Republic of the Philippines

Department of Education
Region X
DIVISION OF CAGAYAN DE ORO CITY
2 Raboca Drive, Suntingon, Bugo, Cagayan de Oro City
Tel. No. 8526088, bugonhs@[Link],

ORGANIZATIONAL STRUCTURE

What Is an Organizational Structure?

An organizational structure is a system that outlines how certain activities are
directed in order to achieve the goals of an organization. These activities can
include rules, roles, and responsibilities.

The organizational structure also determines how information flows between

levels within the company. For example, in a centralized structure, decisions
flow from the top down, while in a decentralized structure, decision-making
power is distributed among various levels of the organization.

Having an organizational structure in place allows companies to remain

efficient and focused.

Understanding Organizational Structures

Businesses of all shapes and sizes use organizational structures heavily.
They define a specific hierarchy within an organization. A successful
organizational structure defines each employee's job and how it fits within the
overall system. Put simply, the organizational structure lays out who does
what so the company can meet its objectives.

This structuring provides a company with a visual representation of how it is

shaped and how it can best move forward in achieving its goals.
Organizational structures are normally illustrated in some sort of chart or
diagram like a pyramid, where the most powerful members of the organization
sit at the top, while those with the least amount of power are at the bottom.

KEY TAKEAWAYS

 An organizational structure outlines how certain activities are directed to

achieve the goals of an organization.
 Successful organizational structures define each employee's job and how it
fits within the overall system.
 A centralized structure has a defined chain of command, while
decentralized structures give almost every employee receiving a high level
of personal agency.
Not having a formal structure in place may prove difficult for certain
organizations. For instance, employees may have difficulty knowing to whom
hey should report. That can lead to uncertainty as to who is responsible for
what

in the organization. They should report. That can lead to uncertainty as to who
is responsible for what in the organization.
Having a structure in place can help with efficiency and provide clarity for
everyone at every level. That also means each and every department can be
more productive, as they are likely to be more focused on energy and time.

Centralized Versus Decentralized Organizational

Structures
An organizational structure is either centralized or decentralized. Traditionally,
organizations have been structured with centralized leadership and a defined
chain of command. The military is an organization famous for its highly
centralized structure, with a long and specific hierarchy of superiors and
subordinates.

There has been a rise in decentralized organizations, as is the case with many
technology startups. This allows companies to remain fast, agile, and
adaptable, with almost every employee receiving a high level of personal
agency.

Types of Organizational Structures

Functional Structure
If you’ve had a job, you likely worked in a functional organizational structure.

The functional structure is based on an organization being divided up into smaller

groups with specific tasks or roles. For example, a company could have a group
working in information technology, another in marketing and another in finance.

Each department has a manager or director who answers to an executive a level up

in the hierarchy who may oversee multiple departments. One such example is a
director of marketing who supervises the marketing department and answers to a
vice president who is in charge of the marketing, finance and IT divisions.

An advantage of this structure is employees are grouped by skill set and function,
allowing them to focus their collective energies on executing their roles as a
department.

One of the challenges this structure presents is a lack of inter-departmental

communication, with most issues and discussions taking place at the managerial
level among individual departments. For example, one department working with
another on a project may have different expectations or details for its specific job,
which could lead to issues down the road.

In addition, with groups paired by job function, there’s the possibility employees can
develop “tunnel vision” — seeing the company solely through the lens of the
employee’s job function.
Divisional or Multidivisional Structure
The second type is common among large companies with many business
units. Called the divisional or multidivisional structure, a company that uses
this method structures its leadership team based on the products, projects, or
subsidiaries they operate. A good example of this structure is Johnson &
Johnson. With thousands of products and lines of business, the company
structures itself, so each business unit operates as its own company with its
own president.

Additionally, within this structure, divisions could also be created geographically, with

a company having divisions in North America, Europe, East Asia, etc.

This type of structure offers greater flexibility to a large company with many divisions,
allowing each one to operate as its own company with one or two people reporting to
the parent company’s chief executive officer or upper management staff. Instead of
having all programs approved at the very top levels, those questions can be
answered at the divisional level.
A downside to this type of organizational structure is that by focusing on divisions,
employees working in the same function in different divisions may be unable to
communicate well between divisions. This structure also raises issues with
accounting practices and may have tax implications.

Matrix Structure
A hybrid organizational structure, the matrix structure is a blend of the functional
organizational structure and the projectized organizational structure.

In the matrix structure, employees may report to two or more bosses depending on

the situation or project. For example, under normal functional circumstances, an
engineer at a large engineering firm could work for one boss, but a new project may
arise where that engineer’s expertise is needed. For the duration of that project, the
employee would also report to that project’s manager, as well as his or her boss for
all other daily tasks.

The matrix structure is challenging because it can be tough reporting to multiple

bosses and knowing what to communicate to them. That’s why it’s very important for
the employees to know their roles, responsibilities and work priorities.

Advantages of this structure is that employees can share their knowledge across the
different functional divisions, allowing for better communication and understanding of
each function’s role. And by working across functions, employees can broaden their
skills and knowledge, leading to professional growth within the company.

On the other hand, reporting to multiple managers may add confusion and conflict
between managers over what should be reported. And if priorities are not clearly
defined, employees, too, may get confused about their roles.
Flatarchy Structure
While the previous three types of organizational structures may work for some
organizations, another hybrid organizational structure may be better for startups or
small companies.

Blending a functional structure and a flat structure results in a flatarchy

organizational structure, which allows for more decision making among the levels of
an organization and, overall, flattens out the vertical appearance of a hierarchy.

The best example of this structure within a company is if the organization has an
internal incubator or innovation program. Within this system, the company can
operate in an existing structure, but employees at any level are encouraged to
suggest ideas and run with them, potentially creating new flat teams. Lockheed
Martin, according to Forbes, was famous for its skunkworks project, which helped
develop the design of a spy plane.

Google, Adobe, LinkedIn and many other companies have internal incubators where
employees are encouraged to be creative and innovative in order to promote the
company’s overall growth.
A benefit of this system is it allows for more innovation company-wide, as well as
eliminating red tape that could stall innovation in a functional structure. As for the
negatives, the structure could be confusing and inconvenient if everyone involved
doesn’t agree on how the structure should be organized.

Additional Benefits to Having an Organizational

Structure
Putting an organizational structure in place can be very beneficial to a
company. The structure not only defines a company's hierarchy, but it also
allows the firm to lay out the pay structure for its employees. By putting the
organizational structure in place, the firm can decide salary grades and ranges
for each position.

The structure also makes operations more efficient and much more effective.
By separating employees and functions into different departments, the
company can perform different operations at once seamlessly.
Organizational structures as a business strategy
The fact that organizational structure is viewed as a complex thing that can't
be done without deep business knowledge, made it even discouraging for new
businesses to adopt the concept.

While in the modern work environment, a business is no longer a place for

work, it's an entire community where individuals share their own visions and
innovative new ideas.

So organizational structure is no longer about the channels of communication

or the written charts, it's more into everyday relationships between people
inside the organization.

When planning for your organizational structure, you need to keep your
business goals in mind, because even if you hire good people without a clear
structure in place, you will be wasting your time and resources.

That's why when big companies change their strategies, they look again for
modifications and do internal changes to the way they recruit to make sure
that different functions are not working against each other.

Evolving from Red to Teal

The first organization structure aroused when there was a need for more
efficiency and effectiveness, when companies wanted to remain the same and
maintain their position in the market, during these days, whatever structure
needed was put in place and people adapted to it whether they liked it or not.
This was until 1930's when the human factor aroused to give bigger
recognition to the needs and opinions of employees.

Red organizations
Just like wolf packs, red organizations are led by only one strong person who
controls with power and commands others on what to do. There wasn’t much
about red organization as they were made they were the simplest and first
form of organizations the world ever saw.

But in today’s world, this form of leadership doesn’t exist in organizations that
much rather in gangs and mafias.

Usually, there are no formal hierarchy or seniority levels which makes it hard
for this type of organizations to scale. Red organizations will usually fail the
test of the modern world when it comes to strategy and planning, however,
they enjoy a highly reactive ability in unstable environments.
Amber organizations
During this stage, organizations started to get closer to the form that the world
knows toady, where there are structures, reporting lines and job titles, and as
a result for this hierarchy structure, the decision making process flew from top
to bottom with no way back or middle management communication.

This somehow created a social difference between talents inside factories,

starting with different uniforms to different treatments and launch areas, this
caused the forming of intolerance groups that act against each other.

A good metaphor for this type of organizations is the army, where there are
soldiers following the orders and commanders controlling the decision making
process with no room for innovation. Leaving this type of organizations is not
just a betrayal, but also employees will be snatched from their communities.

And although amber organizations might seem a little like red organizations,
they are totally different at heart. While red organizations only think for the
short term, amber organizations can take down long term projects like building
the Great Wall of China or the pyramids.

These great accomplishments were done during the amber consciousness era
due to having solid processes by this time. Through these processes,
organizations were able to repeat the same process with much more
efficiency.

With the rise of processes, there were also middle management levels, so
information flew from the top level management to the department managers
then production line workers. This means that planning remained an exclusive
duty for the top management while execution was only for lower levels.

This form of command and control leadership was adopted due to the
prevailing worldview back then that workers are dishonest men and thieves
who should be under supervision.

Orange organizations
We could call it the era of innovation, where project groups and cross
functional initiatives appeared to the surface.

Moving into orange organization was a leap when it comes to how innovation
is promoted inside organizations, instead of discouragement, organizations
started encouraging innovation and allowing it to beat up its competition.
New departments, job titles and rules were created to support the new orange
organizations pursuit as they moved from command and control to predict and
control techniques. Also, the essential functions like finance, risk management
and IT got centralized in the headquarters.

Green organizations
organizations adopt a servant leader concept, where top and middle
managers are sharing power with their subordinates and giving them the
support and motivation needed to go through problems instead of working as
problem-solvers themselves, this sometimes is referred to as the "inverted
pyramid".

As clarified, the theory divides power equally between individuals so everyone

has the same share to make decisions, so front line employees are
empowered to make decisions without management approval as they are
directly working on day-to-day problems which makes them more aware than
distant experts.

In green organizations, managers are rated fairly according to morale surveys

and 360-degree feedbacks, huge amounts of money are invested in training
new generations of leaders and even in some cases, teams choose their
leaders not vice versa.

In green, employees are part of a family, they have responsibilities and rights
and ready to have each other's back in good and bad times.

And what keeps green organizations running as a family is the culture it tries
to build within its individuals, so they can make decisions and behave on
behalf of the organization internally or externally following shared values not
policies and rules.

owever, there are fatal downsides for this system that can’t be neglected, as
green is trying to implement a culture that invites everyone to be part of a
family, people may abuse its good intentions. In these situations, they have
only two options:

1. Accepting the fact that it will be abused by people who are still living in
the Amber and Red consciousness era.
2. Know that not all the people will share the same tolerance worldviews
and set limitations.

Also the family concept causes issues of looking for sameness to join that
family, so instead of valuing people based on motivation and capability, they
look for people who will behave just like them which makes choices limited
and drops diversity levels.
Finally, green needs to understand that by removing all the formal structures
and hierarchy, they are not eradicating inequality. Informal structures will take
place and this will reduce transparency and lead to much bigger disasters like
having internal silos.

Teal organizations
The final form that organizations have evolved to is the teal, where
organizations are considered as complex adaptive systems that are
decentralized and consist of self-managing teams. Inside these organizations,
power and leadership are not static, they are transferred to those who earn it
the most based on passion, interest or expertise.

What makes this paradigm unique, is encouraging employees to show up as

who they are as humans with all the flaws and emotional sides of their
personalities, rather than pretending perfectionism, teal organizations
developed a set of practices that revolve around bringing your whole self to
work.

This system is supported by conversations that clarifies the organization

purposes to everyone involved to make sure they are all aware of the big
picture, so while orange organizations are like machines and green ones
adopts a family concept, teal are like a living organism.

Through this evolution, many organizational structure models appeared and

evolved, over ranging from complete bureaucracy to the self-managed
organizations, however the basic elements of any organizational structure
remained the same over time.

And they were always represented in an organizational chart, which is a

diagram that clarifies who reports to whom and who is responsible of what;
according to the customization happening in these six elements:

1. Chain of Command
It represents the reporting authority that extends from the top of the
organization to the bottom. It also clarifies who reports to whom and
contributes mainly.
2. Span of Control
The number of team members a leader can manage effectively and as this
number gets bigger, the span of control gets wider.

3. Centralization
The extent to which the decision making process is centralized, for example,
in highly centralized companies the decisions are mainly taken by the CEO or
the executive board, while in flat organizations, the power of authority is
distributed among all the team members.
4. Specialization
The extent to which the members of the organization have depth knowledge in
their fields, high degrees of specialization makes employees able to detect
problems easier and gives them a high level of experience and increases their
productivity, on the other hand, low degree of specialization allows for more
flexibility as employees can shuffle between variety of tasks without struggling
of learning about the new task since they already have a background about it.
5. Formalization
Formalization is the degree to which the organization is going to have roles
and tasks clearly defined and described with all the relationships, skills and all
the job requirements. In organizations that are less formal, you can find the
role adhering to the person filling it and they have the opportunity to innovate
and set structure, teams and processes that they see best fit for the role.

6. Departmentalization
The way in which the organization is divided into teams of certain functions
and how these teams are communicated. ‘The more the teams are rigid, the
less the communication between the teams is established’. And in today's
work environment, this type of rigid structure is not encouraged.
The Bureaucratic Era

During this time, innovation was not encouraged across all levels of the
organization, it was only the duty of the high level management, while other
employees were only responsible for getting things done. 

Under a hierarchical structure, C level management took most of the decisions

inside the organization and have the authority over information flows,
however, this type of models is so outdated, it makes employees inside feel
like machines who are responsible only for executing orders and the truth is,
nobody ever asked for bureaucracy.

This was effective in the past, when no one cared about the kind of
experience they're having or paid attention to their learning curve, but in
today's technology world, this model can draw back the organization and
make it less competitive because employees inside are not experienced
enough to handle major shifts in what they do and almost trained not to think.

You might need a little structure with a sense of humanity inside your
organization, this is why the semi structural era was brought to us. The
models created during this period will be most convenient for your business if
you're looking for something to maintain everything organized with a little
autonomy, it all depends on your business objectives.
Geographical Divisional Structure: When you need to dive
deep in each market
If you're running a company that has branches all over the world, you might
need to understand each territory on its own and get a closer look into each of
your different customers' needs, or you might need to be near your suppliers
and buyers. 

In both cases, it’s always beneficial to have a dedicated team especially if they
are local citizens who are familiar with the market needs and traditions.
Matrix: Functional + Structure

When you want to give it all to the project management to handle, Matrix is a
very good choice. By dividing your organization into two intersecting lines that
form cross functional project teams.

Inside this structure, each team member will have two reporting lines. One to
his own main team and the other to the project manager he is working with. 

But it also depends on what level you want to keep your project management
control, for instance, you can have from weak to strong management.

Weak- functional matrix

A project manager is only playing a supervisory role where he rarely interacts
with the team leaving the handling for functional managers.

Balanced- functional structure matrix

The power is shared equally between the project manager and the team
leader.
Strong-Project Matrix
A project manager is primarily responsible for the project, functional managers
provide technical expertise and assign resources as needed.

The matrix system proved its efficiency for many companies in removing silos
and barriers between team. Also, it helped raising the specialization level and
spreading information across the company but you need to watch out of
creating something that is more dangerous than a silo. A hassle in the chain of
command.

Under a matrix, each team member has two heads to whom he is reporting.
His direct functional manager and the project manager he is working with,
sometimes if those are not aligning with each other, whether accidentally or on
purpose, deadlines might overlap each other and this is where the poor team
member gets lost. 

Should I commit to my function or department duties or the project

manager deadlines?

That's why when following this structure, your chain of command should be
made clear to everyone, even if not written in a way that project manager X
has an authority over function manager Y, it could be be just general agreed
upon rules.

Flat: The absolute freedom

"Deciding what to work on can be the hardest part of your job at Valve. This is
because, as you’ve found out by now, you were not hired to fill a specific job
description. You were hired to constantly be looking around for the most
valuable work you could be doing."
This is basically how valve put out their flat structure in the team manifesto.
Under the flat structure, you will be with no management to tell you what to do,
you have no job title or seniority level. Everyone is equal and the organization
is being self-managed.

All you're required to do is creating project teams and linking them together to
work. This is usually hard to follow especially if you're already an existing
organization. It will cause hassle and will take up a lot of time and effort to get
people to adapt to the new structure, unless your company is small or still a
startup.

Under flat structure, the one appointed as the project lead is not actually there
to lead the project and tell people what to do and what not to do. People with
experience has a more of an organizing role and they have to bury their ego
ensuring that everyone on the team is meeting their best possible productivity
levels and blocks are removed out of the way as quick as possible.

Flatter Structure: The Common model

Removing layers and opening lines of communication. This his how you turn
your organization into a flatter structure, the model is mostly used by mid-size
and large organizations.

Supporting it with the latest technology in communication to keep the team

connected and all aware of what others are doing through team collaboration
softwares like Trello or Basecamp so information can flow on any device,
anytime and anywhere.

This model is suitable too if you want to empower everyone inside your
company, hence information will not flow from up - down, and instead will be
shared across all the company.

Flatarchies Structure: Fostering Innovation

You can't have two structures in place because that's not possible technically
and not what flatarchies mean anyway.

But under a flatarchies structure, you can be following a hierarchy structure

and have teams acting in a flat manner or you can follow a flat structure and
have teams acting in a hierarchical manner.
Holacracy: The latest model
In 2001, Brian [Link], quit his stable job to find a company called
Ternary software that worked as an experiments lab for different models and
methodologies like lean, agile, waterfall and other models. Through the
different insights formed, he established HolocracyOne in 2007, and this is
when the model began to be shared with the world.

The idea is simply eliminating every boss inside the organization and replace
it with an entrepreneur instead. Unlike other models, the goal of this structure
is to allow for distributed decision making process and give everyone the
opportunity to work on things they love the most. So solving Issues is not the
responsibility of the leaders because everyone inside is a leader, and
everyone is responsible of designing his role as the best way it fits.

And although the structure might seem complex, random and consisting of
lots of guidelines and components, at its core, it consists of only circles
intersecting with one another.

For example, we are talking about a company that consists of three main
circles, Sales, Marketing and PR. Members of this company are free to
choose to allocate their time among different activities they love to be part of
in these circles.