Organisational Structures That Kill Businesses.

org structureAs a consultant, every client you handle is a learning experience and an eye opener to bigger issues that many other organisations (may) face. Recently, our firm BLEGSCOPE was engaged by a client to conduct an Organisational Self-Assessment and our findings were both interesting and distressing. In our article today, we share some of our findings about the organisational structure in a bid to help organisations avoid similar mistakes in the future and also as an adjustment and/or improvement tool for organisations that may be facing similar challenges.

The organisational structure is, many a time the root cause of many organisational challenges. From unclear reporting lines, unclear roles and responsibilities, to a lack of understanding of roles and responsibilities, organisational structures have everything to do with this! Organisational structure forms a critical part of corporate governance. Corporate governance refers to the system by which companies and organisations are directed and managed. It usually involves a set of relationships between the company’s board, management, employees, shareholders and other stakeholders. It also provides the structure through which the organisation achieves its objectives and provides accountability to stakeholders. An unclear organisational structure therefore is a result of a bigger problem; a weak corporate governance system.

All organisations; corporations, political organisations, nonprofit organisations, cooperatives, charities, businesses alike need functional organisational structures to operate smoothly. No two organisations are identical and regardless of their similarities, organisational structures will always differ from company to company. However, all businesses need structure to survive. Without structure, there’s very little clarity and focus; reporting is unclear and responsibilities remain unclear or unknown.

Like the common English joke…” “Everybody was sure that Somebody would do it. Somebody thought Anybody could do it, so Nobody did it.

In the end, Everybody blamed Somebody when Nobody did what Anybody could have done.”  

Here are the three (3) major organisational structure challenges/mistakes to avoid;

1. Having a very flat organisational structure; In the past, many organisations and businesses adopted the tall organisational structure with multiple levels of management in one long chain of command. This structure had both advantages and disadvantages, however, the disadvantages outweighed the advantages. Even with clarity of focus, managerial control, close supervision of employees and clear roles and responsibilities, top to bottom communication and vice versa took so long and this hampered decision making and hence hindering progress. Many companies and business owners then adapted to the flatter organisational structure having fewer management levels with ease in communication and employees having more autonomy.

The Good Parts

Flatter structures also offer employees more opportunities, are more flexible to change, eases communication and promotes a more democratic style of management and decision making.

The Hard Parts

When the structure goes too flat however, all employees seem to be on the same level of influence and as much as communication flow is consistent, decision making only gets harder because every employee feels that their opinion equally matters as managers try to balance decision making with democracy. Managers end up with a heavier work load, there’s more confusion over the roles and there’s chaos in the office, once again hindering progress.

flat structures

2. Having no organisational structure at all; Today, many things are changing too fast and organisational structures are no exception. With many startups coming up from time to time, most companies and businesses have adopted to having no structures at all. Hiring practices are changing. Employees today are smarter than those of the previous generations and have the ability to learn faster and take on more and more responsibilities. There is more flexibility and people hate managers! Companies and businesses take huge risks, and can make similarly huge mistakes, however, the most important point for many owners is to get the work done and be able to learn from past mistakes. There exists little to no level of hierarchy at all and employees prefer not to have a boss. Whereas this kind of environment promotes creativity, communication and limits various restrictions, in the end staff become directionless, there is chaos, confusion and a false system of self-management with each individual figuring out how best to work; which ultimately, does not work! While a structureless environment can succeed, the reality of human nature and the need for rules usually catches up with such an organization.

3. Nonfunctional organisational structures; as organisations, companies and businesses grow, directors leave, management changes, old staff leave, new staff come in; it is very easy for organisations to lose focus and direction. Some staff become too familiar with the organisation and assume leadership positions, some managers lack power in terms of decision making, new managers have less and less information as staff hate to report to them, operations are entirely handled by staff, communication flow becomes poor, roles are unclear and ultimately, there is no reporting at all. A once well-structured organisation, with a 5 Year Strategic Plan, a clear organisational structure, clear roles and responsibilities with proper reporting lines; now operates in total chaos especially with staff having no regard to management and in due course, management having nothing to report to the Board of Directors. This is commonly caused by a lack of evaluation and tracking of progress in achievement of earlier set targets and goals and a constant reminder of roles and responsibilities plus reporting lines.

Such organisational structure mistakes are common challenges that organisations face and to overcome this;

  • Corporate governance structures need to be strong,
  • Management need to constantly communicate,
  • Bottom-top communication should remain consistent,
  • Recruiting process should be nondiscriminatory,
  • Roles and responsibilities among staff and management need to be clear,
  • Reporting lines should be distinct and constant reviews need to be done from time to time.

While it is possible to make a change – for companies that are already facing such challenges – regardless of the fact that it may be time consuming and expensive, it is better to get it right, the first time (especially for startups) so as to possibly avoid similar mistakes and not belittle the importance of structure!!

By Sarah Achiro

Sarah_Achiro Sarah recently joined BLEGSCOPE®, as a Management Consultancy Trainee and has worked as a Marketing Executive for   Riham Foods. She has  interest in finance,  accounting and procurement. You can follow her on twitter >> @achirosarah

BLEGSCOPE

BLEGSCOPE is the brand name representing all BLEGSCOPE business and other initiatives that operate under BLEGSCOPE Capital Ltd (BCL).

BCL is an investment holding company based in Uganda that was set up to provide a valuable and unparalleled platform for like-minded entrepreneurs to exploit the numerous business and investment opportunities in the Great Lakes region.

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