Organizations form a whole by arranging and planning for your resources to achieve a purpose. You use organizations to structure and formalize the social relationships of your staff. Organizations can take any number of forms including centralized/decentralized, narrow or broad, functional or general and the like. A good way to think about your organization is that it is a tool to be applied to achieve your vision and mission. On that basis, an organization plan is mostly a design challenge; use the tool suitable for the job to be done. In making that assessment, you have several things to consider:
- Will your decision making processes be based on hierarchy? A top-down, limited-empowerment approach is the most common form of decision making. Its benefits are speed, clarity and clear accountability. Its drawbacks tend to be based on fear as bureaucracies typically follow. The effectiveness of automated and data driven controls can create or destroy the opportunity for empowerment.
- Is collaboration important for your success? I win / you lose designs, like those with limited spans of control, do not foster collaboration. Flat organizations with extensive spans of controls (8+) do enable collaboration. Your design will depend on what you need to do to deliver on your value proposition.
- Do you have your best people working on your biggest problems? When basketball teams need points, they usually pass the ball to their best shooter. Companies can do the same by designing flexible organizations that allow your best talent to migrate to wherever the biggest problems are. In this situation, speed is essential, the design is very general, job titles don’t really mean anything and work routines are informal. Everyone needed to get something done just jumps on it. Most start-ups operate this way in early stages and then morph over time into more formalized structures and designs.
Start-ups must possess the ability to evolve and adapt quickly. The organization design must reflect that need. Broad definitions of responsibilities and job titles are a fundamental part of constructing a flexible organization.