[MUSIC] In this module, we're going to be talking about organizational structure. We'll discuss what structure means and why it's so important for organizations. We'll then talk a little bit about some of the most common organizational structures that you will find in most organizations. Now, some of you may be sitting there thinking, talking about structure doesn't apply to me because I'm not in charge of the structure of the organization, maybe this matters to the top executive team, but not so much to me. Well, regardless of where you are in an organization, understanding the basics of organizational structure can be very important for a couple of reasons. First, everyone operates within an organizational structure. So to the extent that you better understand the organizational structures that you operate in and some of the inherent advantages and disadvantages of those structures, you'll be better equipped to successfully navigate organizational life and ultimately be more productive in your role. Second, you're likely at some point to be in a position where you can influence organizational structure. In fact, it's likely that as a manager, you have some influence over structure right now. So, whether you're an executive discussing the structure of the entire organization, maybe you're a head of a department thinking about how to structure your part of the organization or maybe a project manager trying to design the best structure for your team. Most managers eventually come face-to-face with questions about the best way to structure an organization or some part of an organization. So, this module will equip you with some useful tools to help you better understand and answer these important questions. As a manager, you need timely and correct information to help you make good decisions, but in every organization, there's a fundamental problem of information flow. We need information to flow vertically and horizontally in the organization. When we think about vertical information flow, we realize that managers need to receive good information from those below them in the organization if they're going to make good decisions. At the same time, managers at the top of the organization have specific information that they want employees throughout the organization to receive and act upon. Now, this type of vertical information flow is mostly concerned with control and that's necessary for the organization to operate efficiently and with consistency. Now, when we talk about horizontal information flow, we think of information that needs to flow between different groups or individuals. Various managers and individuals are making decisions in different parts of the organization all the time. And so we need to make sure that those decisions are in sync. So, horizontal information flow is more concerned with coordination and collaboration and that's necessary for adaptation and innovation in the organization. Well, it turns out that often as we focus on one problem of information flow, it tends to make the other problem worse. So, when we try to ensure more control, that sometimes means we become less adaptive or when we try to become more adaptive, it can seem like everything's out of control. Organization structure is one way that organizations try to manage this tension as we try to ensure that the organization is efficient and appropriately adaptive. So, what do we mean by organizational structure? Well, structure refers to the way in which tasks in the organization are divided, grouped and coordinated. So structure is really just about dividing things up and then coordinating to make sure that things work together. That sounds simple enough, but it's actually quite difficult to decide what the most important tasks are, decide how those tasks should be divided up and then figure out how to coordinate between different people and groups that are working on those different tasks. And don't forget that all of these different tasks are supposed to be in pursuit of common organizational goals. There's lots of decisions to make about division of labor and coordination within the organization. For example, how specialized should the tasks be that people perform? Should the tasks in groupings be formalized or should they remain informal? Who should have the decision-making authority in the organization? Should it be centralized at the top or should it be decentralized so that more people are involved? How many layers of management should we have? Do we build a tall hierarchical structure or do we have a flatter organization where employees may oversee a larger number of employees? These are all important questions that we have to consider as we make structural decisions. One last note by way of introduction to structure, remember our three lenses that we've been talking about so far, the rational, natural and open system lenses. Well, when we talk about organizational structure, we usually think about it from a rational system lens. So if the organization is like a machine, then organizational structure is how we build the machine to do its job as efficiently as possible. We often think of a traditional organization chart that outlines formal relationships among key groups and individuals in the organization and shows how they interact with each other but we can also view structure through a natural system lens. There are lots of important informal relationships in organizations that may not show up in the formal organizational chart, but that can be very important to achieving organizational effectiveness. And it's important to remember that as you divide up tasks in the organization, that creates the necessity for human interaction, that creates politics and conflicting goals and interests. Finally, when we view structure from an open system lens, we realize that we shouldn't implement structure in a vacuum. We need to account for all kinds of factors outside the organization that will help us to determine what's the right structure for our organization.
