Types of Organizational Structures

Organizational structures deal with the way the firm is organized, and the way people relate to one another. Broadly speaking, there are two types of organizational structure, namely formal and informal. These two concepts are not independent, and the formal structure may greatly influence informal networks, both positively and negatively.

Formal: The official structure of the organization, which is normally displayed on an organizational chart, and which denotes the hierarchical relationships between members of the firm. It is beyond the scope of this site to offer a discussion on the various formal organizational structures. However, there are a few things that are relevant to KM:

• The formal organizational structure must not be so rigidly enforced so as to stifle informal structures such as communities of practice, where knowledge sharing and creation may take place. It is the knowledge manager's job to understand the knowledge dynamics of the organization and to recognize how the formal and informal structures coexist.
• The formal organizational structure, particularly in a larger firm with separate departments, will impact knowledge flows. There is no set structure that is best, since most have advantages and disadvantages depending upon the business type, firm size, etc. However, studies seem to indicate that flatter, decentralized structures are more effective for KM (Choi & Lee 2000, Claver-Cortés et al 2007, Chen & Huang 2007). This also makes sense logically, since knowledge flows would be less hindered in such a structure.

Implementing changes to formal structures can thus mean restructuring the organization, but it can also mean enforcing existing structures to a lesser or greater degree.

Informal: The unofficial organizational structures are the ones that are created through informal networks, as a result of working within the organization. They represent the way people actually interact. Brown and Duguid (1992) advocated looking at the firm as a community of communities. Increasingly, the value of these informal structures is being understood, and the knowledge manager must learn to identify and support these networks. This process is closely related to KM, since knowledge flows and repositories (particularly tacit) are dependent upon these structures. KM therefore must play a central role in their management, including identification of the structures and the knowledge they hold, implementing changes, bridging gaps between communities, and so on. Unfortunately, implementing changes to informal social networks is difficult without running the risk of disrupting them.

There are however several ways that managers can influence social networks:

• Generalists (sometimes referred to as gatekeepers) can be used to identify communities and their expert know-how, and to help coordinate activities such as cross-functional projects.
• Project teams and other teamwork can serve as a means to bridge the gap between communities.
• Common physical meeting areas can allow communities to grow and flourish.
• Virtual socialization and people finders can support communities of practice.
• Common vision, goals, ideals, social gatherings etc. and a climate of trust can serve as a way to lessen the distance between organizational members and communities.