The 5 types of organization

Organizations are not all of the same nature. They are distinguished from one another primarily by the way in which authority is distributed. Authority is understood here as the recognized capacity to make or cause to be taken decisions.There are five major types of different organizations: the personalized organization , bureaucratic organization , the pyramidal organization , the dual organization and cellular organization .

Personalized organization

Authority here is concentrated in the hands of one and the same person: the leader. The latter is at the center of the organization, all the other members report to him directly without any real interactions being established between them. They execute, but do not decide. The decision-making power is completely centralized and the structure of the organization is said to be “sun”, “star” or “bicycle wheel”.

 

The leader embodies through his vision, his personality and / or his expertise an authority which is recognized by those on whom he exercises it. He takes care of all the integration work and builds an organization in his image without any checks and balances (for more details on the personalized organization, click here ).

 

Bureaucratic organization

As surprising as it may seem at first glance, bureaucratic organization and personalized organization are two variations of the same model. The mode of behavior regulation is the only design parameter on which these two types of organization really differ. Personalized organization is completely informal where bureaucratic organization can not be more formalized. Individual contributions are formalized through specific border posts, and each coordination problem is translated into a procedure. By following the rules, we coordinate without needing to see or even talk to each other.

 

But, like the personalized organization, the bureaucratic organization is centralized. Authority there is concentrated in the hands of one person or a small number of people at the top of the organization. We no longer speak of a leader endowed with a personal authority, as in the case of the personalized organization, but of a leader or a “staff” endowed with a statutory authority (for more details on the organization bureaucratic, click here ).

 

The pyramid organization

The authority here is delegated to the person in charge of the collective performance produced by the organization. According to the principle of parity, this authority must make it possible to take or cause to be taken decisions allowing it to assume its responsibilities. The delegatee, who thereby becomes a manager, can in turn delegate part of his authority to certain members of the organization to endow them with autonomy. The resulting “rake” organization resembles a cascade of responsibilities.

 

Delegated authority must, in one way or another, find legitimacy with those over whom it is exercised. Unlike that of the leader, the legitimacy of the manager is not directly linked to his personality or his expertise. It is less linked to what he is than to what he does, to the way in which he performs the management function, to what is commonly called his management style. He must explain, listen, involve, value, give feedback and recognition… (for more details on the pyramid organization, click here ).

 

The dual organization

Authority is shared here between, on the one hand, those in charge of obtaining results linked to the activity and the purpose of the organization and, on the other hand, those in charge of managing its financial resources. , technological, material and human. Efficiency, the way resources are used, is as important a strategic issue as effectiveness. The two performance criteria cannot be ranked.

 

The main organizational translation of this strategic duality is the dissociation of hierarchical and functional authorities. The first is then in some hands, the second in others. The operation becomes matrix, some members of the organization having to report to several people simultaneously (for more details on the dual organization, click here ).

 

Cellular organization

Authority is here distributed among all the members of the organization who collectively bear responsibility for the performance produced. Authority is distributed according to the principle of subsidiarity rather than that of delegation (see my post on the distinction between delegation and subsidiarity). Decision-making power is completely decentralized.

 

The management function is shared without there being, strictly speaking, any managers unless the members of the organization decide otherwise. They can, for example, for reasons of effectiveness and / or efficiency, assign one of them a more or less ephemeral managerial role. The person who is thus in a management situation is at the service of the other members of the organization and not the reverse as in the personalized or managerial organization (for more details on cellular organization, click here ).

 

A “whole” and parts

Any organization is necessarily hierarchical in the sense that the “whole” is always made up of parts that it includes. Wanting to remove any form of hierarchy within organizations is not only a mistake, but a misunderstanding.

 

The organizational models described above have only one level of integration: a “whole” and parts. But the latter can themselves be systems that need organization. The parts of the “whole” are then themselves “wholes” made up of parts which, in turn, can also be “wholes”, and so on. Most often, a company, an association, an administration… requires several levels of integration and therefore results from a combination of organizations.

 

Organizational reality is more local than global

The organization of a company can be uniform. This is the case, for example, of many SMEs whose organization is uniquely personalized. But, most often, a company, an association, an administration… results from a combination or a mosaic of organizations.

 

The organizational reality is more local than global. Organization is a response to a problem of collective action. Beyond a certain size and a certain level of complexity, within a company, there is not one but problems of collective action which have no reason to be all the same nature and, therefore, to be all resolved by the same organizational model. The problems of collective action in R&D, in production or in the commercial sector are not a priori all of the same nature. The same goes for problems to be solved at the top of the company or at its base.

 

The case of large competitive firms

In a large competitive firm, for example, the overall level often results from the dual organization model; the organization of the operational line is based on the pyramid model while that of the support functions is rather inspired by the personalized model. And, given the adaptability requirements, we find more and more traces of the cellular model at the level of the organization of operational teams: agile teams within the IT department; semi-autonomous groups in production; etc.

 

It would therefore be fairer to speak of a company’s organizations rather than just its organization. In this regard, a common organizational design mistake is to want to uniformly replicate the same organizational model at each level of integration.

 

Contrary to what is explained above, it is very often considered that a large competitive company comes under the pyramid model only and that, in doing so, local managers are small-scale general managers. Anyone who has held this position, even for a short period of time, knows full well that a close manager does not have the same authority as the CEO at the top of the company. This cognitive bias also largely explains the difficulties encountered by local managers in carrying out their daily duties and the fact that they are offered in training tools and methods that are unsuitable for their situation.

 

The case of the released company

Recently, the same mistake is made by the evangelists of the so-called “liberated” company. They propose to free companies from the burden of control by building trust as a basic operating principle. In doing so, they seek to apply the cellular model uniformly across all organizational levels, including the corporate one.

 

At the same time, they rightly point out, a condition for the success of the liberation of a company is the existence of a “liberating leader” which is a characteristic closer to the personalized model than to the cellular model. In fact, a liberated enterprise is the combination of two organizational models: the cellular model at the operational level and the personalized model at the strategic level. It is therefore a type of company that is very decentralized operationally (cellular model) and, at the same time, very strategically centralized (personalized model).

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