What is the purpose of organizational structure?

This is the first in a series of five posts on innovative organizational structuring of nonprofits. 

President & CEO Christine McMahon poses outside of the Nasdaq offices in midtown following closing-bell ringing ceremony in 2011.

People need to understand the purpose of structure and the value that properly designed structure can bring to an organization.

Structure is about a collection of assets that are all contributing to the same goal. Ineffective structure can sometimes be hidden from view because of an emphasis on employees’ places in an organization’s hierarchy. To me, that is not as helpful as understanding your own work in the context of the organization’s goals. Not every structure allows for that. If you have morale problems or people are confused about their roles, you probably have structural issues.

I am convinced that strategy must come before structure, not the other way around. The strategic planning process creates opportunities for dialogue, and to establish culture as a factor in how the organization will ultimately be structured.

When the strategy is clear, you can then create a structure that compels integration and communication across the organization. Leadership’s translation of strategy into tactics is a function of structure. Poorly structured organizations lack communication. If an agency is going to implement strategy, there must be a structure in place that supports the communication of that strategy and the buy in of that strategy. A few years ago we set in motion a strategic plan with robust and optimistic benchmarks. Within that plan we identified the top 20 priorities of our organization and worked hard to ensure that people felt connected to these priorities. The goal was to use our strategic plan as vehicle for engagement with all of our internal and external stakeholders, and to get them invested in our outcomes.

Further, structure can affect leadership’s ability to engage in succession planning. When you have boxy structures that are designed not with goals in mind but rather with laying out how people are organized, you lose the opportunity to identify and cultivate talent. This impedes your ability to accomplish goals and implement strategy.

Christine McMahon has been President & CEO of Fedcap since 2009.

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