McDowell Memo: Organization Styles

Every organization is set up in some style of hierarchy to allow for communication and decision making. In a small organization it is usually a very well defined organization that everyone knows who is in charge of what and who is the decision maker. But , as organizations grow in size this can be blurred and so a different type of management organization maybe needed. We will break them down as best we can below and help you to see the positive and negative sides of each.

• Vertical Organization with straight line decision making- this is an organization that the bottom level employee reports to one manager , that manager will along with several other manager report to one manager, this continues until the CEO level with each person only have to report to one person above them. This manager makes all decisions in relation to the level below employee. Advantage is that you know who you report to and you know who made the decision you are impacted by. Disadvantages are if your manager is away or leaves a large void occurs. You have only one view being given you of any project, etc. If your manager and you do not get along you are in major trouble. There is little to no room for innovation.
• Vertical Organization with multi-line decision making- This is an organization is set up like above except that at each level certain parts of the business reports to one manager for parts of their jobs and to another manager for the rest of their responsibilities. Each manager has input into the employees reviews , discipline ,etc. This type of organization can change as the levels go up in responsibility , with one level being Multi and the next direct line, depending on the needs of the organization. Advantages are that each employee gets a second person giving input and direction for specific parts of your job. The ability to have a management void are dramatically decreased. The ability to innovate increases as you have multiple views involved. Disadvantages- the message can be obscured if both managers do not see the same vision. The relationship between managers must be clearly defined and followed or the employee may get conflicting direction.
• Horizontal Organization- This is usually seen in companies of professionals, such as Doctors office, engineering and consulting firms. Here each employee reports to a different manager for each part of their position. They only report for the purpose of ensuring consistency and legal compliance. Each person is in essence a separate business unit and management is more of a consultant than manager. The real manager is the practice principals or board of directors. An example would be an engineer that would report to a construction manager for issues with that, an electrical manager for electrical issues, etc. Advantages - tremendous opportunity for innovation and change, the ability to run your own project to some extent . The employee has tremendous ownership in his or her duties and results. Disadvantanges are that failures can be large and costly. Employees lack day to day oversight, the decision maker in almost every case is the person asking for the decision. Removing an employee can be a long process and very costly.
• Multi-business Organization- This is a common type of organization which is involved in different markets and basically pulls a type of organization together for the ownership team to be able to manage the management teams. Examples are large corporations such as WalMart which owns Sam's Club, WalMart Stores, WalMart International, WalMart Logistics, WalMart Transportation all seperate units with seperate COO's and yet reporting to a corporate team that oversees areas such as Legal, Human Resources, Comliance and Ethics, Finance, etc. The COO of each company then reports to the CEO of the corporation and they report to the Board of Directors. Each of the business units could possibly operate under a different organization style but that would be highly unusual as most corporations want consistency and would have the same organizational tree in place. 

    This is the basic styles you will most likely see, we will talk about the specifics of these and some very specialized organizations when we get to those later in our discussions. These organizations are used in Non-Profit and Government organizations as well. 

Hope you have a great week . Remember comment please and if you have questions, etc. mcdowellcharles517@yahoo.com