Organizational Chart Madness, Part 2

There is no ideal organization for everyone. There are many different structures for us to explore or model. The trick is to find the right structure for our objectives and needs.

By ALAN NICOL, Executive Member, AlanNicolSolutions

Alan Nicol, Executive Member, AlanNicolSolutionsThis is part two of a two-part piece. Part one can be found here.

Flat organization structures are good for mitigating overhead. They keep the executive leadership highly engaged with lower levels, and they provide a much more direct communication path from the president to the laborer, allowing better understanding and perspective of that president’s values. They are also good for management teams that enjoy more autonomy and less control, because the executive team cannot usually spend a great deal of time monitoring or directing all of the individual teams.

Limitations of flat structures include a limited supply of growth and promotion opportunities for the ambitious, and limited ability to invest time in mentoring the inexperienced. They work well for family-owned businesses or others in which the personality of the organization tends toward a passion for one’s work and personal satisfaction therein. They do not always work well for businesses with a personality bent toward individual growth and a spirit of healthy competition.

Organizations steeped in the Lean methodology generally organize around specific value streams (markets or product lines/groups), directing more decision-making authority toward those teams and what is right for those teams. It is the notional opposite to a highly “matrixed” organization focused on resource sharing.

There is no ideal organization for everyone. There may not be an ideal organization, one without some form of compromise, for any one group. There are many, many different organization structures for us to explore or model. The trick is to find the right structure for our objectives and our needs.

There are many books on the subject of organizational structure, so I can’t possibly cover the entire subject in a single post. However, there are a few considerations that I have been taught by my peers or have observed that I think make a short, but helpful list to have handy while adjusting one’s organization:

  1. Write a statement that captures the need or objective of your organization (such as developing people to support a developing business, or driving greater consistency of process, or accelerated speed of execution) then explore how the organization facilitates or inhibits that objective.
  2. Consider at what level you want decisions to be made and by whom; does the organization enable that decision at the right place? 
  3. Does the decision and communication tree support the personality you have or want? For example, if your organization is highly creative and enjoys experimenting, a communication or authority chain that demands multiple levels of approval will shut down that freedom to explore and make mistakes. Alternatively, tight control of direction will keep an organization focused on the critical few tasks and better manage tight budgets.
  4. Do you want many people conferring on decisions, or do you want just a few to exercise their authority and experience? Another way to consider this is to ask if it is best for your organization to allow a few to dictate direction, or does your culture operate on a more team-of-representatives approach? Direction is faster and more decisive. Teams of representatives, operating effectively, can explore more ideas and address risks, but they are slower.
  5. Can the personalities in the bubbles on the chart skillfully fulfill the roles and responsibilities in each case?
  6. Pick out the leaders of individual efforts (projects/initiatives) according to the org chart and list what information they need to effectively execute those efforts. How far across or up the chart do those task leaders need to go to get that information? Is that OK or do you want something different?

There are two more important activities that we must do. They both come after we decide on our organizational structure, or our adjustments and changes.

The first is to put together a plan to manage the disruption created by the change. If you reorganize in order to improve performance and efficiency, but fail to manage the changes created by the new organization, it will be a good, long time before things settle in, and you actually achieve the performance you sought. Make a plan to eliminate confusion and communicate expectations for how the new organization is supposed to work.

Your change management plan will be as effective as your investment in that plan. If your plan consists of sending out an email communicating the new org chart, well, you asked for it. If you get in the middle of the communications, address the confusion in person, answer questions and redirect proactively, your effort will be fierce, but relatively short.

The second important activity is to step back periodically throughout the year and examine how well your plan is achieving what you envisioned. When personalities are involved, things rarely behave exactly as we plan or expect. What might have seemed like a highly effective communication structure on the drawing board might turn out to be dysfunctional in reality. Be sure to observe and recognize what works and what doesn’t. 

Before making further changes, determine if the problem can be corrected with some mentoring or clarification. If it simply isn’t right, don’t wait for the next change season to roll around to fix it. Make the change right away. The disruption from the adjustment will probably not be any worse than living with the dysfunction, especially if you manage the disruption.

It is good to be objective and logical about our organizational structures, and to consider the functional sensibilities. In addition, consider the human and communication elements of an organizational structure. Before releasing the next org chart, be sure that the structure enables the decision-making and communications that your business and its operating culture require to perform. 

Be sure that your task leaders and decision-makers have access to the information and guidance they need to operate the way you envision, whether it be ready access for quick decisiveness, or recommendations from many peers. Above all, be sure that your structure enables the fulfillment of the needs or objectives of your business and its unique personality.

Stay wise, friends.

To read part one of this two-part series,please click here. What’s your take? Please feel free to comment below!