The Changing Structure of Modern Organizations

Take a look at this article. “According to a survey of some 300 Fortune 500 companies, the number of managers reporting directly to the CEO has doubled, from an average of 5 direct reports in 1986 to an average of 10 today. The growth is driven almost entirely by an increase in the number of C-level ‘functional’ managers, rather than by an increase in general managers. These days, along with the CEO and the general managers, top offices are teeming with specific titles such as chief financial officer, chief marketing officer, chief technology officer, and chief human resources officer.”

OK, but what does that mean for a small organization or community-based nonprofit organization? I think it points at two key issues: how do you divide and manage your work, and how integrated your toolset needs to be.

Typically, a nonprofit organization begins with an organic organizational structure that has roughly three defined roles: executive leadership, programmatic management, and financials. Depending on organization size, there may be “dual-hatted” individuals at first, but as the organization matures, the roles are divested to other individuals.

As the organization grows (hopefully) and the programmatics become more complex, this role may be further decomposed. Additionally, other core services may be created, such as marketing and outreach, fundraising and foundation management (separate from the core accounting functions). At this point, an organization needs to consider how “flat” or “peaked” the org structure should be.

The attached article argues that companies are adding more of these functional managers into their structures. So the question is, should you? And if so, what does that mean?

The answer is actually easy. It depends. (Yes, I know that’s a cop out, but stay with me for a moment.)

The decision rests on numerous points, and I do not pretend to cover all of them here. Depending on the robustness of those underlying activities, it may or may not make sense to create new roles and disaggregate some of the related tasks and responsibilities. But the interesting part (at least for the purposes of this post) is the business technology that lies underneath.

Small organizations have a tendency to go with brand leaders for domain-specific solutions (note that I did not say “best of breed,” since that is often not true). However, they might have failed to focus on key selection criteria when making those purchases, specifically integration and collaboration capabilities. Just as Metcalf’s law describes the theoretical value of networking, we can take that same insight when considering our internal information and its use and relevance in the enterprise.

To be a bit more specific, the easier it is to move information across our functional boundaries, the greater the potential for improved executive level decision making as well as greater understanding across the functional areas.

Easy, right? From a conversation standpoint, definitely. If a small organization understands the links between financial management, program execution, and executive leadership, then that organization may go far. Executing this vision on a technical level can be straightforward, or challenging, depending on the specific realities of the organization. That said, the potential value gain makes the exercise worth considering.