Organizational Challenges on Companies of Different Sizes - dummies

Organizational Challenges on Companies of Different Sizes

By Consumer Dummies

For effective and participatory decision-making in businesses, relationships must be stable and people must know whom to go to — and this is where size comes into play. In theory, at a certain point, an organization just becomes too large to accommodate those kinds of relationships.

So what’s the tipping point? According to Robin Dunbar, a British anthropologist, it’s about 150. In fact, there seem to be two points at which companies alter how work gets done: when they grow beyond 50 employees and when they grow beyond 150 employees. In the following list, you find the organizational challenges businesses of different sizes face:

  • From 1 to 50 employees: Companies of this size can take two approaches to organization: They can implement an organizational structure right at the beginning by agreeing on how decisions will be made and what kind of organization would work effectively, and by selecting the clientele profile they want to work with. Or they can wait until things get so dysfunctional that the business is at risk of failure and they’re forced to put systems in place.
  • From 50 to 150 employees: If you haven’t made clear decisions on how you’ll decide or whom you’ll engage in different kinds of decisions, you must do so now. Consider this your company’s awkward teenage stage. By putting in place systems and processes, you help your company graduate from winging it to being more organized. Gaining employee engagement in gathering or relaying market intelligence keeps a company current with new developments. Similarly, supplier relations become an integral part of reputation-building, so making sure your employees have shared commitment to quality and customers reduces risk as your company continues to grow.
  • More than 150 employees: At this stage in a company’s growth, whatever decisions a company has made about how it gets things done stabilize and settle. Dunbar’s rule, noted earlier, states that in groups with more than 150 members, relationships destabilize. One solution, used by W. L. Gore, a sportswear manufacturing company with 10,000 employees, is to work in units of 150. This structure enables the company to gain flexibility without sacrificing growth.

    Not all companies run into the 150 rule. Companies that use a self-management model organize around how work gets done. They set up clearly defined roles and accountabilities long before they reach the 150 employee stage. Self-managing companies, such as the world’s largest tomato processing company, Morning Star (400 employees), has strong processes and agreements in place that allow them to grow while maintaining clear guidelines for internal relationships and decision-making.