Team Size and Organizational Structure, Part 1

With this post, I am stepping outside my core skills and into an area that I am less familiar with, but still find very interesting.

I’ve worked in small- to mid-sized companies, where an emphasis was placed on getting things done quickly. This always means acquiring resources from outside of your core team. These resources might be team members, materials, equipment or utilities. In most cases, there has not been any formal mechanism for requesting, locating, allocating or releasing those resources.

Senior management often treats successfully locating and negotiating for these resources as a natural part of everyone’s job. In a very small company, everyone knows everyone else and such negotiation seems to be a natural extension of the social relationships. I suspect that this is how even larger companies look to senior managers, who routinely have to negotiate with their peers (who are limited in number). As companies grow, however, problems appear for people lower down in the organization.

It becomes more difficult to determine who has the needed resources, or if the resources even exist. Conflicting priorities across groups make the negotiations more difficult. As the company grows, relationships between people become less social and more purely professional, reducing the common ground that eases the negotiations in very small companies. I believe that this can be described as a shift from high context communication in small companies to low context communication in larger companies. Finally, the negotiations become more political, developing aspects of one-upmanship or CYA that drive behaviors aimed at benefiting the individual but not the entire company.

Some individuals can overcome such challenges. They have the charisma, social graces or relationships with senior management to get what they want, and sometimes they’ll even do what is best for the company globally. For the rest, success becomes more difficult, and they end up aligning themselves with those who can succeed. When this happens during company growth, it fractures a company along political lines, into groups that treat each other as outsiders, if not as outright enemies.

It seems to me that this political division of a company is harmful to the business goals and to the people. A former colleague used to say that we must attend to the quality of our relationships. I have wondered how best to do this, and would like to explore the beginnings of my own ideas.

I was recently considering the number of possible interactions in a group, and at the same time came across mention of Dunbar’s number. Dunbar’s number is named after one Robin Dunbar, who proposed that, based on cognitive limitations, there is a limit to the number of people that one can maintain stable social relationships. Larger groups require more formal rules to remain stable. Dunbar proposed that this limit was one hundred fifty people. Other estimates exist, ranging to about two hundred fifty people. These estimates appear to be based off of a mix of speculation and study of tribal group sizes.

Organizational structures are often described by one of three basic structures: functional; project and matrix. Each of these breaks a company into smaller, largely independent units. A fourth model, not as widely recognized, exists: the spider web. In a spider web, everyone is connected to everyone else, and almost anyone can step into any other role in the company, at least temporarily. It is my understanding that this spiderweb only works in small companies. I’ll bet it only works in companies smaller than Dunbar’s number. The spider-web organization is also the type of organization where direct negotiation is easiest.

In the next post, I will look at smaller team interactions and size limitations. I will follow that with conclusions about organizational structure and growth.