When it comes to organizational structures, “what you see isn’t always what you get,” according to new research conducted by HR.com in partnership with BambooHR, the HR technology solutions provider.
Now available for download, the research report, An Overview of Today’s Organizational Structure: Get the Most of Your Company’s Framework and Culture, is based on responses from 609 HR professionals participating in a survey fielded in late 2016 and early 2017. It found that the traditional hierarchy remains the dominant form of organizational structures, with 65% of respondents saying they work for a company with that traditional formation. Nearly a fifth (18%) said their organizations are flatter than traditional hierarchies, and 14% said they have a matrix reporting structure.
However, the study also asked about “cultural structures,” which refers to the way people actually interact rather than to the way they are supposed to interact, based on organizational charts. Using that lens, only 45% of organizations said they were traditional hierarchies, whereas 28% said they were “flatter.”
“For years, there has been a lot of talk about how traditional hierarchies are, or at least should be, a relic of the past. We found that such hierarchies are alive and well,” said Debbie McGrath, Chief Instigator and CEO of HR.com. “On the other hand, we also found evidence that employees sometimes ignore or work around their formal reporting structures in order to get things done faster or more efficiently. These organizations are culturally flatter than their org charts indicate.”
Further analysis in the research indicates that such disconnects raise the question of whether organizations should be doing more to align their formal structures with their cultural ones. On one hand, aligning the two structures might allow employees to be more productive because they do not need to struggle in opposition to their company’s formal structures. On the other hand, such misalignment may sometimes be adaptive, allowing organizational structures to adjust to new competitive pressures even without the need for a time-consuming and potentially contentious overhaul of formal structure.
The study also examined the prevalence of matrix structures, which are characterized by dual reporting relationships–usually to a functional manager and a business manager. It found that these structures are much more likely to be prevalent in larger organizations than smaller ones, with more than a third (36%) of companies operating with over 15,000 employees reporting that they have a matrix structure.
Results from the study of organizational structures suggest the type of structure itself has an affect on business performance. Organizations with culturally flatter or matrix structures reported slightly higher performance than traditional hierarchies. This suggests that there may be truth to the popular view that too much hierarchy can have a negative impact on performance in today’s fast-paced marketplace.
BambooHR is the leading provider of tools that power the strategic evolution of HR in small and medium businesses. BambooHR’s cloud-based system is a way for growing companies to track and manage essential employee information in a personalized Human Resources Information System (HRIS). BambooHR’s clients include innovators like SoundCloud, Foursquare, Freshbooks, Magnolia Homes and Stance, among thousands of others in more than 100 countries worldwide.
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