Why Structure Matters

Good structure is necessary for fostering mutual trust and respect. Why? Because good structure provides boundaries, which we all need in order to focus our energies appropriately: As Robert Frost wrote in a famous poem, “Good fences make good neighbors.” 1 Unless you know what you have to do, what I have to do, where our responsibilities intersect and where they conflict – in other words, how our jobs affect each other – you’re bound to interfere with other people’s decisions and create a mess. Who is doing what, when, and to whom? It is everyone’s’ guess.

The precise definition of “structure” is a question that philosophers have been debating for two thousand years. But they all agree that structure is to form as process is to function. Structure is like the bend in the river through which water flows. It is continuous, consistent, stable, repetitive – and thus predictable: If I know where the river bends, then I can figure out where the water is going to go. If I know what the structure of your personality is, I can predict how you’re going to behave.

Architecture is a perfect (I)ntegration of form (structure) and function (process): If you tell an architect what you need to accomplish and how you want to live, he will know what kind of a home to design for you. How many rooms do you need? What will happen in each room? How many people will generally occupy each room? Which rooms should be directly connected, and which should be separated? Where will access to each room be necessary? Where will you need privacy, and where will you want the family members to congregate?

With this and other information, the architect begins to imagine a division of space into one or more levels, with walls, doors, windows, and stairs – boundaries, in other words – that is aesthetically pleasing even as it facilitates the tasks his clients need to perform.

Structure is as crucial to organizations as it is to buildings. When it is weak or absent, obvious symptoms develop, just as they do when one of the four roles of management is missing.

When I come into an organization where people are being accused of interfering, micromanaging, or being “empire builders,” I know immediately that the company’s managers lack a clear idea of where their job ends and someone else’s job begins.

An effective structure, by contrast, would set clear and exact limits around each manager’s responsibilities. And ironically, it is precisely within the narrow confines of a detailed job description that managers become free to focus their energies appropriately. Why? Because when the boundaries are poorly defined, a manager cannot rely on others to carry out specific tasks – he cannot even figure out who, if anyone, is responsible for getting them done. Thus he is hostage to every little detail of implementation, leaving him with less time and freedom to make decisions and act on them.

Is Restructuring Always Necessary?

Sometimes it’s possible to make valuable changes in an organization without redesigning its structure. If the prevailing environment is already relatively accepting of change, we can sometimes deal with issues such as motivation, strategy, vision, and information flow without touching the structure.

But if what you want is a paradigm shift, a change in the company’s mission and direction, then a structural adjustment is crucial. Organizations are like motor boats: They have a power system, engines. If you tell me what the engine settings are, I can tell you which direction the boat will take. To change the direction, you need to change the settings.

For example, companies that have traditionally made money producing electronic devices for the military have been rethinking their mission in recent years, as military budgets have dwindled with the end of the cold war.

Let’s say such a company decides to venture into consumer electronics. Simply designing a new strategy will not work. Why? Because the organization’s power structure has historically been based on its managers’ ability to produce military electronics. A change in the organization’s primary mission sets up an inherent conflict of interest: Those in the company with power, who must initiate the change, are precisely the people with the most to lose when the company’s direction changes and new skills and technologies are needed. Naturally, they would want to obstruct any change that would shift power away from them.

In one company I counseled, they kept making that same mistake year after year: They would bring in some new minted MBA and make him a project manager in charge of consumer electronics. He would write lots of reports, cry, shout, smoke a lot, cough a lot, and cry some more – but nothing would happen. Eventually he’d leave or be fired, and they’d bring in the next victiom of their ignorance, and then the next person, and the next.

The problem was that the project manager position, as it was conceived, had no clout. The manager could talk as much as he liked, but he had no army behind him to enforce his decisions. The big engines were going to the right. To turn the boat to the left, they put a small, very small engine that hardly could move a bicycle much less a power boat, to turn it to the left.

My solution was to transfer the entire engineering group, which had been under military electronics, to consumer electronics. This was a radical organizational change, which forced a shift in direction.

Now, that was not an easy thing to do. The military guys did not like it at all. Structural change is painful change. As an analogy, I sometimes compare myself to a chiropractor of organizations, rather than a masseur. Why? A masseur works with your muscles; a chiropractor deals with the alignment of your bones. My task is to realign your bones so that you function much better, but it’s a much more painful process than getting a massage.

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Another analogy I like is the difference between psychotherapy and self growth weekend retreats: Psychologists and therapists try to change your long-term behavior, while self-growth weekends try to change how you behave now. The latter do have an impact, but it’s like a Chinese meal: After twenty minutes, you’re hungry again. To make a long-term change, you have to change the structure of the personality, which can be painful.

Nevertheless, that pain is sometimes necessary, and trying to avoid it will only lead to other, different kinds of pain in the long run. Changing the process without changing the power structure has a very limited, short-term impact. If the organization is not structured properly, you might end up placing camels at the North Pole or polar bears in the Sahara desert. Lacking a compatible structure, you could start out with all the right people in place to create a complementary team, but eventually they will have to adapt their styles to bend to the existing structure – and that complementary team will be lost.

This is a common mistake companies make when they try to do reengineering: They’re trying to change the river flow (process) without changing the river bends (structure). It doesn’t work: What they often get instead is destructive conflict.

Elements of Good Organizational Structure

A well-designed organizational structure contains three distinct elements:

• the structure of responsibility;

• the structure of authority, power, and influence;

• the structure of rewards.

Each of these elements is necessary and together they are sufficient to provide an effective structure. Why? Because they ensure that every person can be held accountable for his role in the organization. In other words, the organization must be able to identify who contributed to its success (or lack of success), and in what manner.

The first element is responsibility: What tasks are each person expected to perform?

People often interpret being accountable and responsible as the same thing, but there is a big difference between the two concepts.

I define responsibility as the results a person is expected to deliver for the task assigned.

Accountability is more than responsibility. You cannot be accountable unless you know exactly what you are responsible for. But being given the responsibility does not, by itself, make you accountable. People will certainly expect you to be accountable, but the truth is that you aren’t going to feel accountable (nor should you) unless you can deliver what you’ve been given responsibility for delivering. Being able means that you have sufficient authority, power, and/or influence to carry out your responsibilities and you are getting rewarded for carrying out your responsibilities successfully.

Thus it is crucial that the boundaries of each person’s authority and power be defined. How far should his authority carry? How much power can or should he use? (Influence, which relies on persuasion and is available to everyone, does not require boundaries.)

The third component involves structuring a system of rewards that will motivate the person to use the authority he’s been given to accomplish his assigned tasks. Although a person can be held accountable if he understands his responsibilities and has sufficient authority, power, and/or influence to carry them out, he will not feel accountable unless he also feels he will be rewarded for accomplishing those tasks.

We also need to learn how to motivate and reward people for group and individual effort.

The rewards should correspond logically with the assigned task and also be satisfying to the particular managerial style that is likely to be performing that task.

To demonstrate this point, let me tell you about my experience consulting to a fast-food restaurant chain.

One day, the founder/CEO complained to me that the company lacked (E)ntrepreneurial spirit. His employees were content just to do what they were told, he said, but that was not good enough for him. He wanted people like himself who would take initiative and help build the company.

I happened to know that this CEO was adamantly opposed to giving any ownership to his employees, so I asked him how he would feel about working for a straight salary.

“Absolutely not,” he said. “I want equity. I want to benefit from the growth of the company I contributed to building.”

“Exactly!” I responded. “Don’t you see that the rewards system you’ve established attracts the wrong kind of people? If you want (E)ntrepreneurs, you must entice them with (E)ntrepreneurial reinforcements; otherwise, they won’t come to you. In fact, if you did manage to hire any (E)ntrepreneurs, they would soon leave you because what you’re offering is not what they want.”

Accountability, then, cannot be assumed until all three requirements have been met: The worker knows what he is responsible for; he has sufficient authority, power and/or influence to carry out his responsibilities; and he feels he will be adequately rewarded for doing so.

Once all three criteria are met, I can and should hold you accountable

if your responsibilities are not met: You knew what to do, you could do it, and you were rewarded correctly for doing it. So why didn’t you do it?