A Few Thoughts on Organization Structure

AEC firms today still struggle with the same old organizational issues that undermine clarity, accountability, and leadership.

Most people probably don’t know it, but my undergraduate degree is actually a management degree with a specialization in organizational behavior. And yes, it proved to be relevant and useful. I have been working with AEC firms on organization structure issues for my entire 45-year post-MBA career and employed every bit of this knowledge over the years.

That said, some of the issues and problems I was helping companies deal with as far back as 1980 – as hard as that may be to believe – are STILL issues in firms today. Let’s take a look at some of these common problems, several of which are unique to firms in our industry:

1.  Project managers working in a matrix organization structure who have no one permanently assigned reporting to them. This is the most common problem I see with organization structures of firms in our business. PMs are supposed to deliver quality work on time and within budget, yet the people they rely on to do the job don’t report to them. They have no control over their time and no ability to reward or punish. Not to mention the fact that any individual could have six different PMs they are working for plus their department manager at the same time. Who sets the priorities? Not the PMs. The matrix organization is a big problem.
2.  Individuals who report to more than one person. I see this frequently in our business, also. It doesn’t work and violates a principle called “unity of command,” one that says each individual reports to only one person. It really creates problems if the two people someone reports to give out conflicting directions. Who is the person with the dual reporting relationship supposed to listen to?
3.  People with titles who have been “promoted” to “senior-somethings” but who have no change in functional role or responsibilities. What’s the point, really, if their job isn’t going to change whatsoever? I have always thought this was a bad practice. Just pay the person more versus giving them what I consider to be a fake promotion!
4.  People with titles that are misrepresentative of their real function and responsibilities. One of the most typical that I frequently see is when “operations” people are dealing with non-operations issues. “Operations” to me should be all about the line functions – i.e., what the firm actually does to make money (architecture, engineering, etc.) – as opposed to support functions.
5.  Confusion over the titles of “principal” and “associate” and all variants of those, and what the functional responsibilities of those roles are. My answer to the questions about what these people are supposed to do is that typically these are not functional roles at all, but instead imply status and/or position in the hierarchy of ownership. Many people don’t understand that.
6.  People who use the term “partner” as synonymous with “principal.” They are not the same thing. While both may be owners, partners are owners in a partnership, and that is quite a bit different from being a stockholder or shareholder in a corporation or member of an LLC. “Partner” may imply rights to some people that principals, shareholders, or members may not have.
7.  Marketing directors who are charged with managing business development when none of those who actually do the business development report to them. It makes the marketing director’s responsibility for selling a joke. Everyone knows they have zero control over the principals who are typically the ones responsible for BD. They (the marketing director) or whomever is the top marketing person in the firm is usually at a lower level in the status/clout hierarchy than a principal is in the same firm. Therefore, how can the marketing manager manage them?
8.  Boards of directors (BOD) whose members are all insiders who also work full-time in the functional organization. If the BOD is supposed to supervise the CEO but all of the BOD members report to the CEO in the functional organization, how in the world is that supposed to work? It doesn’t.

I could probably list 10 more of these organization issues if pressed. These are not academic problems. They are real issues that need to be discussed and dealt with! 

Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. This article originally appeared in The Zweig Letter. Reprinted with permission.