Org Structure an Organization\'s Structure Affects Many

Org Structure

An organization's structure affects many aspects of the organization. Kanter (1999) notes that people within an organization tend to operate in line with the messages that they are receiving, so structural elements do affect culture and vice versa. An organizational structure reflects how the people at the top of the organization view how the organization works. So if you have, for example, few new products, you might just work with a geographic structure, and that would encourage people in the company to adopt a transactional mindset, building stability within a tightly defined context. However, if products are the basis of the organizational culture, this might have people working on a specific product become more oriented towards growing that product. The orientation of the company is different so the way that people within the company see themselves and their roles is also going to be different. Buhler (2011) also notes that when an organization changes its structure, this requires managers to "enhance their strategic orientation."

Below the organizational structure level, there are different ways to affect culture and behavior. While not talking about structure, Kanter (1999) notes that incentives provide specific behavioral orientations, and therefore can be used to affect change within the organization. Ultimately, however, I have to question whether either author makes a compelling case that organizational structure affects front line employees whose daily activities are not governed by management structures three layers up. Kanter talks about a lot of things in her interview -- fostering innovation, goal-setting and things like that, but all these things operate well below the organizational structure level. Yes, managers can affect both behavior and culture, but at a more direct level. Organizational structure changes might reflect shifts in executive priorities, and how resources are deployed at the higher levels of the organization, but connection with lower-level activities is tenuous. Organizational culture can be affected, however, by changes to structure -- FedEx sought to do just this when it reorganized Kinko's into FedEx Office.

There are a few different organizational structures. A functional structure reflects a fairly traditional organization, or a simple one that operations with a handful of products in a handful of markets. This structure does not reflect a growth orientation and it also reflects a high fragmentation of activities. Behaviors are likely to focus on maintaining the status quo. It could also reflect a more manufacturing or research-based culture, where perhaps incentives are designed to reflect innovation.

A geographic structure places less emphasis on product and more on market development. This should create a culture that emphasizes sales, marketing and the customer ahead of engineering. Managers are therefore more likely to incentive sales and market growth, rather than product, because product is viewed as secondary. A geographic structure might also result in a company with different strategies for different parts of the world, if those departments prove to operate independently.

A more open organizational structure is used when a company wants to foster very high level of collaboration and innovation. Google has this sort of structure. People belong to work teams more than they belong to divisions. This type of structure is normally used in smaller, creative companies, but larger companies that also want to foster a high degree of creativity and innovation are finding a way to create open teams in order to facilitate a high degree of innovation. This element of structure has become a core part of Google's innovation platform and its organizational culture over the years.

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It is not possible to generalize and say that one organizational structure is better than others. Different structures have different effects on behaviors within the organization, so which organizational structure is the best is going to depend on what the objectives of the organization are. Each organization has a different set of objectives and different market conditions. Moreover, there are different leadership conditions that are oriented towards specific types of behaviors. When you put all of this together, it becomes clear that for each company there will be an ideal organizational structure but it is impossible to generalize and say that one structure is always better.

As an example, we can look at Google. Google has a lot of work teams and otherwise only a vague sense of organizational structure. This fosters a high level of innovation at the company. This is important for Google, because innovation is an important part of its business model. Google needs to innovate in order to maintain its competitive advantage in advertising, and it also needs innovation in order to develop new businesses with all of that cash it has. So a structure that fosters a high level of innovation is important for Google. Clorox Bleach does not require the same level of innovation, therefore the company is not going to benefit from high-powered work teams.

Companies with repetitive processes require different structures and different cultures. They are focused on efficiency, not innovation. Many companies have an efficiency-first culture, for example Six Sigma, because that is more important to success in their business. Let's look at it this way -- Apple needs a high level of innovation and should build its organizational structure and culture around that need. The companies that build Apple tablets, phones and computers do not need to innovate -- Apple already did that -- they just need to produce high volumes of goods at a reasonably low cost. Thus, they are performing an entirely different role and to perform that role well requires a different culture and a different organizational structure.