‘There is a common belief in organisational development circles that if we could only get leaders to be more enlightened, all would be well. That notion is too simplistic; enlightened leaders don’t automatically make for enlightened organisations, unless they also embrace structures, practices, and cultures that change how power is held, how people can show up, and how the organisation’s purpose can express itself.’ Frederic Laloux

Reinventing Organizations (2013)

One of the priority organisational areas that often comes out during the organisational self-assessments I do with my NGO clients is a question about organisational structures. Usually there is a sensation that the organisational structure isn’t serving the staff to design and deliver the work as they need to. And while there can be differing views on what aspects of structure could be the problem, or the focus, attending to this could pay some dividends in improving the work of many non-profits. 

So it seemed to me to me that it was worthwhile to investigate this further and to see where it connects with other organisational issues identified. If your organisation has is interested in reviewing its structure then this post, as a compilation of some notes, background, pointers, ideas and suggestions around organisational structure issues, might be helpful.

Illustrating Different Forms

Obviously there are many different structural forms of organisation (and even different structures within the same organisation; as they can have different functions). There are reams of academic papers, commercial consultancy reports and books on organisational structures. I don’t want to advocate one form over another for you (sort of misses the point), but I will present some of the issues around some of the most common forms and highlight what are some of the questions you may want to consider in your deliberations.

The UK’s National Council for Voluntary Organisations (NCVO) has an interesting set of web pages that highlight organisational structural issues (http://knowhownonprofit.org/organisation/orgdev/structure-and-culture/structure ). I think it is useful for you to have a look at these pages. They denote four main organisational structures: hierarchical, flat, informal and no structure. Here is a summary from their pages with a few additions:

 1). Hierarchical:
The hierarchical organisation structure is pyramid-shaped. At the top of the structure is a single person, who has a small number of people reporting directly to them. Each of these people has several people reporting into them and the number of people at each level increases as you move down the structure.

Advantages of hierarchical structures:
– A hierarchical structure uses clear reporting lines. It is easy to see what each team is called, how many people there are in each team and how they relate to other people in the system.
– Easy to understand who does what.
– Efficient.
– Familiar, can be comfortable and most career paths still follow hierarchical paths.  

Disadvantages of hierarchical structures:
– People can feel stuck in a ‘silo’ and miss opportunities for co-operation, both for themselves and the organisation.
– Be difficult to work across.
– Make the development of general management capability a challenge.
– Build lots of functional specialist activity that potentially adds little value to the enterprise as a whole.Be slow to change and monolithic. 

2). Flat Structure:
There are fewer levels in the flat structure organisation. Usually there is one person at the top with everyone else reporting into them on an equal level.

Advantages of flat structures:
– People feel more involved and can take on more responsibility.
– Greater communication.
– Better team spirit.
– Less bureaucracy and easier decision making.
– Lower costs.

Disadvantages of flat structures:
– Decisions can get stuck as a result of consulting with many people.
– People may have ‘matrix management’, with more than one manager.
– Limited to smaller organisations.
– The function of each department gets blurred as roles merge. 

3). Informal structure:
Many organisations develop informal, sometimes invisible structures. These are based on the reality of day-to-day interactions at work. They are very important, as they can pass on communications (or rumours), they can be friendly and supportive (or form cliques). They can also influence decisions, as there is knowledge and discussion at an informal level. The influence of these networks is significant.To understand this think how would it be if your NGO ran itself only to the rules, policies, and procedures that are official and written down. Very soon it would stop working as we cannot plan for every eventuality (unions use work-to-rule as a form of industrial action). So there are many processes that are informal and have developed to fill the void; and usually informed within the overriding culture of the organisation 

4). No structure:
It is difficult to imagine any organisation without a structure. Even groups of young children start to establish a network or informal hierarchy. In the beginnings of a new organisation there may be no formal structure but often this changes over time.

Adapted from NCVO website with additions from myself andCheung-Judge, and Holbeche (2011), Organisation Development 

This is fairly standard stuff, but misses some of the more evolved approaches (matrix structures[1]team or network structures[2]) and revolutionary ones (self-managing teams[3][4]). I think it would also be beneficial for any organisation to look into McKinsey’s Report on matrix organisations[5] and see whether some of the issues identified here echo with the experience at your group. I would recommend that any ‘change team’ or the management reviews these references for inspiration. Naturally there are many other sources and some other resources can be found here[6], but only if you have the interest. 

A summary of the facets of these three approaches are given here:

 5). Matrix:
A matrix organisational structure is a structure in which the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. In other words, employees have dual reporting relationships – generally to both a functional manager and a product manager. The matrix organisational structure is therefore different from a hierarchy because it brings together employees and managers from different units to work toward accomplishing a goal. The matrix structure is a combination of the functional and divisional approach. The former divides units within an organisation by the functions performed, while the latter divides them by products, stakeholders or geographical location.

Advantages of matrix structures:
– The main responsibility of the project manager is to maintain co-ordination among interrelated factors of a particular project. He has to communicate both with the horizontal and vertical authorities so that the project work can be run smoothly. Similarly, functional managers are responsible for providing technical and administrative guidance to projects. This leads to a better and more effective control over regular operation. Information flows both across and up through the organisation.

– This structure is adaptable to the frequent changing and uncertainty found in civil society operating environments. Employees are in contact with many people that helps with sharing of information and can speed the decision process.

– Resources can be used efficiently in matrix structures, many projects are handled at a time. As such, there is more possibility of maximum use of available resources including manpower. It minimizes extra cost of hiring new personnel. Similarly, surplus material, plant, equipment and other resources of a completed project can be transferred to another project. Thus, available resources can be used within the organisation and the wastage of resources can be minimised.

– The matrix structure encourages a democratic leadership style. This style incorporates the input of team members before managers make decisions. The ability to contribute valuable information before decisions are made leads to employee satisfaction and increased motivation.

– This structure encourages delegation of authority to project managers. They are responsible for regular operation of the project. They have the authority to take decisions related to the day-to-day operation of projects. This provides sufficient time to the top management to make strategic planning and policies rather than operational activities.

– Since specialists and experts are involved in many inter-disciplinary areas, there is the possibility for higher quality performance and output. Similarly, specialists from any inter disciplinary and interact with each other to get better opportunity to expand technical excellence into many inter disciplinary areas and also in many activities.

– Here, many members, both from the project and functional areas, are involved in achieving common objectives. They interact with each other and develop mutual and close relations with each other. This working environment develops a feeling of team spirit among the members. This contributes to develop the overall working efficiency of the organisation.

– Staff have to work autonomously and do some self-management between their competing bosses; this can enhance motivation and decision making in employees who enjoy it.

Disadvantages of matrix structures:
– Matrix structures are considered one of the toughest organisational forms to work in, due to the conflicting pull on resources and via supervision.

– It can result in internal complexity. Some employees may become confused as to who their direct supervisor is (or prefer one over another). Thus the dual authority and communication problems may cause division among employees and managers. To avoid the problems, frequent and comprehensive communication among project and functional managers is necessary.

– There is real potential for miscommunication and ineffective managing of people. This can result in employee dissatisfaction and low morale. Prolonged issues may cause an organisation to experience high employee turnover.

– Expensive to maintain. An organisation’s overhead cost typically increases because of the need for double management. In some situations, matrix organisation creates a problem of over specialization. Specialists from both functional and project works gather to solve many complex problems of the organisation. As many experts gather to solve problems they may waste time in discussing unrelated issues.

– Matrix structure demands a high level of inter personal relations and skill. It is essential to involve both functional and project specialists. Besides, it is essential to maintain a balance among these authorities to bring about uniformity in the organisational performance. The sharing of employees may cause unhealthy competition for their time between managers within a company and also role-overload.

– Time limits to assignments are a limiting factor of the matrix structure and it creates problems in maintaining wide co-ordination among all the mechanisms of the organisation. For example, a project manager has been given a fixed time to co-ordinate all the mechanisms to complete the given work within the fixed time. As the time factor is limited, the manager cannot maintain a wide co-ordination among various departments and authorities. The competition for scarce resources may cause hostility within the workplace and hinder production.

– Many specialists and experts are drawn from different functional departments for any project. They are generally appointed in the project only for a limited period. Their role is to provide technical and administrative support to the project managers. However, the project manager does not have the line authority to coordinate and control these personnel.  

6). Team-Based Structure
The practice of team organisation is common in many organisations. Team organisation is an approach to organisational design that emphasizes almost exclusively on project type teams having little and some cases no functional hierarchy. In the team organisation work is divided into various projects or units and each project work is entrusted to a team having dedicated and sufficient members. When a unit becomes large it is sub divided into smaller manageable units.

Employees move from one project to another project on the basis of demand of the projects. The skills and efficiency of the employees are considered for assigning project work. Team members work together in such a way that they utilize their skill to achieve common goals. This helps the team members to change direction, explore new ideas, and try new methods on the basis of effectiveness in performance. 

There are various types and classification of team organisation structure depending on the requirements of the task: problem solving team, quality circle, self-managed work team, cross-functional team, and virtual team.

Advantages of team structures:
– A team is self directing, autonomous and self managing. There is little hierarchy and rules to be followed by team members. A team is formed for a specific job. Team members set objective, prepare plan and policy, develop strategy and implement plan independently. Top level management only supervises and coordinates team performance.

– Mutual trust and value to each other is one of the important facets of team organisation. Members of the team are heterogeneous and have expertise in certain functional area. Yet they are inter-dependent and complementary to each other, and must do the assigned job through mutual support.

– Team organisation emphasises two-way communication. So, for taking any decision, there is a system of transfer of information between the manager and team members. Similarly, team members are close to the information required to solve many operational problems.

– Managers invite subordinates to participate in the decision-making process. They can provide views, opinions, ideas, information and suggestion etc., in the course of decision-making.

– It emphasizes flexibility in operation. Team structure and members can be changed on the basis of requirements of the job. A new team can be formed by accumulating members having diversified knowledge and skills. Thus they can adapt the organisation’s performance on the basis of changing conditions and requirements.

Disadvantages of team structures:
– There may be the possibility of conflict among team members as the responsibilities are inter-dependent of each other. Managers therefore need to invest more time and effort to resolve conflict.

– Good inter-relationships and inter-dependency are required for the high performance of all teams, yet team members are independent and self-responsible for doing their assigned job. If there is lack of mutual relations (respect) among the team members then managers need to devote more time to maintain co-ordination over their performance and output. 

– A feeling of insecurity among the employees is one of the limitations of the matrix structure, as they may have to ‘sell themselves’ to be part of any ongoing project.

– Teams are formed on the basis of the job to be done, which potentially creates the problem of effective control over functions of teams. Top management needs to maintain close supervision over the performance of teams.

– The lack of effective performance in one team could create problems in the performance of all the teams of the organisation.

– Team organisation emphasises a participative decision-making process, however, the involvement of more persons in decision-making processes potentially makes it more complex and may create problems in delivering timely decisions.

– Team performance is the main motive of team organisation. However, if any misunderstanding arises among team members or among teams, it can spoil personal relations.

– In some situations it can become more difficult to develop a good working environment and maintain organisational performance. In some situations team organisation creates a problem of over specialization (staff members become ‘siloed’). Plus as many experts gather to solve problems, in some cases, they may waste valuable time in discussing unrelated subject matters.

7). Self-Managing Teams:
A specific sort of team is the self-managed, or directed, team. This is a team in which the members are responsible for an entire ‘business’ operation, generally with very little input from a manager or supervisor. A self-managed team typically manages its own workload in addition to having primary responsibility for producing a good or delivering a service. The team members share both managerial and operational responsibilities, as well as accountability for the team’s output. Self-managing teams are distinct from self-directed teams. While the latter define their own goals, the scope of a self-managing team’s authority is limited by goals that are established by others.

Thus a self-managing team has considerable discretion over how it gets its work done. This means the majority of key decisions about activities are made by people with direct knowledge of, and who are most affected by, those choices. Advantages and disadvantages mirror many of those found above in teams generally, but the effects are perhaps heightened. In response specific practices and policies are required for such forms of working.  

Advantages of self-managed team structures:
– Organisations in various fields have proved effective in using self-managed teams to boost productivity and motivate employees. They are heavily skewed towards personal and organisational learning and continuous improvement.

– It is seen to be a highly-democratic form of organisation; and appropriate to civil society organisations where human relations and an open culture are important.

– Members of self-managing teams plan, co-ordinate, direct, and control their activities. For example, they set the work schedule and assign tasks. They may also contain the usual admin or HR functions, such as: set their own salary levels and determine performance evaluations. In this way they share both the managerial and technical tasks.

– Team members share responsibility for their output as a whole, which can inspire pride in their accomplishments. Staff development and organisational status is based on ‘real’ personal development and abilities, rather than job titles and positions.

– Because they eliminate a level of management (usually the middle-management and many of the administrative management become superfluous), the use of self-managing teams can better allocate resources and even lower costs.

Disadvantages of self-managed team structures:
– The lack of hierarchical authority means that personal relationships can overwhelm good judgment. 

– It can also lead to conformity, which can inhibit creativity or make it difficult for team members to be critical of each other.

– Self-management adds a layer of responsibility that can be time-consuming and require skills that some team members may not have. 
– Members of a self-managing team often need training to assist them in succeeding at jobs that have a broad scope of duties.

– New methods for joint decision-making and conflict resolution are required, especially when dealing with the administrative or personnel functions.

– Fundraising, business intelligence, or project development roles might be lost.

Adapted from http://smallbusiness.chron.com/http://study.comhttp://www.wisenepali.com/ & www.boundless.com 

The influence of culture

In NCVO’s associated pages they also make, what I think is, the crucial link between structure and the culture of the organisation[7]; in that structure needs to marry together with the culture otherwise they are potentially going to conflict with one another. As Frederic Laloux points out in his book Reinventing Organizations (2013):

‘Hierarchical structures with non-hierarchical cultures – it’s easy to see that the two go together like oil and water. That is why leaders in these companies insist that culture needs constant attention and continuous investment.’

And as Charles Handy, in his classic book Understanding Organizations (1999), has written:

“… many of the ills of organisations stem from imposing an inappropriate structure on a particular culture, or from expecting a particular culture to thrive in an inappropriate climate.”

It is seen as the clash between the cold (strategy, structure and systems) and warm (goals, staff, skills and style) organisational aspects. So Handy bakes the structure cake differently using culture as the basis for – or explaining – the form exhibited. He proposes that there are four main types of culture: power, role, task and person. A summary of each is given below (in full on pages 184-187). I wonder do any of these have resonance with your group, what does your culture demand?

Power culture:
This culture depends on a central power source, with rays of power and influence spreading out from that central figure. They are connected by functional or specialist strings but the power rings are the centres of activity and influence. These cultures, and organisations based on them, are proud and strong. They have the ability to move quickly and can react well to threat or danger. Whether they do move or whether they move in the right direction will, however, depend on the person or persons in the centre; for the quality of these individuals is of paramount importance in those organisations and the succession issue is the key to their continued success. 

Role culture:
This culture works by logic and by rationality. The role organisation rests its strength in its pillars, its functions or specialties. These pillars are strong in their own right. The work of the pillars, and the interaction between the pillars, is controlled by: Procedures for roles, e.g. job descriptions, authority definitions; Procedures for communications, e.g. required sets of copies of memoranda; Rules for settlement of disputes, e.g. appeal to the lowest crossover points. The role organisation will succeed as long as it can operate in a stable environment. Role cultures are slow to perceive the need for change and slow to change even if the need is seen. But come disaster – collapse or take-over – and the security of the role culture may be found to be built too much on the organisation and too little on the individual’s capacities. 

Task culture:
The so-called ‘matrix organisation’ is one structural form of the task culture. …the whole emphasis of the task culture is on getting the job done. To this end the culture seeks to bring together the appropriate resources, the right people at the right level of the organisation, and to let them get on with it. It is a team culture, where the outcome, the result, the product, of the team’s work tends to be the common enemy obliterating individual objectives and most status and style differences. The task culture is therefore appropriate where flexibility and sensitivity to the market or environment are important. Essentially control is retained by the top management by means of allocation of projects, people and resources. However, when resources are not available to all who can justify their needs for them, when money and people have to be rationed, top management begins to feel the need to control methods as well as results. Alternatively team leaders begin to compete, using political influence, for available resources. In either case, morale in the workgroups declines and the job becomes less satisfying in itself, so that individuals begin to change their psychological contract and to reveal their individual objectives. This new state of affairs necessitates rules and procedures or exchange methods of influence, and the use of position or resource power by the managers to get the work done. 

Person culture:
In this culture the individual is the central point. If there is a structure or an organisation it exists only to serve and assist the individuals within it. It is often the form used by partnership (say legal firms or consultancies). Clearly, not many organisations can exist with this sort of culture, since organisations tend to have objectives over and above the collective objectives of those who comprise them. Furthermore control mechanisms, or even management hierarchies, are impossible in these cultures except by mutual consent (which on a larger scale is on the road to decision-making deadlock).

What to do now?

Okay I’ve thrown lot of things at you. Clearly structure is not something that can be worked out in isolation of the other issues that might be raised via an organisational assessment, they are interlinked. These other organisational priority areas are perhaps ‘hanging’ from, or exacerbated by, this structure, it would be important to consider those aspects too and how the structure is a part of those aspects and how any changes might positively impact upon them. So whatever you do when you work on structure consider what other parts will be influenced by any change in it; essentially you are changing a system.

Personally I think that the appropriate form of any organisation should be focussed towards maximising its impact towards achieving its mission (NCVO also say something of this on their site, so have a look), and is essentially addressing the combined requirements of two main things: the function and the culture. In an ‘equation’ it could be:

Form = Function + (or x) Culture

In this light perhaps there should be a discussion of what is the effect that you are aiming to have and thus what is the function that supports it. Start with a clean slate and try not to look at what you have, but rather what you could have. So what are you delivering and what constitutes the impact you wish to have? What capacity do you currently have to do these things? How does that support your NGO’s change/transformation model? Remember this includes not only the structural form, but also the processes and practices that support it.

Next discuss the culture of your group, what values and ways of working do you wish to exemplify. Perhaps discuss whether the values of the NGO are living (and are able to live), and also issues surrounding enrichment of the staff experiences (meaningful work, living organisational values, work-life flexibility, staff/stakeholder relatedness, supervisor behaviour and mentoring, solidarity and fair working conditions, subsidiarity in decision-making, supporting self-direction, and ensuring staff growth and development). As a civil society organisation you have a certain way of doing things that would amend a purely functional approach (in the same way that a business would approach your activities with a profit motive in mind).

Also be honest about what are those assumptions that you, individually and the management in particular, hold about how other people work. You will find it extremely difficult to go against your deeper assumptions here (are you a Theory-X or a Theory-Y manager?[8]). Frederic Laloux again:

‘What determines which stage an organisation operates from? It is the stage through which its leadership tends to look at the world. Consciously or unconsciously, leaders put in place organisational structures, practices, and cultures that make sense to them, that correspond to their way of dealing with the world.

This means that an organisation cannot evolve beyond its leadership’s stage of development. The practice of defining a set of shared values and a mission statement provides a good illustration. ….’

Have a look at what you have and marry the two together, reflecting on the different organisational forms in the references I have given, it might give you direction towards what you need. Remember work on the organisational development of any organisation is as much a part of everyone’s jobs as your core work; on campaigning, making proposals, organising seminars, or preparing a press release. This is where you look to improve the efficiency and effectiveness of your collective approaches and why we work together in an organisation in the first place.

One last thing, as you work on this or other organisational other issues, have an experimental attitude. One of the things I see again and again in my work is that people want certainty in an uncertain world, and assurances that this new thing will work. I think that change is ever present and so we need to have an open and inquiring attitude as we work. Look at this as an experiment, or an investigation, and much of the pressure falls away. It means that whatever changes you make are cast as “this is the best idea we have right now, so let’s see how it works”. Then reflect together on what happened, how it worked and how it didn’t and then improve it.

Good luck!

[1] Here is a rather thorough explanation: http://depts.washington.edu/pmgroup/GlobalCongress2006/TRN12_Integrt_proj_org_NR.pdf

[2] See pages 3-5: http://www.pathfinder.org/publications-tools/pdfs/Strengthening-You-Organisation-A-Series-of-Modules-and-Reference-Materials-for-NGO-and-CBO-Managers-and-Policy-Makers-Organisational-Structure.pdf

[3] Here is a link to an article by Frederic Laloux, author of Reinventing Organisations (I have mentioned this earlier), it gives a good basis to what SMT are about and the structures that are needed to support them: http://www.managementexchange.com/story/how-self-management-works-coherent-set-structures-and-practices-get-rid-bosses-hierarchy-and and a document on them: http://www.managementexchange.com/sites/default/files/media/posts/documents/The%20keys%20to%20self-management-detailed%20description.pdf

[4] ‘Self-management, just like the traditional pyramid model it replaces, works with an interlocking set of structures, processes, and practices; these inform how teams are set up, how decisions get made, how roles are defined and distributed, how salaries are set, how people are recruited or dismissed, and so on.’ Laloux, 2013, Reinventing Organisations, p.134)

[5] Excellent review of the issues: http://www.mckinsey.com/insights/organisation/beyond_the_matrix_organisation

[6] Here are other sites, perhaps less applicable, with different approaches: http://blog.hubspot.com/marketing/team-structure-diagrams , http://www.gdrc.org/ngo/org-chart.html and a McKinsey report: https://www.google.ch/webhp?sourceid=chrome-instant&rlz=1C1VSNC_enCH607CH612&ion=1&espv=2&ie=UTF-8#q=structuring%20your%20organisation%20to%20meet%20global%20aspirations

[7] http://knowhownonprofit.org/organisation/orgdev/structure-and-culture/culture

[8]Description of Douglas McGregor’s ideas: http://www.businessballs.com/mcgregor.htm

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