This Isn’t Your Daddy’s Company – The Changing Structure of Corporate America
Every company has its own unique structure and set of working relationships, but in recent years, more companies are trending towards similar organizational setups. The days of purely mechanistic corporations, marked by predictability, centralized authority, narrow spans of control and impersonal working relationships are largely over.
Many companies today are shifting towards organic organizational structures, characterized by adaptability, decentralized power, and informal/personal working relationships. To better examine the trends in company structures, it’s important to understand the way these structures can impact the way an organization functions.
Formal structures, also known as organizational reports, assign specific employee relationships and articulate the company hierarchy. Informal structures, the unofficial sets of working relationships between members of an organization, are every bit as important as the formal, stipulated structure. By nature, they are not stated in any document or form, but in practice, they can have a major impact on the operations of a company.
Example Organizational Chart – Construction Company X:
Informal structures can help people accomplish their working goals through cooperation, overcome limitations of the formal structures, gain access to interpersonal networks, and sanction informal learning between employees. They also have a unique set of potential disadvantages. Informal structures can work against the best interests of the organization, facilitate inaccurate information, gossip, and rumors, breed resistance to formal change, divert work efforts away from important objectives and create feelings of alienation by clique outsiders.
Keeping all of these complex factors in mind, managers must fit formal and informal structures to the strategy, technology, environment and people of their organizations. So how are managers today shaping their companies differently than those from previous generations?
- Fewer Levels of Management: Organizations are streamlined by cutting unnecessary levels of management. Flatter structures can be viewed as a competitive advantage.
- Less Unity of Command: Rather than working for one supervisor, employees are often finding themselves working for more than one boss.
- Wider Spans of Control: As levels of management are eliminated, remaining managers have responsibility for a larger number of subordinates. These subordinates operate with less supervision.
- More Empowerment: Companies often speak of an “empowered workforce”. Managers provide freedom for employees to do what they want to do, rather than what managers want them to do.
- Reduced Use of Staff: Employees who do not directly pursue the mission of the company, staff employees, are often first to go in down-sizing/cost-cutting.
With these changes, company atmospheres have transformed dramatically. In many respects, employees enjoy more freedom, operate more on the basis of intrinsic motivation and have a more positive experience in the workplace. Just because a company relaxes the formal organizational standards does not mean that it isn’t successful. Zappos employees wear flip-flops to work every day, and in 2009, it surpassed $1 billion in sales. Not too shabby.