Organization Structure Basics at KODESINC
Organization Structure Basics at KODESINC
GROUP MEMBERS
The organization's design should ensure the smooth flow of both vertical and horizontal
information as needed to achieve the overarching goals. If the structure fails to align with the
organization's information needs, individuals may either lack crucial information or waste time
processing irrelevant data, ultimately diminishing effectiveness. However, there exists a natural
conflict between vertical and horizontal mechanisms within an organization. While vertical
connections are primarily established for control purposes, horizontal connections are geared
towards fostering coordination and collaboration, often at the expense of control.
Centralized Versus Decentralized:
• Centralization means that decision authority is located near the top of the organization.
• Decentralization, decision authority is pushed downward to lower organization levels.
Vertical linkages serve to coordinate activities between the top and bottom tiers of an
organization and are primarily instituted to maintain control over organizational operations. It is
essential for employees at lower levels to align their activities with the overarching goals set by
top-level management, while top executives must remain informed about the activities and
achievements occurring at lower levels. Various structural mechanisms can be employed to
establish vertical linkages, such as hierarchical referral, rules and regulations, and formal
management information systems.
Hierarchical referral, the first vertical mechanism, relies on the hierarchy or chain of
command. When employees encounter a problem they cannot resolve, it can be escalated to the
next level in the hierarchy. Upon resolution, the solution is communicated back down to lower
levels. Essentially, the lines of the organization chart function as channels for communication.
Rules and plans are another method used to establish linkages within an organization. When
problems and decisions are repetitive, rules and procedures can be implemented so that
employees know how to respond without constant communication with their superiors. These
rules and procedures serve as standard references, enabling coordination among employees
without the need for constant communication. For instance, at PepsiCo’s Gemesa cookie
business in Mexico, production workers are briefed on goals, processes, and procedures,
empowering them to manage the production process efficiently, thereby reducing the need for
extensive managerial oversight. Plans, such as budgets, also serve as essential references for
employees, allowing them to operate within their allocated resources.
Vertical information systems are another tool for enhancing vertical information flow within an
organization. These systems encompass various forms of communication, including periodic
reports, written documents, and electronic communications like emails, distributed to managers
across different levels of the hierarchy. Such information systems streamline communication up
and down the organizational hierarchy, enhancing efficiency.
In light of contemporary corporate scandals and ethical dilemmas, many senior managers are
considering bolstering their organization's vertical information and control linkages.
Additionally, ensuring adequate horizontal linkages is another critical aspect of organizing,
facilitating coordination and collaboration among different departments and teams within the
organization.
Horizontal communication bridges the gaps between different departments, allowing employees
to coordinate and collaborate effectively towards shared organizational goals. Collaboration
entails a collective endeavor involving individuals from multiple departments working together
to achieve outcomes that align with a common objective, often surpassing what could be
accomplished individually or within isolated departments. Horizontal linkage denotes
communication and coordination that occurs across various organizational departments.
Information Systems: In modern organizations, horizontal linkage is facilitated significantly by
cross-functional information systems. These computerized systems allow managers or frontline
workers across the organization to regularly exchange information, updating each other on
progress, issues, opportunities, activities, or decisions.
Liaison Roles: Another level of horizontal linkage involves direct contact between managers or
employees affected by a problem. One method to encourage this direct contact is by establishing
a liaison role. A liaison, also known as a coordinator, typically situated in one department, is
tasked with communicating and fostering coordination and collaboration with another
department. These roles are often established between engineering and manufacturing
departments, as engineering needs to develop and test products to fit manufacturing constraints.
Task Forces: Liaison roles typically connect only two departments. For issues involving
multiple departments, a more intricate approach like a task force is necessary. Task forces are
temporary committees comprising representatives from each affected organizational unit. Each
member represents their department or division and can relay information from meetings back to
their respective departments. Task forces effectively facilitate horizontal collaboration, solving
problems directly and alleviating the information burden on the vertical hierarchy. Once their
tasks are completed, task forces are typically disbanded.
Full-time Integrator: A stronger horizontal linkage strategy involves creating a full-time
position or department dedicated solely to coordination. A full-time integrator, often holding
titles like product manager, project manager, program manager, or brand manager, does not
report to any of the functional departments being coordinated. Instead, they are positioned
outside these departments and are responsible for coordinating several departments.
Cross-Functional Teams: Project teams serve as robust horizontal linkage mechanisms. Cross-
functional teams, which are permanent task forces comprising members from various functional
areas, are frequently used alongside a full-time integrator. When activities necessitate extensive
coordination and collaboration across departments over an extended period, a cross-functional
team is often employed. Many contemporary companies utilize virtual cross-functional teams,
consisting of dispersed members linked primarily through advanced information and
communication technologies, such as the Internet and collaboration software. These teams enable
collaboration without face-to-face meetings, particularly beneficial for multinational companies
with members in different countries across various time zones and cultures.
Relational Coordination:
Relational coordination refers to “frequent, timely, problem-solving communication carried out
through relationships of shared goals, shared knowledge, and mutual respect.”
Organization Design Alternatives:
Organization structure outlines three main things in organization design alternatives which
includes required work activities, reporting relationship and departmental grouping.
Required Work Activities:
Departments are formed to handle duties that are strategically vital to the organization. In a
manufacturing business, work activities are divided into many functions to achieve
organizational goals, such as a company's departments include human resources, buying,
production, and sales. As firms develop in size and complexity, managers often need to fulfill
additional duties. Organizations often create new jobs, departments, or divisions to focus on
important responsibilities.
Reporting Relationship:
After defining needed work activities and departments, the following step is to determine how
they should fit into the organizational hierarchy. Vertical lines on an organizational chart
represent reporting links (also known as the chain of command). The chain of command should
establish a clear line of power inside an organization, indicating who reports to whom. Large
organizations like General Electric, BP, Amazon, or L'Oreal may require multiple charts to
identify reporting relationships.
Departmental Grouping Options:
Divisional structure:
A divisional structure, often known as an M-form (multidivisional) or a
decentralized form, organizes discrete divisions to manage certain goods, services, product
groupings, key projects or programs, divisions, enterprises, or profit. A divisional structure
groups organizations depending on their outputs. Organizations tend to shift from functional to
divisional structures as they become more complex.
Divisional structure is divided into two categories which includes product based divisional
structure and Geographical based divisional structure.
Product Based Divisional Structure:
A product based divisional structure is when a structure is departmentalized by product line. This
is useful when the products don’t overlap and are designed, marketed, sold and managed
completely differently.
For example:
United Technologies Corporation (UTC), which is among the 50 largest U.S.
industrial firms, has numerous divisions, including air conditioners and heating, elevators and
escalators, aircraft engines and technology products for the aerospace and defense industries.
Geographical based divisional Structure:
For global businesses, a division based on
geography often makes the most sense, as different countries or continents will have specific
market needs that must be met. Each geographic unit encompasses all tasks necessary to
manufacture and promote items or services in that region.
For example:
Walmart Stores are organized by geographic regions, such as Walmart Japan,
Walmart India, Walmart Brazil, Walmart China, and Walmart Asia.
Sometimes, an organization needs a multifaceted structure that emphasizes both product and
function, or product and geography, simultaneously. One way to achieve this is through a matrix
structure. The matrix structure is useful when both technical expertise and product innovation are
crucial for meeting organizational goals. It becomes necessary when traditional functional,
divisional, or geographic structures combined with horizontal linkage mechanisms are
insufficient.
The matrix structure represents a strong form of horizontal linkage, characterized by the
simultaneous implementation of product divisions and functional structures, both horizontally
and vertically. In this setup, product managers and functional managers have equal authority, and
employees report to both. This structure is similar to the use of full-time integrators or product
managers but gives product managers formal authority equal to that of functional managers.
Conditions of Matrix Structure:
A dual hierarchy might seem unconventional for an organization's design, but a matrix structure
is appropriate under the following conditions:
1. Pressure to Share Scarce Resources Across Product Lines: The organization, typically
medium-sized with a moderate number of product lines, needs to use people and equipment
flexibly across these products. For instance, engineers might be assigned part-time to multiple
products because the organization isn't large enough to dedicate them full-time to each product
line.
2. Environmental Pressure for Multiple Critical Outputs: The organization faces demands for
in-depth technical knowledge (functional structure) and frequent new products (divisional
structure). This requires a balance of power between the functional and product sides,
necessitating a dual-authority structure to maintain this balance.
3. Complex and Uncertain Environmental Domain: Frequent external changes and high
interdependence between departments demand substantial coordination and information
processing in both vertical and horizontal directions.
Strengths:
1. Ensures the coordination needed to satisfy dual customer demands.
2. Allows flexible allocation of human resources across different products.
3. Ideal for handling complex decisions and frequent changes in an unstable environment.
4. Facilitates the development of both functional and product-related skills.
5. Most effective in medium-sized organizations with a variety of products.
Weaknesses:
1. Participants face dual authority, leading to potential frustration and confusion.
2. Requires participants to possess strong interpersonal skills and undergo extensive training.
3. Is time-consuming, involving numerous meetings and conflict-resolution sessions.
4. Depends on participants' understanding and adoption of collegial rather than hierarchical
relationships.
5. Demands significant effort to maintain a balanced distribution of power.
Virtual Network Structure and Outsourcing:
Outsourcing involves hiring other companies to handle specific tasks or functions like
manufacturing, human resources, or credit processing. In a virtual network structure, also known
as a modular structure, the firm outsources most of its key functions or processes to different
companies and manages their activities from a small central headquarters.
Strenghts and Weaknesses:
Strengths:
1. Allows even small organizations to access global talent and resources.
2. Provides a company with immediate scale and reach without significant investments in
factories, equipment, or distribution facilities.
3. Makes the organization highly adaptable and responsive to changing demands.
4. Lowers administrative overhead costs.
Weaknesses:
1. Managers lack direct control over numerous activities and employees.
2. Managing relationships and resolving conflicts with contract partners demands significant
time.
3. The organization risks failure if a partner fails to deliver or goes out of business.
4. Employee loyalty and corporate culture may be weak, as employees might feel they can be
replaced by contract services.
Holacracy Team Structure:
The most current approach to organization design emphasizes
self-management. The holacracy team structure is an extreme form of self-management. The
design trend towards self-management indicates a major shift in the perception of human
organizations and management. Every employee allocated standard management duties such as
planning, organizing, staffing, and controlling. There are no managers to carry out these
management functions. Organization members are responsible for organizing their own work,
collaborating with others, building personal ties, and procuring necessary resources.
The holacracy team structure, a popular self-management model, has been implemented in over
300 firms worldwide. Circles, also known as holacracy teams, serve as the foundation of an
organizational architecture, rather than people, departments, or divisions. Each circle has a
common aim and authority to make decisions about their work.
Each circle negotiates distinct responsibilities and tasks to achieve its aim. People don't have "job
descriptions." Individuals have control over their own goals, resource allocation, and ownership
of relevant knowledge. In a holacracy team structure, individuals take on many responsibilities
and may work on multiple teams simultaneously.
For example:
This structure is used primarily in small to medium size organizations that face
a need for continuous learning and innovation to meet rapidly changing customer needs. One of
the largest and most well-known companies using a holacracy team structure is online retailer
Zappos.
Characteristics of holacracy team structure:
• Teams (circles), rather than individuals, tasks, departments, or other units, are the
fundamental building blocks of the organization. Everyone works on a team in a
holacracy.
• Individual roles are collectively defined and assigned within the various teams as needed
to accomplish the work.
• Teams design and govern themselves. Holacracy teams work inside a larger structure of
circles that everyone has a hand in shaping.
• Leadership is distributed and contextual. No one is an assigned “manager.” The
responsibilities of leadership are continually shifting as needs arise, teams change, and
new roles are defined.
Each type of structure is applied in different situations and meets different needs. Each form of
structure—functional, divisional, matrix, network, and holacracy team—represents a tool that
can help managers make an organization more effective, depending on the demands of its
situation. Some of these includes mix and match, structural alignment etc.
1. What type of organizational structure does your company follow and how it supports
your overall goals and objectives?
We use a project-based organizational structure that allows resource allocation optimization and
the focus on the client. This way, we accrue a structure that strives for efficiency, flexibility, and
innovation toward our objectives of giving quality solutions and satisfaction to the clients.
Relation with Topic: Organization Structure
The statement highlights the adoption of a project-based organizational structure, emphasizing its
benefits in optimizing resource allocation and client focus. This structure aims for efficiency,
flexibility, and innovation to achieve quality solutions and client satisfaction. It aligns with
organization structure's components by grouping individuals into project teams and emphasizing
effective communication and coordination across departments, essential for integrated efforts
towards common objectives.
2. Can you provide insights into how information is shared vertically and horizontally
within your organization? Can you give us insight on your Organization Chart?
The vertical sharing of information in our organization is typically conducted at weekly or bi-
weekly meetings between a manager and their team or through cross-functional teams and
horizontal sharing, mainly through online collaboration tools with the help of applications like
JIRA. The organizational chart would typically have a CEO at the top, department heads - IT,
HR, and Finance – and then teams and project managers across departments at varying
hierarchical levels.
8. What indicators do you look for to identify any structural deficiencies within your
organization, and how do you address them?
To discover problems with structure, we look for signs such as communication breakdowns,
project delays, unclear responsibilities, and employee unhappiness. To address them, we take on
regular evaluations, collect feedback from team members, and modify assignments or team
compositions to increase efficiency and fix any issues.
Relation with Topic: Structural Deficiencies
The provided answer aligns with the topic's discussion on evaluating organizational structure to
ensure alignment with changing needs. It identifies signs of structural problems such as
communication breakdowns and project delays, reflecting symptoms of structural deficiency
outlined in the topic. The approach of regular evaluations and collecting feedback from team
members mirrors the top executives' periodic evaluations mentioned in the topic. Addressing
issues through modifications in assignments and team compositions aligns with the goal of
achieving the best fit between internal reporting relationships and external environment needs, as
discussed in the topic. Overall, the answer's strategies for problem discovery and resolution are
in line with the considerations outlined for evaluating and adapting organizational structure.
9. What are the primary strengths and weaknesses of your organization's current
structural design?
Our structure's benefits include flexibility and increased collaboration via cross-functional teams.
However, it might be difficult to manage and balance resource allocation properly.
Relation with Topic: Strengths and Weaknesses of Structural Design (Project Based)
The organization's structure promotes flexibility and collaboration through cross-functional
teams but faces challenges in managing and balancing resource allocation. This aligns with the
advantages of project-based organizations (PBOs), including improved business value and
knowledge management. However, concerns arise regarding isolation from other teams and
potential issues with knowledge transfer. Overall, the structure offers benefits in responsiveness
and direct authority over project operations but requires careful management to mitigate
drawbacks related to resource allocation and communication.
10. In what ways do you strive to achieve a balance or mix of organizational structural
elements to optimize performance?
We continuously analyze project requirements and staff capabilities, and change team
compositions and communication lines as needed. By combining functional and project-based
structures, we maintain flexibility while also guaranteeing optimal resource usage to improve
performance.
Relation with Topic: Functional and Project-based structures
It describes a continuous analysis of project requirements and staff capabilities, allowing for
adaptive team compositions and communication lines. This approach maintains flexibility while
ensuring optimal resource usage, aligning with the functional structure's consolidation of
expertise and the project-based structure's focus on dedicated project divisions. By integrating
both structures, the organization benefits from the depth of knowledge provided by functional
specialization while also leveraging the agility and focused direction of project-based divisions.
11. How do you evaluate the effectiveness of your organizational structure, and what
metrics do you use to measure its success?
We assess the effectiveness of our organizational structure by monitoring project completion
rates, client satisfaction, and staff feedback. Project timeframes, deliverable quality, and team
productivity are all metrics that can help us measure success and identify areas for improvement.
Relation with Topic:
It highlights key metrics such as project completion rates, client satisfaction, and staff feedback,
which are essential for assessing the success of organizational structure. These metrics allow for
monitoring project timeframes, deliverable quality, and team productivity, providing valuable
insights into the structure's efficiency and identifying areas for improvement. This approach
reflects a proactive stance towards organizational structure evaluation, emphasizing the
importance of measurable outcomes in determining effectiveness and driving continuous
improvement.
12. Can you provide a hypothetical scenario where your organization needs to adapt its
structure to better meet its evolving needs? How would you approach this situation?
Assume we take on an extensive and asking for project that requires expertise from various
departments. We would form a dedicated cross-functional team with project managers to
coordinate efforts and improve communication. We would monitor progress on a regular basis
and change team compositions or lines of communication as needed to ensure effective
collaboration and project completion.
Relation with Topic: Mix and Match
The scenario of creating cross-functional teams for difficult projects demonstrates "Mix and
Match" concept. This strategy, which mixes horizontal information sharing and holocracy team
structure, promotes flexibility and collaboration. It is consistent with how huge businesses
modify their structures to capitalize on strengths and offset weaknesses in an ever-changing
environment.
13. How do you ensure that your organizational structure remains flexible and adaptable in
response to changing market dynamics or internal factors?
We maintain flexibility by asking staff members for input, analyzing our structure on a regular
basis, and keeping up with industry developments. When necessary, we quickly modify the size
of our teams, the manner in which we report, and the distribution of our resources in order to
adapt to changes and maintain peak performance.
Relation with Topic: Mix and Match, Structural Alignment
They seek employee feedback, analyze their structure on a regular basis, and keep up with
industry changes. This method mirrors the "Mix and Match" theory, which states that combining
different structural aspects allows organizations to adapt to changes and retain peak performance.
14. How frequently do you review and update your organization's structure to ensure
alignment with your evolving business needs and objectives?
We review and update our organization's structure quarterly to ensure alignment with evolving
business needs and objectives.
Relation with Topic:
It’s a general question that asks how much time a company takes to update its structure, it’s
partially related to structural alignment where a company checks for any changes being occurred
that may result in structural change in organization.
15. What tools or methodologies do you employ to facilitate communication and
collaboration across different levels and functions within your organization?
We use tools like JIRA, Skype, and Confluence to facilitate communication and collaboration.
Relation with Topic:
Different communication tools between the employees are used to discuss their work and tasks.
16. How does your organization foster a culture of autonomy, accountability, and self-
organization, similar to the principles of holacracy?
We foster a culture of autonomy and accountability by empowering teams to make decisions and
encouraging ownership of projects.
Relation with Topic: Holacracy Team Structure
They promote collective decision-making and project ownership. This method is similar to the
ideas of a holacracy team structure, in which self-management, distributed decision-making, and
the elimination of traditional hierarchical roles allow employees to take full responsibility for
their work and collaboration.
17. Can you share examples of how your organizational structure has adapted to changes in
the external business environment or internal factors?
When faced with rapid growth in a particular market segment, we restructured our organization
to create dedicated teams focused on serving those clients.
Relation with Topic:
An example was shared by the company where they discussed how they faced rapid growth in
changing environment and how they approach the clients with different need and requirements.