What’s wrong with traditional functions (and why do most organisations still use them?)

I’ve written a 3 page feature for HR Magazine this month (this edition also has me on the cover as one of their ‘Movers and Shakers’).

The feature focuses on the creative design of people centric organisations and summarises some of ‘The Social Organization’. Therefore, if you’ve not read and don’t want to read the book (you should!) you can at least read the summary of the section on organisation models in HR Magazine. However, I’ll also be outlining a lot of the main points from the book and the article here (in more detail than the article but less so than in the book).

I’ve already introduced the topic and will shortly start to review why we need to look at other options other than traditional functions. However, I first need to provide a defence for this organisation form. This means that these initial notes won’t contain anything new for most people, but I think my conclusions differ from the prevailing commentary.

Simple / functional organisations

Simple organisations are centralised networks which organise people into similar vertical categories of work, eg in functions, these categories could be manufacturing, marketing, HR, etc. However, a simple structure can also be based on geographies, products or really anything else. The key is that everything is organized around one single dimension. People and work are usually co-ordinated through layered reporting relationships but that's a less crucial attribute.

This form of organisation enables firms to develop the capabilities and collateral they need to deliver each particular areas of activity and often results in higher productivity than having generalists undertaking a broader mix of activities. It also provides an efficient and understandable way to manage the whole organisation. The model is easily scaleable, although as organisations grow they often restructure into divisional organizations which are not as simple or as centralised as functional organizations but are built on the same type of thinking, applying the logic of specialisation to organisational management too. Therefore, I normally group both functional and divisional organisation forms together.

Functional organisation was the first formal organisation form to be developed and is often the first form to be implemented as an organization grows, once it realizes that its lack of organization is starting to result in unnecessary chaos. This is usually once it employs about 50 people, which is the point that it will typically get its first HR person too.

From ‘The Social Organization’:

"Simple organizations were the first formal organizations to emerge in history. An example is the organization of legions in the Roman army. These consisted of about 5,500 men led by a legatus and a camp prefect together with an aquilifer who carried the eagle standard. Legions were divided into ten cohorts. Nine of these consisted of 480 soldiers divided into six centuries each headed by a centurion. The first cohort consisted of around 800 specialists such as surveyors, builders, blacksmiths, medical staff, veterinaries, soothsayers and priests. This cohort was divided into five centuries and was led by the highest ranking centurion in the legion, who was called the primus pilus. Each century also included a small number of specialists such as the optio who helped provide training. The organization was supported by well developed career paths, for example, the legatus was often a development role to be a future provincial governor. The exception to this was the centurion role which was generally only vacated when role holder was killed in battle."

The main disadvantage of simple organisations is that focus on a single area can distract people from things which are even more important, such as the work which needs to be done and the customers who need to be served. In addition, implementing processes or delivering services often means passing work between functions and therefore, that there is no one person or group who is accountable for delivering value to the end customer. Each hand-off from one function to the next also raises a risk that needs will be miscommunicated or activities will be misaligned.

Functional units (departments) can become silos. However, there is nothing in functional organisation design which suggests that people cannot work with others outside of their own group. So when silos occur, this is often a result of badly designed or poorly implemented organisation architecture, rather than being a necessary consequence of a functional structure itself.

And functional organisation doesn’t naturally prioritise agility, customer focus or employee satisfaction either. However, this doesn’t mean functions organisations can’t achieve in these areas, simply that their functional model isn’t going to help them do so. Good design tries to find other ways to make them happen.

So all though I agree with many other commentators on organisation effectiveness that we need to move towards other organisation forms, I don’t believe the functional form needs to jettisoned in its entirety.

And actually, I find many articles about functions to be highly pejorative. As well as being siloed, functions are apparently strict, rigid, formal, mechanistic, bureaucratic, only focused on command and control, and the list of criticisms goes on. And their design is all about sticks and boxes too. Well, it’s just not true. And organisation design, whether functional or of any other type, hasn’t focused on sticks and boxes since the 1980s (notably as a result of Tom Peters and Bob Waterman’s paper on McKinsey’s 7S).

There's a reason that so many firms use functional organisation and the reason is that they still work, and in fact they provide the best option, for the vast majority of the time. Most of my OD work still focuses on fairly traditional restructuring, and that's not that I'm being lazy or uncreative, it's just that functional design is the right approach most of the time too. So those who criticise functional organisations should perhaps just be grateful that at least today’s bosses do not beat their staff with three foot staffs in the way Roman Centurions used to do!?

Functional organisation isn’t going to go away, and it shouldn’t do so. However, it doesn’t meet every need and organisations that only use functional designs do need to be more creative in combining functions with some of the alternatives that I’ll have a look at next.

This is my previous post introducing this series of articles on modern organisation models: https://www.dhirubhai.net/pulse/hr-magazine-new-organisation-models-jon-ingham/

And you might be interested in this blog post on Gary Hamel's Humanocracy too.

Picture credit: https://www.realmofhistory.com/2016/09/30/animation-command-structure-roman-legion/

Jon Ingham, @joningham, https://linkedin.com/in/joningham, [email protected], +44 7904 185134.

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