Divisional Organization Structure

A divisional organization system is designed by splitting up an organization into semiautonomous areas referred to as division. Each division consists of a complete set of functions that are essential for achieving goals, as shown in Figure 1.2. The


Flow Down of Environmental Regulatory Requirements in a Functional System

Potential Benefits

Potential Pitfalls

Groups requiring knowledge in environmental compliance are easily identified

Employees may become distracted and lose their questioning attitude as a result of performing the same tasks over time. Therefore, they may not keep abreast of environmental regulatory requirements or report issues to management as they occur

Flow down of environmental regulatory requirements simplified due to the departmentalized structure Fewer people to train and track qualification requirements

Supervision accountability easily to identify and


Smaller number of people and area involved in assessment of environmental matters

Less eyes and perhaps attention to issues that can lead to environmental noncompliances

Divisional organization structure

FIGURE 1.2 Divisional organization structure.

divisional system makes use of the functional system and groups it into divisions to support the product or market in which they compete. The divisional organizational system is extremely beneficial for companies that conduct business in different regions, markets or product lines.

The challenges and benefits involved in developing and implementing an environmental compliant program in a divisional structure are listed in Tables 1.3 and 1.4. Although not a complete list, the tables provides some issues that should be considered and leveraged or avoided in some cases.

Matrixed Organization Structure

A matrix organizational structure combines two or more types of organizational structures. In this structure, employees have more than one boss and may be expected to support several projects at a time. Leadership responsibilities are often split between the functional manager and the project manager. This type of structure makes use of the concept of ‘dual authority’ and generally combines the divisional and functional structure in forming the matrix system (Harris and Raviv, 2002). A matrix system allows sharing of resources across functions, which is an ideal use of the matrix organization structure. An example of a matrix organization system is shown in Figure 1.3. When considering the four primary structures used most


Benefits and Pitfalls of Divisional Systems



Each division is able to focus efforts on a specific product, service or market in which they compete

Higher operational cost for the company is expected because duplication of resources exists as each division is fully autonomous having all resources necessary for supporting each division or group

Facilitate business decisions and the coordination of activities among divisions to be made expeditiously by the local leadership team because they have complete autonomy for organizational matters

Each division will have its own strategic focus than may not completely support the goals of the company as a whole

Facilitation of a common culture within each division

The company may not be able to take advantages of economies of scales because purchases of goods are not typically integrated across the company

Development of knowledge and expertise in the products and services

Communication across the company is minimized

Places decision-making as close to the customer as possible

Operate in a silo with little or no collaboration with other division employees within the company

Can respond faster to changes in the market as decision-making is localized


Flow Down of Environmental Regulatory Requirements in a Divisional System

Potential Benefits

Potential Pitfalls

Quick flow down of information and changes in environmental regulatory requirements

Regulatory' flow down may be inconsistent due to several environmental departments operating in silos

Common compliance culture within each division

Potential differences in regulatory interpretation across the company and flow down information The perception or acknowledgment of having too many resources across the company and risk reduction in force during critical budget times Compliance culture different across the company Environmental compliance costly across the company due to duplication of resources and efforts

Matrix organization structure

FIGURE 1.3 Matrix organization structure.

frequently today, the matrix system presents more challenges when it comes to developing and implementing a compliant regulatory system and culture.

The matrix system presents many complexities when it comes to flow down and implementation of environmental regulations because roles and responsibilities across the organization may not be clear (Tables 1.5 and 1.6). In this type of system, it is often difficult to keep track of projects that have environmental law impacts because of the different layers of groups that must be communicated with and the movement of personnel to support the various projects within the organization.

Developing a strategy to support environmental compliance in the matrixed organization presents complexities that involve having many levels of groups of people performing projects and tasks that involve compliance considerations that must be overcome to ensure compliance with laws and regulations.


Some Benefits and Pitfalls of Matrix Systems

Potential Benefits

Potential Pitfalls

Sharing of knowledge and skills across the company

Responsibility for employee development may not be clear to employees

Fosters employee development

Heavy workload for employees because of the support provided for several projects or departments

Cost less due to the sharing of resources

Handling conflicts may be complicated because many layers of management may be involved due to reporting structure

Efficient use of limited resources

Source allocation and assignment issues when many projects are in need of the same skill sets

Project structure assistance in development of resources and encourage team cohesion

Employees are accountable to more than one manager with at least two chains of command


Flow Down of Environmental Regulatory Requirements in a Matrix System

Potential Benefits

Potential Pitfalls

Several groups or teams to hold accountable for compliance

Many eyes on environmental compliance

Cost of compliance less due to sharing of resources

Difficulty in ensuring new workers have the training and knowledge needed to adhere to regulatory requirements

Flow down of regulations may not reach workers actually impacted by regulatory' requirements

The need to train many workers in various aspects of environmental regulatory requirements

Tracking regulatory training requiring and compliance is complicated due to the number of workers trained

Management accountability since it may be difficult to determine process and task responsibility for managers and hold them accountable

More areas requiring inspections

Flat Organization Structure

A flat organizational structure is an organization system that does not have layers of management between the company’s grassroots staff members and senior managers. In these structures, employees usually report to the president, the CEO or the highest level of leadership instead of reporting to a lower level of management that then reports to the senior executive. Flat organization structures are not common for medium- to large-size organizations. This type of structure is typically effectively utilized in small or start-up companies. An example of a flat organization structure is shown in Figure 1.4.

Environmental compliance in small organizations tends to be less complex and easier to achieve because of the absence of organizational layers of management and

Typical flat organization structure

FIGURE 1.4 Typical flat organization structure.

also because these organizations tend to have small groups of employees. The ES&H or the environmental compliance manager and subject matter experts directly report to the top level of management and have fewer organizations to consult with and enable compliance to regulations and laws. In addition, it is possible that since these organizations tend to be small, the environmental compliance posture will include a limited number of laws and regulations, depending upon the business profile and functions. In other words, the simpler the structure and business functions, the easier the compliance (Tables 1.7 and 1.8 ).


Benefits and Pitfalls of Flat Systems

Potential Benefits

Potential Pitfall

Cost efficient, having fewer layers of management

Employee retention may be difficult due to lack of job change opportunities and promotions

Clear and consistent communication. Miss communication is minimized

Management can lose control if organization expands having a large ratio of employee to manager

Expedited decision-making


Flow Down of Environmental Regulatory Requirements in a Flat System

Potential Benefits

Potential Pitfalls

Easier flow down and implementation of environmental requirements since requirements is expected to be less for a small organization with a smaller business portfolio

The perception that compliance poster is insignificant

Fewer employees needing training and retraining

Minimal staffing to address compliance issues

Less regulatory inspections from regulators

Less environmental knowledgeable staff for regulatory interpretation and flow down

Less internal inspections to verify compliance

No matter what organization system is utilized to organize a company, environmental compliance must be at the forefront and not an afterthought. When environmental compliance is planned as an afterthought, one can expect difficulty in compliance and thus potentially expect fines to be levied when not in compliance with the applicable laws and regulations.

Applied Learning

Review the case study and respond to the questions that follow.

1.4.1 Case Study

The senior leadership team in a major international company having a matrix organization system decided that a process expansion be made to keep up with and improve production of a proprietary component that will change the capability and use of a chemical product. The changes in production will include additional chemicals that are not a part of the current process. To support the new process, the company will have to hire additional resources.

  • 1. Should the company reevaluate their compliance posture? If yes, describe the process or strategy that will be used to determine the new compliance posture for the company. If no, why should the company continue business as usual?
  • 2. Is the process change significant enough that the leadership team need to reevaluate the organization structure to support the process changes? Explain your decision.
  • 3. How should flow down of the new applicable environmental requirements be handled?
  • 4. How will you address training and knowledge requirements to the new staff and current staff who will be responsible for new process operation?
  • 5. What impact will the current organization structure exert on the process expansion?


Allen, Patricia Melton, Alston, Frances E., & Dekerchove, Emily Millikin. (2019). Peak performance: how to achieve and sustain excellence in operations management. Boca Raton. FL: CRC Press/Taylor & Francis.

Cyert, Richard. (1994). Positioning the organization. The Institute of Management Sciences, 24(2), 101-104.

Harris, Milton & Raviv, Artur. (2002). Organization design to organization designing. Management Science, 48(1), 853-865.

Yoo, Youngjin, Boland, Richard J. Jr., & Lyytinen, Kalle. (2006). From organization design. Organization Science, 17(2), 215-229.

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