The form or shape of an organization matters because it communicates to employees and customers how it functions. It defines who makes the decisions, how work is accomplished, and how employees are assigned tasks.
As a result, people will have a sense of the overall structure of a company and how they relate to it. They will understand not only their role, but also how they can make an impact.
The following words are commonly used to describe the form of an organization:
- Pyramid – Executives at the top supported by middle management, who are in turn supported by staff
- Inverted Pyramid – Or reverse hierarchy. Decisions are made by employees who have contact with customers. Employees are supported by senior management.
- Vertical – Power flows from the top down. Employees follow a chain of command.
- Flat or Horizontal – Power flows laterally. Chain of command is loosely structured with employees possibly reporting to multiple supervisors who have overlapping areas of responsibility. Few or no levels of middle management.
- Centralized – Similar to vertical.
- Matrix or grid – Company structure is set up on a grid. Employees typically report to administrative and operational supervisors.
People will suggest that one form of organization is better than others for completing certain tasks, or for employee growth and development.
However, one must take into account the vision and values of the organization when talking about the effectiveness of the structure.
What a leader wants to accomplish will drive the form of the company. The most successful organizations will be tuned into their customers and adjust their form and structure to better serve them.