largish business, probably two of these will be staffers in Head Office – Finance and the technical head of the main resource you employ; the rest will be line managers. Staffers shouldn’t take much managing, although it is as well to remember that they are people and do need encouragement. But a good staffer is like a General’s ADC, around when you need him and invisible when you don’t.

A business where more than ten people report to one level of management is usually inefficient. Managing people takes time. If you don’t devote that time poor management will leave the profits below their maximum.

However, in certain very labour-intensive businesses you could build a vast pyramid of management if you stuck rigidly to this rule. That is why the position of supervisor is so valuable.

Supervisors are the non-commissioned officers of business, interpreting the orders from the top to those at the coal face. In the old days in Hong Kong they used to be called Compradors and they were vital to the success of the Hongs. Every business needs them.

Among the jobs that a business structure has to perform is making cooperation between the different departments possible. Good communications do not come easily to many people and they need proactive help to make them work.

Failures in this area are mainly due to lack of understanding and I have found it helpful to get people to learn what the other chap does. A good example is the clash between finance and marketing. If you mix them up they start to understand the other function, working together more easily as a result.

All structures need to address the flow of the business, whether it is a production line or a city office. A good business flow works backwards from the customer; a bad one, forwards from the administrators.

Structure that is in place solely for the benefit of the managers is a disaster – customer unfriendly and form-proliferating. Controls are there to ensure the swift, economic service of the customer, not to prove that every mistake was someone else’s fault.

A valuable rule about any proposed change in structure, any hiring of new staff and any creation of new procedures is to ask what will happen if you don’t do it. Change is always difficult and invariably more expensive than even the best estimates. It causes unproductive stress and often loses the very people it was designed to keep.

Organisations are dynamic; they must adapt and grow especially in today’s rapidly advancing technological world. But we should never lose sight of the fact that people work best when they are in stable environments, where they can forecast realistically and when they have to live with the results of their work and decisions.

Restructuring is a necessary evil. It should be kept to a minimum, handled with tact and generosity and explained cogently. You don’t need to hit someone over the head to describe a hammer.