When to change the organizational structure?

Organizations are complex systems. They are born and develop just like living organisms and must continually adapt to the surrounding reality to grow and advance towards their goals. Several of its elements such as mission, vision, structure and culture influence the way in which the individuals that make up them relate and organize. In this article we will focus on the organizational structure since it is much more than an organization chart. It is necessary to pay attention to it, as it plays a determining role in the methods and processes of the institution, increases efficiency, helps establish accountability, and so on.

Therefore, from time to time, we must stop and think: at what stage of life is my organization? What are the characteristics of the environment in which it is immersed? Does your current structure support or hinder the achievement of our objectives?

What is the organizational structure?

Successful organizations have an organizational structure that defines the work of each employee and clearly identifies the way in which this work contributes to the whole. This structure indicates the hierarchy within the company and address that the activities must have to achieve the objectives. Helps maintain efficiency and focus; Provides clarity to all members of the organization.

There is no ideal structure, quite the opposite, depending on its very particular characteristics, each company must have the structure that works best for it. And it is the most experienced leaders who must take on the task of determining the type of organization that best suits you according to your line of business, your culture and the industry to which you belong.

How is it formed?

The key elements that make up the organizational structure are:

  1. The definition of positions, tasks and responsibilities.
  2. The division of the departments; that is, the way in which work is coordinated.
  3. The way to delegate.
  4. The amount of control exercised over activities and people.
  5. The line of command – the number of people who report to managers.
  6. The rules and roles.
  7. The way in which information flows within the company.
  8. The positions in which decision-making falls.

The way in which these elements are combined results in the specific type of organizational structure. In an article, Forbes Advisor describes some of them:

Types of organizational structure, pros and cons

  • The functional or role-based It is one of the most common. Authority is centralized: the hierarchy, vertical; functions and roles are clearly defined. This type of structure facilitates the specialization of collaborators and it is easy to see who to climb with and who the responsibility falls on. But on the other hand, it can be too rigid, impede growth or cause communication between departments to not be fluid.
  • Something similar happens with the structure based on the product or the marketeither. Same hierarchy, verticality and so on, but the focus is not on roles and functions. This structure can help companies that have several product lines, but it is very important to take care of communication between teams and that there are not many duplicate functions.
  • The geographical structure It is similar to the previous one and can serve companies present in several countries or areas. It is good because it takes into account the characteristics of each location, such as culture, language, etc., but it has the same disadvantages and dangers (duplicated functions, rivalry...).
  • The structure based on processes (research and development, collections, customer service, etc.) follows the life cycle of the product or service. It can help increase efficiency, specialization and teamwork, but it can create barriers between teams unless communication is taken care of.

There are more types, such as circular, matrix and organic, but for reasons of specificity we will not delve into them. You can read about them directly in the mentioned article, as well as see the graphic representation of each one.

What factors affect the organizational structure?

There are many factors that make a certain structure more or less suitable for an organization, but the fundamental ones are:

  • The size of the company.
  • Its moment in the life cycle. Has he just been born? Is it a young or mature company?
  • The strategies that the organization uses to position itself in the market. Are you betting on differentiation or are you looking to offer a product that offers a better cost-benefit?
  • The political-legal, sociocultural, economic environment and even the natural conditions in which the company exists.
  • The technology available.

If you want to delve deeper into this topic, you can consult this link.

How does the organizational structure influence projects?

If you are wondering if the organizational structure influences projects, the answer is a resounding "Yeah". It has been seen, for example, that the organizational structure affects whether certain innovation projects are successful or not.

The reason is that it determines the resources that will be assigned to each project, the methods of communicating the objectives and tasks, the number of rules to follow, the freedom of action and decision that the project will have. project manager and other aspects that are directly related to the management of activities. What's more, even within each project there is a structure that defines the hierarchy, authority, functions of each participant and the way of reporting the results.

When should it be changed?

For all of the above, if something feels “stuck” in your company, it is worth stopping and reviewing what changes there have been in the factors that affect the organization, roles and teams, and the alignment of tasks with the Strategic plan. It is very important that you consider how communication is flowing since, as we saw, it is an essential element to foster collaboration and efficiency.

If you think that your company needs an adjustment to its structure, but you don't know where to start evaluating, we can help you. We recommend this article that deals with change in organizations. We can also support you with communication workshops or change management projects.

Remember, at Coacharte we seek to be the strategic allies of your company.

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