Organizational structure, much like a human skeletal structure, determines what shape an organization will take. We don't spend much time thinking about our skeletal structure until something breaks, and so it goes with organizations.
How an organization is structured basically means how the reporting relationships and work teams are organized. It reveals a great deal about the culture, function and leadership of a company. When I work with an organization, structure is one of the components I examine, since it can be an underlying cause of problems. Perhaps it is a cause of problems where you work. Here are a few examples I've come across:
Too many levels of hierarchy slow decision-making and are a barrier to empowerment.
One of the best examples of the impact structure has on operations is the transformation that began in the 1970's and is still going on today: flattening. In the early part of this century, companies had many levels between the worker in the shop or office and the President. Decisions had to pass through many levels of approval before anything got done.
Organizations grew larger and the bureaucracies ballooned until some of them were crushed under their own weight. Roughly fifteen years ago, Fortune Magazine ran a cover story about the huge reorganization efforts in GM and IBM, in which one executive was quoted as saying, "Trying to get a decision made was like swimming through peanut butter."
Multiple bosses can be confusing.
Sometimes it makes sense to have several people share the leadership position. For instance, when the two founders retired from their highly collaborative architectural firm, three people assumed the CEO job. They call themselves the 3EO's. In their culture, it works. In most others, it doesn't.
For example, one of my clients stepped into a new job at a technical company. He is the Director of over 100 specialists, working three shifts. The group had been leaderless for some time, due to the illness of the former Director. When we looked at some of the people problems he inherited, it became evident that some of the problems stemmed from the way the organization was structured: all 100 people reported to all four managers. In other words, each technician had four bosses, depending on who was around.
Some of the employees played one manager against the other, policies were not consistently applied, power plays between the managers were a regular occurrence and the resulting dysfunction hampered their effectiveness.
Structure by purpose—not necessarily by specialty.
People trained in a specialty often have a strong identity with their profession. When this focus is the primary criterion for how they structure themselves within a business, it can have a negative affect on outcomes.
For example, a 40-person department was organized into 20 teams, comprised of two people each. One of each pair had training in a specialty I'll call "A" and the other person was trained in "B." Each "AB" team was assigned to work on a medical unit in a hospital. There were two supervisors, one trained in A and one trained in B.
The teams were complaining of poor communication, inconsistency and a host of other problems. A closer look at some of the root causes revealed that the structure was part of the problem: Each member of the two-person team reported to a different supervisor. Since the team's purpose is to work together to serve the unit, both parties needed to report to one person, in order to get clear, consistent expectations, resolve problems quickly and simplify communications.
When structuring an organization, how your customer uses your services should "trump" orderly internal efficiency.
If you've ever called a company with a complaint or a question, and been passed from department to department, with no resolution, you can bet their internal structure is partly to blame. Customers want one-stop shopping—we want to call one person and have that person figure out how to get our needs met.
For example, in one organization the Human Resources Department was getting bad marks from the rest of the company for the service they provided. Among other things, internal customers complained that calls weren't being returned, requests took weeks and policies didn't fit their needs. We reorganized HR and created generalist "consultants." Each department in the company was assigned a consultant. This consultant was their point person, who got to know their needs and helped them with such basics as recruiting and employee relations, and tapped into the experts back in HR for more specialized help with things such as compensation and benefits.
So, the next time you have a "people problem" take a look at the underlying structure. It may be the cause no one thought of.