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The Organization’s Fault


Last updated 8/5/2010

Long hours, endless streams of e-mail, blurry chains of command, occasional turf wars and the ever-present foreboding that you’ll never be able to meet all your obligations. If this sounds like your life, there’s a good chance you’re a knowledge worker in a modern corporation. Try not to place all the blame on yourself. After all, a lot of these problems might be tied to how your organization is structured. In fact, a number of experts believe that today’s corporations tend to be in awkward transition between the traditional corporate structures of the 20th century and the ones necessary to thrive and be productive in the 21st century.

Analysts contend that contemporary organizations, which contain growing proportions of skilled workers, should not be structured in the same way as yesteryear’s factories and plants. Knowledge workers depend, after all, on collaboration and the constant swapping back and forth of information, analysis and expertise. “There is a mass of evidence to suggest that, in the twenty-first century, the time is ripe for sustainable change in the ways organizations use to get things done,” states Gerard Fairtlough, former CEO of Shell Chemicals and author of The Three Ways of Getting Things Done (Donkin, 2005).

Others agree it is time for a change. “Today’s big companies do very little to enhance the productivity of their professionals,” wrote Lowell Bryan and Claudia Joyce of the consulting firm McKinsey & Company. “In fact, their vertically oriented organizational structures, retrofitted with ad hoc and matrix overlays, nearly always make professional work more complex and inefficient. These vertical structures—relics of the industrial age—are singularly ill suited to the professional work process.”

Matrix designs are an example of modifying traditional hierarchies to make them better suited for modern organizations. Using this strategy, some companies organize personnel according to both functions and products. Although the idea is to create synergy and lateral communication, critics of matrix structures claim that this system winds up causing conflicts and confusion as workers end up reporting to two bosses (Bryan & Joyce, “Surviving,” and “The New”).

Bryan and Joyce argue that companies should, instead, modify vertical structures in a different way, one better suited to knowledge workers. That is, firms should clarify and streamline vertical reporting relationships but also develop “organizational overlays” in the form of markets and networks. For example, a company can encourage formal networks of people with common interests. Such networks make it easier for people to exchange ideas and information horizontally across organizations.

Bryan and Joyce also recommend performance metrics as a way of keeping knowledge workers on track: “As the workforce increasingly comes to consist of self-directed professionals, leaders will have to manage them by setting aspirations and using performance metrics that motivate them to organize their work, both individual and collective, to meet those aspirations.”

Another idea comes from organizational design consultant G. Bruce Friesen, who advocates what he calls the “lattice” organizational structure. This model is based on the organization-as-network idea. Hierarchy still exists in a chain of command from CEO to manager to team, but rather than relying on functional silos, the structure is based on work processes (for example, product development). Managers oversee the processes and the teams associated with those processes. In short, the hierarchy “has been curtailed to a degree consistent with empowerment of employees to make essential decisions at the point of action or contact.”

Perhaps the most famous example of a company that relies on loose networks of employees is W.L. Gore and Associates (Oxman & Smith, 2003). The company founder, Bill Gore, also called this a “lattice” structure. The organization allows natural leaders to emerge. Decision making does not depend on an assigned hierarchy but rather on the responsibility, skills and knowledge of employees and project groups.

The Gore example might fall into one of Gerard Fairtlough’s categories. He argues that, aside from hierarchy, there are two other ways for getting things done. There’s “heterarchy,” which the Financial Times describes as “divided, supported or dispersed rule where control shifts around depending on the project and the personality, skills, experience and enthusiasm of those who can make things happen.” There’s also a concept known as “responsible autonomy,” in which teams of employees decide what to do but remain accountable for the results.

Some experts even argue that trying to find the best formal organizational structure is an outdated activity (Oxman & Smith, 2003). They note that formal reporting lines seldom reflect true working relationships, anyway. Rather than going through the arduous and dangerous process of restructuring, perhaps it’s best to make organizational cultures more adaptable via knowledge- and performance-management systems. That is, maybe companies can update their managerial “software” rather than overhaul their structural “hardware.”

If that’s not good enough, of course, there are other ideas for more radical structural solutions. Trying to settle on the right ones, however, requires knowledge workers to put their collective heads together—assuming, that is, they can get themselves properly organized.

For more information on organizational change and flexibility, visit HRI’s Website.

Documents used in the preparation of this article include the following:

Bryan, Lowell, and Claudia Joyce. “The 21st-Century Organization.” McKinsey Quarterly, no. 3, 2005, pp. 24–33.

Donkin, Richard. “A Hierarchy Is Not the Only Way to Run a Business.” Financial Times. ProQuest. November 3, 2005.

Friesen, G. Bruce. “Organization Design for the 21st Century.” Consulting to Management, September 2005, pp. 32–51.

Mandel, Michael, Steve Hamm, Carol Matlack and Christopher Farrell. “The Real Reasons You’re Working So Hard...” BusinessWeek. ProQuest. October 3, 2005.

“The New Organisation.” The Economist, January 19, 2006.

Oxman, Jeffrey A., and Brian D. Smith. “The Limits of Structural Change.” MIT Sloan Management Review, Fall 2003, pp. 77–82.
“Surviving the Matrix.” Businessline. ProQuest. July 10, 2006.