How Design Shapes Behavior Inside Organizations

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How Design Shapes Behavior Inside Organizations

Principles of Management · Chapter 7: Designing the OrganizationSection 7.4 · lesson 36 of 11712 min · free with a free account

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In this lesson

Structure as an active determinant of what people do.

  • Explain how structure influences individual and group behavior
  • Describe the behavioral effect of each structural element
  • Trace common complaints back to the structure producing them
  • Predict the behavior a described structure will produce

Transcript

Everything said in the video, section by section (1,606 words). Read along, or search it.

Designing the Organization

How Design Shapes Behavior Inside Organizations

When people inside an organization behave badly, the usual instinct is to blame the people. This section argues that you should look somewhere else first. We'll treat structure as an active force on behavior, not a neutral backdrop. We'll go element by element, asking what each one encourages, and what it quietly suppresses. We'll explain silos, goal displacement, and information filtering as structural problems. Then we'll trace three familiar complaints back to the design features producing them, and be honest about the limits.

The Central Claim

Structure Is Not a Neutral Container

The central claim is that structure is not a neutral container. It isn't just a background arrangement that people operate within, separate from how they act. It's an active determinant of behavior. It works through three channels. First, structure sets who talks to whom, by defining reporting lines and departmental groupings. Second, it sets who is accountable for what, by defining roles and their scope. Third, it sets what gets rewarded, by shaping what each position's performance is actually measured against. Communication, accountability, and reward each shape behavior directly. So a given structure predictably produces certain behaviors, and predictably suppresses others. And that happens largely independent of the particular people who occupy it. Swap the people, keep the structure, and you'll often get the same behavior back.

Element by Element

Each Element Carries a Behavioral Effect

Each structural element from Subchapter seven point one carries its own behavioral effect. Work specialization affects satisfaction and boredom, following the diminishing-return curve from that subchapter. Span of control affects the supervision people receive, and the autonomy they experience. A narrow span means close supervision, and correspondingly less day-to-day autonomy. A wide span means the reverse. Centralization affects initiative and ownership. There's little point initiating action on a decision you have no authority to make. And there's little sense of ownership over an outcome you didn't actually decide. Formalization affects discretion and compliance. Heavy formalization narrows discretion, and shifts behavior toward rule-following. That's for better or worse, depending on whether the rule fits the situation at hand. Departmentalization affects identification, and cooperation across units. How people are grouped shapes which colleagues they see as us, and which they see as a separate them. And that line has direct consequences for how readily cooperation crosses it.

Table 7.4.1

What Each Element Encourages, and What It Suppresses

Table seven point four point one sets out all six elements in one place. Every element cuts two ways at once. Work specialization encourages skill and speed within the narrowed task. Past the diminishing-return point, it suppresses engagement and variety. A narrow span of control encourages close supervision and consistent guidance. It suppresses independent initiative and judgment. Centralization encourages consistency in decisions made at the center. It suppresses local initiative, and a felt sense of ownership over outcomes. Formalization encourages predictable, rule-consistent compliance. What it suppresses is judgment tailored to a specific situation nobody anticipated. Departmentalization encourages strong loyalty to one's own unit, and suppresses spontaneous cooperation with other units. The chain of command encourages clear escalation, and a traceable line of accountability. It suppresses fast lateral problem-solving that would bypass the formal line. These suppressed behaviors are unintentional. Nobody designs them on purpose. They arrive bundled with the benefit.

Structural, Not Attitudinal

Silos and Goal Displacement

Two familiar problems look like attitude problems, but they're better explained by structure. The first is the silo effect. Departments fail to coordinate or share information, even inside the same organization. Here's the mechanism. Group people by function, then measure them mainly on functional performance. The result is genuine functional loyalty. People reasonably optimize for what they're actually measured and rewarded on. That's their own department's results, not some broader outcome nobody in the department is accountable for. So urging departments to collaborate more, without changing the grouping or the measurement, misses the cause. That's precisely why such appeals so reliably fail to produce lasting change. The second problem is goal displacement at the unit level. A department pursues its own local measure of success, even where that works against the organization's broader objective. This connects to Subchapter five point four, on local optimization within a larger system. A department can behave in a locally rational way, given what it's measured on, and still produce a globally poor result. Its local rationality doesn't make that global outcome any less poor.

Communication Follows Structure

Proximity, Layers and Filtering

Structure also shapes how communication moves, in two distinct ways. The first is arrangement, physical and increasingly virtual. Communication follows structure and proximity. People grouped closely communicate more readily than people who are structurally or physically distant. Grouped closely can mean co-located, or connected through frequently shared virtual tools. And this holds largely regardless of how much either group might want to communicate. It extends naturally to distributed and virtual teams. The second way is filtering. Every layer filters the information that passes through it. Sometimes that's deliberate summarization. Sometimes it's an honest misunderstanding, or compression under time pressure. And the distortion accumulates with every extra layer a message has to cross. A message passing through five reporting layers has had five separate chances to be filtered. By the far end, it can bear little resemblance to what was originally intended. Both of these effects get a fuller treatment in Subchapter twelve point four, on communication.

Designed Into the Role

Role Ambiguity and Role Conflict

Two more problems are often blamed on individuals, but they're really designed into roles. Role ambiguity is uncertainty about what a role actually requires. Expectations are unclear, the scope is undefined, or the priorities are never stated. Role conflict is facing incompatible expectations from different sources at the same time. A classic source is a matrix arrangement, with its dual reporting lines, developed fully in Subchapter seven point seven. Both are, in a real sense, structural products rather than personal shortcomings. They arise directly from how a role, and the relationships around it, were designed. And both have a well-documented effect on stress and performance. The reason is simple. A person facing unclear or conflicting expectations can't reliably know what success in her own role looks like.

Worked Examples

The Structure Behind the Complaint

Here's a pattern that makes this whole section practical. Very often, the structure produces the exact behavior the organization complains about. Take the complaint that no one takes initiative. It frequently traces to heavy centralization. Centralization removes the authority that initiative would need in order to act. Next, the complaint that departments won't share information. That frequently traces to departmentalization, paired with purely departmental measurement. It's the silo mechanism again. Then there's the complaint that people won't use their judgment. That frequently traces to heavy formalization, which narrows discretion by design. So rule-bound behavior is exactly what that design choice was always going to generate. In each case, the complaint describes the structure working as built.

Figure 7.4.1

Trace the Complaint, Fix the Feature

Figure seven point four point one traces one complaint at a fictional firm, Harborline Manufacturing. It reads from left to right, in three steps. The complaint comes first. Departments won't collaborate, despite repeated urging from leadership. In the middle sits the structural feature actually producing it. Each department is measured and rewarded only on its own results. On the right is the design fix. Add a shared, cross-department metric that both departments own. The key point is where the fix lands. It targets the feature in the middle, not the complaint on the left. A shared metric changes what each department is rewarded for. And that's the lever this section has identified as actually shaping the behavior.

The Design Implication

Examine Structure Before People

The practical implication follows directly. If the behavior is wrong, examine the structure before you examine the people. This connects to two points made earlier in the course. Subchapter four point four covered how perception shapes what an observer attributes a behavior to. A structural explanation is easy to overlook for a simple reason. The person performing the behavior is visible. The structure producing it is not. Subchapter five point four's systems view explains why this matters in practice. Suppose you correct one individual for behavior the surrounding structure will keep producing. The next person in that role will likely do the same. That correction solves nothing durable. Correcting the structure, by contrast, addresses the actual source of the pattern.

The Limits of the Claim

Structure Sets the Odds

This claim should be stated with its real limits attached, not overstated. Structure constrains behavior. It does not fully determine it. Individual variation, skill, and effort still matter within any structure. Two people in the identical position don't behave identically. Culture and leadership, covered in Subchapter six point eight, also shape behavior. They operate alongside structure, rather than being replaced by it. A strong culture, or a particularly skilled leader, can partially offset a poorly designed structure. At least for a time. So the honest position is this. Structure sets the odds, and the default pattern, that a given design will produce. It is not an iron law that overrides every other influence on how people behave.

Case Vignette

Urging Collaboration, Measuring Silos

Here is a composite case, constructed for instruction. Harborline Manufacturing's leadership grew frustrated with two of its departments, engineering and customer support. The two rarely coordinated on product issues, despite repeated messages from senior leadership to work together more closely. A closer look at how each department was measured explained the puzzle. Engineering's performance reviews were based entirely on development speed, and on defect counts within its own releases. Support's reviews were based entirely on ticket-resolution time within its own queue. Neither department's measured performance moved at all when the other's outcomes improved or worsened. So neither had any structural reason to prioritize coordination over its own measured work. This wasn't a failure of attitude, or a lack of goodwill between the two departments. It was the predictable output of a measurement structure, one that rewarded each department for exactly what it was already doing. Leadership had been sending messages. The measures had been sending a louder one.

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FAQ

Questions students ask us

About How Design Shapes Behavior Inside Organizations

How does organizational structure affect employee behavior?
Organizational structure shapes behavior by setting who talks to whom, who is accountable for what, and what gets rewarded. As a result, a given structure predictably encourages some behaviors and suppresses others, largely regardless of who fills the roles. For example, heavy centralization suppresses initiative, because there is little point acting on decisions you have no authority to make.
What causes silos in organizations?
Silos are often caused by structure rather than attitude: when people are grouped by function and measured mainly on their own department's results, they reasonably optimize for those results. Urging collaboration without changing grouping or measurement rarely lasts. A more effective fix is to change what departments are rewarded for, such as adding a shared metric that two departments own together.
What is goal displacement in an organization?
Goal displacement occurs when a unit pursues its own local measure of success even where that works against the organization's broader objective. It is locally rational behavior, given what the unit is measured on, that still produces a poor overall result. It is a structural problem of local optimization within a larger system, so it is best addressed by changing measures rather than blaming people.
What is the difference between role ambiguity and role conflict?
Role ambiguity is uncertainty about what a role requires, such as unclear expectations, scope or priorities. Role conflict is facing incompatible expectations from different sources at the same time, a classic case being dual reporting lines in a matrix. Both are largely products of how roles are designed, and both raise stress and hurt performance because people cannot tell what success looks like.

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