Whether you’re just starting to expand beyond your founding team or you’ve been operating with a few dozen employees for years, it’s important to be thoughtful about the way your organization is structured.

Your leadership and entry-level employees alike depend on a well-defined org structure to orient themselves in your company. Not only will a clearly defined org inform your team about what and who they are responsible for and to, but it’s also a vital tool to helping them understand who they can go to for support as different problems, requests, and innovative ideas arise.


In this article, I’ll outline 5 things to consider as you plan to establish or reconfigure your company’s organizational structure and how I’ve applied these 5 considerations to orgs I’ve managed in the past. 

Before we get started, it’s important to remember that there’s no one size fits all org structure out there; however, there is one thing I know for sure: while truly flat orgs are an anarchic fantasy, you should try to keep your org as flat as possible to avoid cumbersome bureaucracy, confusion, and waste. 

 

5 Things To Consider When Planning Your Org

 

  1. Your Goals
  2. Your Culture
  3. Scalability
  4. Resource Allocation
  5. Evaluation Methods

 

Assess Your Goals: 

If your org structure doesn’t help you achieve your goals, it’s a bad org!

Defining your company’s goals, growth trajectory, and business strategy is vital to establishing an org structure that aligns best with your objectives.

As your business grows your short and long-term goals will change with it. Whether it’s shifting beyond your MVP to full-scale production, or from a service to a product-based business model, how you deliver your products and services will change (i.e. what you do in-house vs. with partners) and your org structure must change with it. 

One of our goals for Microsoft’s Bing Maps Imagery team was to grow a data production team to process, QC, and publish huge volumes of high-quality geospatial data consistently within a short period of time. I leveraged a matrix org structure early on when the team was small (50-75) to enable resource flexibility, but shifted to a functional structure as the team grew (>75) to support improved quality and productivity.

While you should avoid constant org whiplash, it’s important to adapt your org structure to your business goals. 

 

Incorporate Your Culture: 

Perhaps the biggest X-factor preventing a one size fits all org strategy is culture, and thank goodness! 

Your company’s culture and values are critical to supporting your unique value proposition and team cohesion. 

Some structures align better with a collaborative or innovative culture, while others suit cultures emphasizing discipline and dependability. Your org structure should not only embrace but advance your company culture. If not, you run the risk of undermining team cohesion, employee retention, and productivity.

Microsoft’s culture emphasized careful planning, consistent production, and predictability. As my team grew past 180 employees in our Boulder office alone, our functional structure supported this culture. Key to our success was maintaining a ratio of 1 lead to every 10 individual contributors. While this org was not very “flat”, it enabled rapid dissemination of changing processes and goals through leads, as well as provided opportunities for promotion, improving employee retention and production quality. 

Uber’s culture emphasized agility, innovation, and efficiency. Our functional org was adapted from Microsoft’s more waterfall-oriented environment to this agile environment by reducing some of the hierarchy and introducing agile frameworks to solicit greater team input on processes, objectives, and priorities. 

Aligning your org structure with your company’s culture and values will ensure greater employee engagement and productivity.

 

Consider Scalability: 

You will touch on scalability while considering your company’s goals, but scalability is worth considering on its own as well.

As your company grows, knowing how your org structure must grow with it will allow you to keep your teams in sync and efficiently working toward your vision. 

Avoiding constant org whiplash as your company grows requires thinking about scalability from the start. Consider: How easy will it be to add new teams or divisions to your org? What changes must occur to accommodate such growth? How can you manage this change?

Our matrix structure was perfect for early-stage pre-production of geospatial processing workflows on the Microsoft Bing Maps project but was not very scalable as we matured into full production. The reporting relationships and communication demands became too cumbersome. So we shifted to functional orgs nested within distinct streetside and aerial divisions. Moreover, our 1-10 lead-IC ratio enabled rapid scalability as high-performing ICs with leadership qualities were promoted to train new hires. 

Managing this change to improve scalability required not only getting team buy-in by clearly communicating our new structure and the reasoning behind it but also reinforcing the new structure by championing and supporting new leads as they stepped into their roles.  

 

Assess Resource Allocation: 

Perhaps the most challenging aspect of planning an org structure is understanding how it will impact your allocation of resources. 

Your employee, technical, and financial resources are scarce! Allocating them efficiently means the difference between business success and stagnation. 

Consider how your resources will be allocated in your org structure and what implications this has on team cohesion, business efficiency, and product/service quality. Will certain functions receive sufficient attention and resources? Is the benefit of allocating certain resources to a particular function, division, or team worth the cost of removing them from their existing place in your org?

One of the biggest resource allocation challenges I’ve faced is selecting who to run a new project, team, or division in my evolving orgs. Hiring from the outside can bring fresh perspectives but can be expensive, take time, and build resentment from those on the team who want a chance at leading. Promoting from within can improve employee retention and team cohesion, but can produce functional gaps where that employee used to fit in.

When considering resource allocation in your org structure, conduct a cost-benefit analysis of each scenario. Be sure to consider factors beyond just cost and time, especially those emanating from your company culture and values.

 

Continuous Evaluation: 

As with any system, change is inevitable. 

Regularly evaluate your org structure’s effectiveness and make adjustments as needed.

To do this, you must identify how you’ll measure the efficacy of your chosen org structure. Be sure to establish clear performance metrics such as efficiency, productivity, quality, employee satisfaction, collaboration, etc. Benchmark these metrics under your current org, and regularly evaluate them as you implement org changes. Give your org changes time to take root, and perhaps even test them out on small portions of your company before applying them to your entire organization.

As you gather feedback and performance data, be sure to analyze any patterns and trends with your leadership team. Incorporate any insights you gather into future org structure strategies, but be sure not to implement changes too frequently, and when you do, do so thoughtfully with clear change management processes identified. 

Conclusion

Your organizational structure is a critical component to your company’s success. It should be clearly communicated to and easily accessible by anyone in your company so they know where they fit in, what they’re responsible for, who they report to, and who they can go to when they have questions, feedback, or ideas.

By aligning your org structure with your company’s goals, culture, growth trajectory, and available resources, it will allow you and your team to work together effectively. Regularly evaluating your org structure and adapting it to your changing business will ensure it serves as an asset to your company’s growth and success.