Lessons Learned as an
Part I of “Lessons Learned as an Organizational Remodeler” contained an introduction to the topic and Lesson 1 which was “Organizational Design is Important.” In discussing this lesson, I emphasized “Each organization is unique. Organizations need to be designed to meet their unique circumstances, cultures, environments, needs and purposes.”
Last month’s column ended with me saying that in this month’s column “we will explore how to develop:
Correct organizational designs,
Clear and compelling visions and missions,
Well coached teams of highly motivated individuals,
Cultures based on effective communication, collaboration and shared values, and
Strategies for developing each of the above.”
However, in order to adequately address some of the questions we have received about organizational structure, some of the items I had planned to cover this month will have to be postponed to next month.
With that explanation, let’s return to the point in last month’s column, “organizational design is important.”
At some point in your career, you may have been asked to provide an organization chart for an employee handbook, an annual report, as part of a budget request, for your organization’s website, or for something else. If you did and I had to guess what that the structure looked like, I would guess that it looked like a pyramid. At the top would be the chief executive officer (or whatever the title is of the highest ranking person in the organization) with lines stretching down to middle management, then to supervisors, and finally to staff-level employees.
The problem is that not every organization functions best with a hierarchical organizational structure and other types of organizational structures exist. Let’s examine the basic types of organizational structures and the strengths and weakness of each.
The Hierarchical Organizational Structure – This is the type of structure just mentioned above. It is the most common type of organizational structure — the chain of command goes from the top position down to the entry level positions and each employee in the organization has a supervisor.
The strengths of the Hierarchical Structure are that it:
Better defines levels of authority and responsibility,
Shows who each person reports to or who to talk to about specific projects,
Motivates employees with clear career paths and chances for promotion,
Gives each employee a specialty, and
Creates camaraderie between employees within the same department
The weaknesses of the Hierarchical structure are that it:
Can slow down innovation or important changes due to increased bureaucracy,
Can cause employees to act in interest of their department instead of the company as a whole, and
Can make lower-level employees feel like they have less ownership and can’t express their ideas for the organization.
Functional Organization Structure – This is similar to the hierarchical organizational structure. It starts with positions with the highest levels of responsibility at the top and goes down from there. However, employees are organized according to their specific skills and their corresponding function in the organization and each separate department is managed independently.
The strengths of the Functional Structure are that it:
Allows employees to focus on their role,
Helps teams and departments feel self-determined, and
Is easily scalable in any sized organization.
The weaknesses of the Functional Structure are that it:
Can create silos within an organization,
Hampers interdepartmental communication, and
Obscures processes and strategies for different markets or products of an organization (Most MBA’s clients are criminal justice agencies and this is seldom a concern for the organizations with which we work).
Horizonal or Flat Organizational Structure – This structure organizations with few levels between upper management and staff-level employees. Many start-up organizations use a horizontal structure before they grow large enough to build out different departments, but some organizations maintain this structure since it encourages less supervision and more involvement from all employees.
The strengths of the Flat Structure are that it:
Gives employees more responsibility,
Fosters more open communication, and
Improves coordination and speed of implementing new ideas
The weaknesses of the Flat Structure are that it:
Can create confusion since employees do not have a clear supervisor to report to,
Can produce employees with more generalized, rather than specific, skills and knowledge, and
Can be difficult to maintain once the company grows be-yond start-up status.
Divisional Organizational Structure — In divisional organizational structures, an organization’s divisions have control over their own resources, essentially operating like their own company within the larger organization. Each division can have its own purchasing team, IT team, accounting team, etc. This structure works well for large organizations as it empowers the various divisions to make decisions without everyone having to report to just a few executives.
Depending on your organization’s focus, there’s a few variations of the Divisional organization to consider. Among them are the Market-Based Divisional structure, the Product-Based Divisional structure and the Geo-graphical Based Divisional structure.
As mentioned earlier, the Market-Based and the Product-Based Divisional Structures are not applicable to MBA’s clients; therefore, I will address only the Geographical-Based Divisional Structure. In this structure, division are separated by region, territories, or districts, offering more effective localization and logistics. An organization might establish satellite offices across a county, state, country or the world in order to stay close to their customers.
The strengths of the Divisional Organizational structure are that it:
Helps large organizations stay flexible,
Allows for a quicker response to industry changes or local needs, and
Promotes independence, autonomy, and a customized approach
The weaknesses of the Divisional Organizational structure are that it:
Can easily lead to duplicate resources,
Can mean muddled or insufficient communication between the headquarters and its divisions, and
Can result in an organization competing with itself.
Matrix Organizational Structure — A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for special projects. For example, an IT employee may regularly belong to the IT Department (led by an IT Director) or a security employee may regularly belong to the security department (led by a Security Director), but work on a temporary project (led by a project manager). The matrix organizational chart accounts for both of the employees’ roles and reporting relationships.
The strengths of the Matrix Organizational Structure are that it:
Allows supervisors to easily choose individuals by the needs of a project,
Gives a more dynamic view of the organization, and
Encourages employees to use their skills in various capacities aside from their original role
The weaknesses of the Matrix Organizational Structure are that it:
Presents a conflict between department managers and project managers, and
Can change more frequently than other organizational structure types.
Team Based Organizational Structure – After reading the name of this organizational structure, it is probably no surprise to you that this type of organizational structure groups employees according to teams. A team organizational structure is meant to disrupt the traditional hierarchy, focusing more on problem solving, cooperation, and giving employees more control.
The strengths of the Team Based Organizational structure are that it:
Increases productivity, performance, and transparency by breaking down silos,
Promotes a growth mindset,
Changes the traditional career models by getting people to move laterally,
Values experience rather than seniority, and
Requires minimal management.
The weaknesses of the Team Based Organizational structure are that it:
Goes against many companies’ natural inclination of a purely hierarchical structure, and
Might make promotional paths less clear for employees.
Network Organizational Structure – In today’s world, few organizations have all their operations under one roof, and dealing with a multitude of vendors, offsite locations and satellite offices can become confusing.
A Network Organizational structure makes sense of the spread of resources. It can also describe an internal structure that focuses more on open communication and relationships rather than hierarchy.
The strengths of the Network Organizational structure are that it:
Visualizes the complex web of onsite and offsite relation-ships in organizations,
Allows organizations to be more flexible and agile,
Gives more power to all employees to collaborate, take initiative, and make decisions, and
Helps employees and stakeholders understand workflows and processes.
The weaknesses of the Network Organizational Structure are that it:
Can quickly become overly complex when dealing with lots of offsite processes, and
Can make it more difficult for employees to know who has final say
Organizational structure is not a one size fits all option. The structure that worked in one organization may not work in another. In addition, the structure that served the organization well in one phase of its existence may not be as effective in the next phase.
In remodeling various criminal justice agencies in which I worked, I considered the size of the organization, the different types of services to be offered, the geographical area which needed to be served, the political environment in which I was working, and the culture I wanted to create. I would advise anyone to do the same.
In the movie, “Indiana Jones and the Last Crusade,” the Grail Knight said, “Choose wisely, for while the true Grail will bring you life, the false Grail will take it from you.” The same is true of choosing an organizational structure. The right structure can help bring life to your organization and the wrong one can snuff the life out of it.
I hope that addressed the questions that were raised about organizational structure.
Next month we will pick up the lessons learned with where I had planned to start this month’s column – developing a clear and compelling vision.
If you have questions about this column or would like to suggest topics to be addressed in future columns, email them to email@example.com.