The Magic Management Formula

Do You Have the Right Organisation Structure

By Julie Goh (16 Nov 2022)

Typically, in an organisation, there are 3 levels of managers: -

- The top-level managers: They are responsible for developing corporate-level strategies and setting the targets

- The middle managers: They translate the top manager’s strategy plans into actionable plans for the units they are responsible for.

- The functional managers: They put into action the plans by the middle manager

The middle and functional managers within a department itself, could be further divided into more levels of managers, based on their seniority or division of jobs.

There could be several layers before it reaches the staff/frontline employees’ level.

Vertical vs Flat Structure

This is what is known as the vertical management structure. It is assumed that this is the best structure as it allows everyone to focus on specific aspects of the business based on their specialisation.

Naturally, the expectation will be that there will be higher productivity and efficiency. After all, you are only doing what you are good at. Employees will also be able to see where they are in their career progression in this structure. This is what all the books will tell you.

Vertical Structure

But I am not always in agreement with this, especially for SMEs.

1. Decision-making is slow because there are too many levels of approval.

2. This structure requires more manpower. Larger headcount means higher expenditure.

3. Most of the time, company do not review the organisation structure to cater to the latest needs. So, you could end up with a team that is no longer relevant but still on your payroll.

4. It slows down collaboration as there are too many people involved. The tendency for miscommunication is higher.

5. The need to constantly hold meetings and discussions is too time-wasting.

6. It deters employee engagement as a lot of information would not reach the employees. Employees would also feel frustrated as the gap with the top management is too big.

7. Encourage the tendency to work in silos. Too much focus on individual roles rather than collaboration.

8. Dampens creativity. Being too specialised means, you are only able to see things from a small perspective (narrow-viewed).

9. Contributions will be “lost” before it reaches the right person. This leads to employee dissatisfaction due to lack of recognition.

10. Employees will have less opportunity to increase their skills and knowledge through their work. Their work does not require them to be multi-skilled.

Hybrid Structure

Of course, in a flat structure, there are its disadvantages too.

But these can be controlled when you have good processes, and updated job descriptions in place and an organisational structure that combines the best features into one – a hybrid structure. Processes and job descriptions need to be reviewed periodically to ensure they are still relevant. They will not only save cost, but also boost productivity and efficiency.

At the end of the day, what you want is to stay competitive in the market and grow your business.

So, when was the last time you reviewed your company’s structure? Are you measuring its effectiveness against the results?

The author is an award-winning HR Sifu with Kakitangan.com, who has made significant improvements in how HR operates in multiple retail and high-volume/fast-paced companies. Complimentary consultation sessions with HR Sifu are available for all paying Kakitangan.com customers.

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