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IMA Human Resources Blog

Designing the Right Organizational Structure for the Future

By Kurtis McBride


A century ago, the nature of industrial work necessitated a top-down structure that persisted for generations, but the days of corporate hierarchy are numbered.

It used to be that jobs were mechanical. People took whatever job was available, often without any previous training let alone specialized higher education. They built things, usually on an assembly lines where the tasks were repeatable. Communicating a message through the company was difficult and expensive. Companies used hierarchical structure to make sure orders cascaded down to the masses, and the people in charge of each layer held the next layer accountable.

These days, the nature of work at many modern companies is far more creative than mechanical. Workers are more likely to be specialists who have been trained specifically for their roles rather than unskilled workers trained for a few tasks and then asked to repeat them over and over. Because today’s creative workers are more likely to have chosen their careers due to passion for the subject versus a base need for income, they also tend to hold themselves accountable.

Equally important, the nature and cost of communication has radically changed too. Technology has given us email and collaboration tools that make the cost of communication throughout an organization almost nothing.

So here we are in a world where the biggest reasons for corporate hierarchy no longer exist, but companies are still relying on that structure. As an engineer by training, and now the CEO of a company, I have grown from having a couple of employees to more than 100. My prediction is that won’t last for much longer—at least for most companies that were created in the 21st century.

People are motivated by a desire to do great work in areas where they have skills. As a company, we need to find ways for them to use their passions and skills while also meeting the company’s needs. The best way to do that is not for me to dictate everyone’s roles top-down. Instead, I let them find ways to apply their passions and skills. If one of my engineers also happens to be interested in working with customers, I’ll let her spend time in a sales role.

For the C-suite and HR leaders, it might sound like I came up with these ideas in a smoke-filled tent at Woodstock. As much as this talk of working on people’s passions can sound idealistic, I assure you it’s all about improving company performance. One way we ensure that is by setting hard goals and objectives. If someone identifies a role for himself, he must explain how it will help the business and then track his progress toward meeting those goals.

As we have followed this new organizational structure, a few important lessons have emerged:

  1. Hire the right people.I know that’s true for every company, because hiring mistakes can get expensive, but I’d argue it’s even more so in the absence of hierarchy. Some people just want to be given orders and then go execute. That’s fine, but those are not the people we look for. We want people who are eager to find that intersection of passion, skill, and business need. If we can fill the organization with motivated people, we can build the company around trusting them.
  2. Celebrate the space between successes. If an employee completes a short-term role, give them time to figure out what’s next. We call it the bench, and we celebrate it. If you don’t make it a cause for celebration, those motivated workers can get insecure and uncomfortable simply because of the uncertainty of what comes next. You have to give them some time to figure what that will be without pressuring them into something that won’t lead to a good result.
  3. Watch leaders emerge.Anyone who has had a terrible boss is likely to be pretty disenchanted with hierarchy. I’ve never understood the idea that I’d have to follow someone because the boss said so. Plus, as the CEO, if I anoint someone a leader and he ends up being bad at it, my credibility suffers. It’s better to let leaders emerge naturally. Put together a team and see who the people rally around.

There is no reason whatsoever to accept hierarchy just because that’s the way our predecesors ran things. People are more than cogs in the machine, and companies need to think more about their workers’ individual experiences, or they’ll go somewhere else where they feel valued—somewhere they can apply their skills and passions to help the business grow.


Source: HR People + Strategy