A Consultant's Guide to Understanding Companies' Internal Structures
A company structure can be a bewildering – and frustrating - aspect of starting a new client project.
Yet, if you don’t have the right consulting questions to ask, you could spend the rest of the project speaking to the wrong people or waiting forever for the go-ahead on your suggestions.
So, let’s look at some possible organizational structures and what their implications are for consultants.
What Is A Company Structure?
A company or organizational structure tells us how the business runs. It basically defines the rules, roles, and responsibilities for interaction and how information flows within the company.
The companies convert it into a visual chart, showing how the company has been segmented, who reports to whom, and their relationships.
Moreover, the way a company chooses to segment itself has a significant impact on how it is run and resourced.
Some of the more usual ways of segmenting are:
- Function, e.g., Finance, HR, Marketing, Sales
- Market segment
- Geographic location
- Processes, e.g., R&D, Customer Acquisition, Order Fulfillment
However, all structures have pros and cons, and there is no “right” one. What is more important as a consultant is to find out what the client’s company structure is before you start on a project.
For example, let’s assume your client project is about marketing. If the company structure is Product or Geographic, you have to liaise with several Marketing teams. If there is a Functional structure, you could work just with the head office team.
The next thing to consider is the management reporting structure. There are three ways to look at it:
- Chain of command
- Span of control
Let’s look at them in more detail and consider how they might impact your consulting project.
But before we do that, consultants should also be aware of the truism expressed by Harold Geenen: “Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization.”
So while you will consider the formal organizational chart, a smart consulting question to ask might be, “Who do you normally ask for advice?” or “What’s the best way to get a fast decision here?”
Chain Of Command In A Company Structure
The chain of command shows the order of decision-making and responsibility. Those at the top have the most power and usually the final say in decisions. At each level below, the power decreases.
The longer the line shown, the more hierarchical a company structure is.
The benefit of a long line is that there is clarity. Everyone knows who is responsible for what, who reports to whom, and where to turn to for answers. The company can basically hold individuals accountable for specific tasks.
The downside is the lack of autonomy for people at lower levels and slow decision-making.
If you are a consultant and your primary contact for the client project is too low in the structure, you will definitely face extended delays and reversals of what you thought had been agreed upon.
How low should you go? That depends on the scope of the project.
If it is relatively simple and affects a limited number of people or only one area of the business, the level of your contact person is less important. For more complex projects, it is worth negotiating to have a more senior internal project leader – or at least to have access to someone more senior.
In very hierarchical organizations, it is very bad form to go over someone’s head. If you sidestep the system and attempt an informal route to higher positions, you risk losing the trust of the assigned project leader.
Span Of Control
The span of control can be wide or narrow. It refers to the number of subordinates that report directly to a single supervisor, manager, or executive.
Hierarchical structures associates with Narrow spans of control, while less hierarchical ones associate with wider spans.
Centralization Of Decision-Making In A Company Structure
Some companies centralize decision-making at the top of the organization or the top of functional or geographic units. Others decentralize according to team structure, product difference, project, or other considerations.
Understanding the client structure for decision-making is perhaps the most critical consideration for consultants introducing digital or agile systems as part of their client projects.
Agile organizations depend on decentralized decision-making and flexible team structures.
- By definition, they are non-hierarchical, with short chains of command and wide spans of control.
- The focus is on customers and shifts in the market rather than on internal reporting lines.
- Fast and open communication is essential.
All of this might sound good. But it is easier to say than do if you are working with a client with a more traditional company structure. Interestingly, it is often those at lower levels who are more resistant to autonomy.
You need a carefully designed and executed change management program to take the company structure into account and bring people at all levels in the company along with you.
The Consulting Question To Ask About Company Structure
The consulting question to ask at the start of a project is a simple one: “What is your company structure?” This can be followed up with more detailed questions to better understand the chain of command, span of control, and centralization aspects.
You should ensure you know where your primary contact persons are placed, as this has a significant bearing on planning and executing the client project. And remember to ask them who they turn to for help and advice, so that you also understand the informal company structure.
If you are a digital or agile systems consultant, knowing the current structure is not enough. The consulting question to ask is more likely to be, “Is this the best company structure for this client?”