Having a current org chart with defined reporting structures, prevents unnecessary conflict and murkiness over roles and responsibilities within the business that affect performance. Being familiar and having an understanding of the reporting structure within an organization helps employees to understand how their role functions and their accountabilities within the structure. Organizations are distributed organisms with various working parts and the relative and/or absolute relationships between them. Current org charts also help to manage complexity and allow employees and other stakeholders to understand how the overall system works.
There are a number of formal and informal reporting structures that can exist within a structure. For example, a mechanistic structure represents the traditional, top-down approach to organizational structure, whereas an organic structure represents a more collaborative, flexible approach to achieving goals.
Flat/Horizontal Structures- Company Wide Collaboration and Decision Making Autonomy
In an organic/flat org, everyone in the company participates and is empowered to further business objectives in a decentralized setting. Popular with smaller companies and start-ups, this org structure offers more responsibility and autonomy to employees, giving them wide spans of control. Flat organizations move faster and are able to innovate more easily than in a traditional hierarchal framework, though official reporting structures are not always easily understood. Flat orgs becomes limited when facing growing teams and workflows, requiring a new structure for optimal organizational performance as the organization grows into a new business lifecycle.
Horizontal reporting relationships in flat organizations establish peer relationships with multiple employees holding decision making powers to initiate growth and develop the company collaboratively.
Hierarchal/Vertical Structures – Reporting Directly to a Manager
More bureaucratic and structured in nature, a hierarchical organization generally follows a chain and command style of authority with employees reporting to a manager above them. Slow to change, and the most traditional form of org design, this structure is commonly found supporting growth through direct reporting to a manager with formal policies and procedures. Vertical relationships represent the rules of engagement in a highly centralized, formal manner making it clear how decisions move up and down the chain of command.
With employees reporting to a clear head of a department, managers can get overloaded with managing different business units and risk becoming a bottleneck. Employees are able to clearly understand who is responsible for overseeing their outputs. Though this structure is still popular today, like all org structures, it has limitations and it slowly becoming less relevant with the new demands of today’s modern workforce. The hierarchy is a very resilient management structure that has been so embedded in how we work that most organizations around the world are having a tedious time getting rid of it. Functions, departments and geographic regions all can be organized in hierarchical structures.
Dotted Line- Reporting to More than One Person
The matrix structure, is a hybrid of divisional and functional structure and is usually found in large, and most multinational companies. Matrix structures are more complex, with team members expected to take more responsibility for their work and in most cases, report to more than one person.
Dotted lines on an org chart indicate that employees or manager report to more than one person. For example, a technical person may report to both their direct manager as well as a project manager if they are involved in another department in some capacity. This leads to dotted line reporting relationship in the org structure with more than one person overseeing the performance of an employee within a project and business unit.
Challenges in this type structure often lie, where one manager may give the performance reviews though another project manager can be responsible for their outputs for a project. If these leaders have different management styles, it can lead to confusion to those reporting, not having a clear understanding of what is expected of them. For example, a project manager may have a different expectation of a job well done but the direct report manager completes the performance reviews.
Advisory & Functional Authority
Whether it is the internal legal department or an outside consultant, some key functions of a business provide counsel to an entire organization or report directly to the CEO. Human resources usually possesses a similar functional authority by implementing and mandating company wide policies and procedures through their department.
Virtual and Network Structures
Virtual organizations are becoming increasingly popular as a means to grow efficiently while matching the demands of the workforce flexibly. Organizations are realizing the benefits to hiring other contractors or businesses to fill company functions. This approach forgos hierarchies altogether and results in losing control of some processes. There are, however, significant gains to be made in lower overhead, and hiring specialized skills as needed. These structures rely heavily on results rather than the time and means to achieve them.
Different org structures facilitate different behaviours to achieve company-wide goals. This impacts communication and decision making through formal and informal authorities within an organization. Centralized companies keep control as high up in the company as possible though all organizations today must be flexible enough to account for different skills, procedures, business units and the market they compete in.
Mechanistic structures represents the traditional, top-down chain and command style of reporting within the organizational structure, whereas the organic structure represents a more collaborative, flexible approach empowering employees to get results collaboratively with their peers. Organizations benefit from different structures based on where they are in their current life cycle.
What is next for your organization? Map out future scenarios of where your reporting structures need to adapt for the future of your Org inside Organimi.