Structure: Form follows function?
The eternal org chart battle
If there is one evergreen topic for GR managers, it is the org chart question. The org chart usually answers two questions: (1) Internal affiliation (where should GR sit in the corporate organization — within Legal, Comms, Corporate Strategy, Go To Market or be an independent global function?), and (2) team structure (functionally, as a matrix, regionally or by product and business line?).
We haven’t done an empirical study on this, but here is our guesstimate: The vast majority of GR teams are structured as regional teams — maybe with one cross-regional “special” or “central” team — and sits within either Legal or Comms. Graph 1 shows our guesstimate in a two-dimensional chart. In this logic, roughly 70% of all GR teams qualify as “Type 2” (within Legal or Comms, regionally organized).
An obvious observation is: No matter where you put GR — there will always be trade-offs: Take your team affiliation:
- If you are in Comms, you might gain a better understanding of brand management issues, are better aligned with brand-building campaigns, and might be better in dealing with PR crises that have a GR angle.
- Being part of Legal also has advantages: Usually, GR covers only one part of the regulatory “value chain”. At some point you might need your specialized lawyers of the Legal function to define a policy position. E.g. understanding liability issues requires deep knowledge of existing product liability regulation and your contractual terms and conditions with customers.
- Similar arguments could be made for being part of Corporate Strategy (you might have a better grasp of where the company is going) or Go To Market (“In the end, everyone in a company is in Sales”).
Similarly, each team structure model has pro’s and con’s.
- Functional teams might allow a deep integration into business units. If your government relations issues require a long-term view on your company’s technology development plans, this is a clear advantage.
- Regional teams allow for a close integration within Sales and broader “in-country” teams. We found that companies differ widely regarding the balance between headquarters and country teams — the more “muscles” the country teams have, the more logical it seems to set up mirroring regional GR teams.
- Finally, a matrix organization is supposed to combine the best of two worlds. However, there are some challenges: Firstly, matrix organizations are more complex. It requires a settled and well-functioning GR leadership team to manage these complexities. Secondly, we have seen cases in which an unhealthy competition between functional and regional teams developed. Avoiding a “second class” feeling in the regional teams might become a challenge — as well as a feeling on the other side that regional teams are a bottleneck or identify more with the region than the company and global policy priorities.
A matrix to define the right org chart for GR
Most likely, GR teams are not built from scratch, but have their own history. Path dependencies are often strong — the most important factor being budget and headcount allocations that cannot easily be changed. However, opportunities might arise to change your org chart. So what to aim at?
To make sense of the org chart, it is best to start with asking what the main challenges of your corporation with regard to GR’s portfolio is. Graph 2 provides a high-level view on how such an approach could be structured. On the vertical axis, you might start listing your main challenges — we put some examples in. The blue boxes derive the main organizational imperative you should follow. This is where functional, matrix and regional structures show their pro’s and con’s.
Admittedly, such a high-level matrix leaves plenty of ambiguities. However, we think it is important to get the first step right when you design an organization.
We will publish another blog article on the question of how GR interacts with other global functions — stay tuned.
We want to hear from you! Participate in our survey
So much for our guessing. Now we want to hear from you what you think about GR team structures and organizational affiliations. For this purpose, we set up an anonymous survey and ask you to spend 5 to 7 minutes on a couple of questions. We will publish the results in a follow-up article on the GR Blog.
