How Organizational Structure Affects Performance
Organizational planning is concerned—in management jargon—with the duties, responsibilities, authority, relationships, and personal requirements of positions. This kind of planning harnesses and legitimizes power. It also helps to contain illegitimate power. To be sure, an organizational plan is restrictive. In fact, all managing processes are restrictive, for their purpose is to guide people’s efforts toward effectively attaining the objectives of the group, and in a sense all guidance is restrictive. If people are to pull together rather than work at cross-purposes, some harness is needed—and better a planned harness than a tangled one. With a soundly developed system of management and good leadership, high-caliber people will work productively and with zest despite the restrictions of the organizational plan and the other system components.
In business as in government or any other field, able people just don’t want jobs with inadequate or unclear authority. It is our conviction, based on observation of executives at work and on hundreds of confidential interviews with executives at all levels, that any high-caliber man’s effectiveness, job satisfaction, and zest for work—from the time he takes his first job until he retires—are all vitally affected by the structure of the organization in which he works. And there is a structure whether it is a haphazard tangle or the product of a formal plan.
The results of organizational planning are pictured in organizational charts, with their boxes and lines of authority. But organizational planning really deals with the actions, ambitions, emotions, and personal effectiveness of people. Whether or not the actions of individuals are effectively harnessed to achieve the purposes of the business depends largely, I believe, on how well the plan of organization is fashioned and how resolutely managers at all levels follow it themselves and require others to do so. The boxes and lines on charts are merely symbols of plans that, as part of the management system, help to require and inspire purposeful, productive decisions and actions.
Even a perfect organizational plan won’t control all the imperfections of human nature. But a defective plan can be counted on to bring out the worst in people and to raise costly havoc in the organization. Business executives, like generals and educators, often engage in infighting, and businesses, like all other organizations, have their political camps and cliques. These reflections of the mean side of human nature frequently originate from a defective organizational structure. At the very least, such a structure stimulates and facilitates infighting and politics.
Across many industries, a rising tide of volatility, uncertainty, and business complexity is roiling markets and changing the nature of competition. Companies that can sense, assess, and respond to these pressures faster than rivals will be better at capturing the opportunities and mitigating the risks. more