Organizational Structure

Organizations need to be flexible, especially when taking on new challenges. However, structure is needed when issues of responsibility arise.

I often write about the need for flexibility in organizations. Flexibility is essential during unusual circumstances or when taking on new challenges. Flexibility allows us to accomplish a lot without being tied down by past practices or outdated procedures. However, when it comes to issues of responsibility and lines of authority, a certain amount of structure is needed.

Large organizations understand the need for structure. People know who they report to and, for the most part, what their responsibilities are. On the other hand, in small and mid-sized companies, responsibilities and reporting lines are often a little blurred. In fact, in some organizations employees have difficulty answering the simple question: “Who is your boss?” As people in smaller organizations tend to wear many hats, some employees may think they have many bosses. Interestingly enough, when work is being done and the end results are positive, this does not cause a problem. Yet, there are times when this lack of clarity can lead to confusion and even frustration.

Structure becomes important when action needs to be taken on problems, especially when the problems are related to employee performance. When action is needed, there should be a clear reporting relationship so the right people can be involved in the corrective-action process. Whatever the person’s title, someone should be designated responsible for the work of others and given the authority to take appropriate action on performance problems. Each employee deserves to know who that person is.

Most small and mid-sized manufacturing companies have an organizational structure similar to this: The first level is the hands-on employees, including machine operators, assemblers, technicians, material handlers and so forth. The second level generally includes more-senior or more-skilled employees such as the group/team leader, lead operator/mechanic, senior technician and others with similar titles. The third level consists of supervisors or managers, who themselves may exist in multiple levels.

It is important to define the level of responsibility and authority resident with each of these levels. For example, first-level employees are responsible for the quality and quantity of their work as well as the required completion and sharing of company-required documentation. However, the authority of these employees may be limited.

The second level is generally responsible for distributing work and reviewing the quality of first-level employee’s output. Second-level employees may also be responsible for training first-level employees as well as other company-specific duties that need to be handled on a regular basis. In some organizations, the second-level employee may have authority to hire and administer disciplinary action as well.

The third level, or supervisory/manager role, may have all the responsibilities of the second level and will always have the authority to administer disciplinary action.

In this scenario, it is important that all employees understand the responsibilities and authorities of each level. Let’s use the all-too-familiar performance issue of excessive absenteeism as an example. It must be clearly defined who should address this problem with the employee. Is it the second-level group leader? If so, has this person been trained to handle this type of discussion? Has the person truly been given the authority to enforce company policy on this type of infraction? Perhaps most importantly, does the group leader realize he or she is supposed to handle this situation, or is he or she waiting for action from the third level? One thing is certain: If no action is taken, the excessive absenteeism will continue.

As simple as this example is, it is a common occurrence in many small and mid-sized companies. The reporting lines are not clear and no one really knows who should initiate appropriate action when problems surface. To combat this, consider developing an organization chart that clearly defines who reports to whom. Sometimes the act of developing such a chart reveals surprises, such as resource constraints, redundant responsibilities or even excessive approval levels that impede decisions. An effective organization chart should include both solid lines, which generally indicate total responsibility for employee activities (including administering discipline), and dotted lines, which generally indicate a more limited level of responsibility and authority over others.

Whatever means are used to establish and communicate a clear organizational structure will go a long way in clarifying roles and responsibilities to improve any organization’s effectiveness.