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Growing Pains, 5th Edition by Yvonne Randle, Eric G. Flamholtz

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Chapter 7Organizational Structure

This chapter deals with one of the critical management systems needed to create a sustainably successful organization: organizational structure. Structure relates to the way people are organized to perform productive work and help achieve the company's long-term goals. The way people are organized, then, can have a critical impact on the overall success or failure of the business. In addition, based on our research and consulting experience with organizations of all types and sizes, we have found that companies require different structures to be effective at different stages of growth. Although an enterprise might have been adequately organized at a former stage of development, success will facilitate its growth, which in turn will make it likely that a new structure will be required.

Even though structure is critical to organizational success, we have observed that in many businesses (regardless of size) structure design is frequently handled poorly. Structure often evolves by a series of ad hoc incremental decisions rather than in a thoughtful strategic way. As a result, we have observed some “organizational Frankensteins”—organizational structures that that seem patched together and not designed holistically. They seem patched together because typically they are “created” in an ad hoc way over time.

This chapter provides a framework to help company leaders understand how to design and use organizational structure optimally as a managerial ...

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