The reporting structure is a very important tool in an organization. This structure is a chart that serves as a roadmap of management levels and positions. Every business has a chain of command and it is structured uniquely, depending on the organization. The structure of an organization, if not built correctly can destroy the organization just like a building with poor architecture. The blueprints clarify and build a strong foundation in which to grow or build an organization. Chipotle is a Mexican Grill Restaurant in the fast food industry that started out with one location in Colorado back in 1993.
Today it has just more than 1,400 locations in the United States, Canada, England, and France. The structure of this organization has had to change and adapt to the growth of the business over time. Like a majority of businesses and organizations the vertical organizational structure is similar with multiple levels of hierarchy. At Chipotle, the top of the pyramid is fulfilled by the board of directors whom have the ultimate responsibility of making decisions for the entire company (Chipotle Mexican Grill, Inc. 2010). At the bottom of the pyramid there are the store managers, assistants, shift managers, and employees completing the everyday operational tasks that brings in the money. Between these two levels there are district and regional managers seeing over the many locations spread out across America and beyond. It is for this reason the horizontal organizational structure of Chipotle is divisional. A divisional structure groups units around product, customers, or geographic regions.
Chipotle’s mission and commitment is to deliver great quality tasting food with integrity to its customers no matter where the customers are; therefore, the tasks in completing this goal do not change from store to store, district to district, or region to region. Each of these regions has the same tasks, the same levels of management within them, and the same superiors to report to in the chain of command. Dividing the organization into divisions based on the geographic region makes it possible for each region to purchase their ingredients locally and organically.
This divisional structure also allows the company to evaluate and compare the regions. This divisional structure is very different from that of others. A functional structure is organized into departments according to the business functions. In this structure each department has its own expectations and responsibilities, they are not like that of any other department, so the tasks in each department are different from one another. In this type of structure each department is built with individuals that have the skills and expertise in relation to that department.
All 1,400 plus Chipotle restaurants are owned by the same corporation. If this was not the case and some stores were franchised out, then a network structure would need to be created. A network organization looks for ways for tasks to be completed outside of the organization by outsourcing. A store that agrees to license contracts and franchises with the company would be responsible for delivering and completing the goals at the specific location; these business functions include management, employment, product ordering, etc.
Chipotle would be cutting a lot of cost and making money by contributing little in return. This is the main reason an organization would choose a network type of structure. The responsible party for the outsource function has the power to choose whatever way he or she pleases to complete the tasks and goals assigned. The divisional structure within Chipotle is coordinated by standardization and a formalization that is in place. Basically, each level of management is very clear on the activities required by them because they are usually the same duties repeated over and over.
Some duties may be scheduled daily, weekly, monthly, quarterly, or yearly. Regardless of the schedule they repeat like a cycle. This standardization also makes it possible for the organization to compare and contrast reports and activities by district and regionally. The statistics and results of these reports and the comparisons give top management information needed to make important decisions for the company as a whole or divisionally.
Each division and each business function within the company has clear procedures, and because rules and regulations are clearly written within policies the organization’s formal management can evaluate the performance of both. The divisional structure requires great communication skills. Chipotle is also a centralized organization where all decisions are made with the top level of management. Management is required to communicate these decisions, goals, and tasks downward to the destined level of management where implementation takes place.
If these ideas and tasks were not communicated correctly poor performance and failure may occur. This may also occur if the information communicated upwards the chain of command is incorrect or ignored. The marketing department relies on information regarding the regions in which operations take place when making decisions and completing the tasks assigned to that function of the company. Operations has the biggest effect on the organizations decisions; therefore, dividing these operations into regions became important when the company grew larger outside of its own region.
An organization must consider the facts that defines and describes itself. Factors like the business it conducts, the size and number of employees it has, and the locations in which it facilitates business will determine the type of structure needed. The success of the business depends on the structure built within the organization. Everyone in the entire organization needs to clearly understand the position they have and the responsibilities expected of them. An organizational chart serves exactly that purpose.
Chipotle’s divisional structure maps out a wide span of control where fewer levels of reporting exist. Fortunately this divisional structure has turned out to be well chosen for Chipotle. Clearly Steve Ells, Founder, Chairman, and co-CEO knows exactly what he wants and needs from his organization. This reporting system has given him a competive edge. And, this knowledge has led him to great success. Once upon a time he owned a single location in Colorado and now there are Chipotle locations around the globe. Communication works well when it is mapped out correctly.