How to guide - selecting an organizational structure for marketing

1. How-To Guide Selecting an Org Structure for Marketing By Kristen Maida, Senior Research Analyst February 2015 EXECUTIVE SUMMARY Does your marketing department have a solid infrastructure? Do all of your company’s marketing professionals understand their role/function in the organization? Is the chain of command easily understood or only loosely communicated to marketing staff? Organizational (org) structures provide a framework within a company that ensures all employees are aware of their role and how they fit into the ecosystem of the business. Org structures present themselves on a spectrum anywhere from a traditional, top-down approach to more collaborative, flexible approaches. Org structures vary by company size, industry and business needs. Ideally, each company will create its structure based on their specific requirements and continue to update the org structure as changes occur, both internally and externally. As marketing departments become more complex, with new technologies and initiatives appearing all the time, it is important that Marketing builds and maintains an org structure that will enhance their current and future plans. This How-To Guide was designed to help you understand what the common org charts look like, the pros and cons of each structure and how to select the best org structure for your company. © 2015 Demand Metric Research Corporation. All Rights Reserved.

2. How-To Guide COMMON ORGANIZATIONAL STRUCTURES The most common org structures for a marketing department are Centralized, Marketing Services, Center of Excellence, Decentralized and Circular. The five figures reviewed in this section do show the entirety of each structure; however, they do provide a glance at how each structure is arranged. Here are graphics of five common marketing org charts: CMO Figure 1: Centralized Org Structure VP, Demand Generation VP, Strategic Communications VP, Customer Success VP, Marketing Ops & Finance Director, Content Marketing Director, Customer Engagement Director, Event Marketing Figure 2: Marketing Services Org Structure CEO President, Business Unit A President, Business Unit B President, Business Unit C Marketing Services Budget Budget Budget © 2015 Demand Metric Research Corporation. All Rights Reserved.

3. How-To Guide Figure 3: Center of Excellence Org Structure Head of Corporate Comm & Marketing VP, Strategy & Branding President, Business Unit A VP, Marketing Programs - BU A CEO President, Business Unit B VP, Marketing Programs - BU B President, Business Unit C VP, Markting Programs - BU C Figure 4: Decentralized Org Structure CEO Business Unit Head A Business Unit Head B Business Unit Head C VP, Marketing Strategy & Programs - BU A VP, Marketing Strategy & Programs - BU B VP, Marketing Strategy & Programs - BU C Content Marketing Manager Content Marketing Manager Event Marketing Manager Event Marketing Manager Creative Services Manager © 2015 Demand Metric Research Corporation. All Rights Reserved.

4. How-To Guide Figure 5: Circular Org Structure ORGANIZATIONAL STRUCTURE DESCRIPTIONS Each org chart in the previous section has its own unique attributes. While each org structure has its pros, there are also cons that should be considered before implementation or restructuring. The following table details the key attributes, pros and cons of each chart: Event Marketing Manager VP, Demand Gen VP, Strategic Ops & Finance VP, Marketing PR Manager Marketing Ops Comm Manager CMO VP, Customer Success Customer Success Manager Figure # Org Structure Description Pros Cons Provides an easily deciphered chain of command; Enables highly specialized job functions; Allows for continued growth as a company expands Can create challenges with communication and adjustments to market changes if all departments are silo’ed Is the top-down approach traditionally used by mid-sized to large organizations. It relies on a singular, centralized marketing department that reports directly to the CMO/CEO. Figure 1 Centralized © 2015 Demand Metric Research Corporation. All Rights Reserved.

5. How-To Guide Marketing Services acts as an internal agency for all marketing activities and programs. This group obtains budget requirements from each Business Unit (BU) and provides the Marketing function based on the requirements for each individual BU. This could be considered “internal outsourcing.” BUs can be based on product, market segment or geographic location. All marketing activities are executed and managed in the same “command center”; Can be easily scaled for growing companies; Remains cost effective with one main source of marketing activity Marketing Services group does not control the budget; May be issues maintaining consistency across BUs Marketing Services Figure 2 Provides a “command center” for Marketing strategy that is filtered down to each BU, which maintains some level of consistency across the entire company; Empowers each BU to market its product or to its segment on their own with their unique knowledge Is similar to the Traditional model; however, the organization is structured by Business Unit (BU). Business Units can be based on product division, market segment or geographic location. In this model, the corporation (as a whole) maintains the strategy portion of Marketing, but the individual BU manages and monitors the unique programs and budget of Marketing. Can cause serious communication loss and transfer of knowledge; Can provide each BU with too much autonomy and a chance to stray from the company’s overarching strategic goals Center of Excellence Figure 3 Allows each BU to utilize their knowledge of the specific division, market segment or location to drive collateral & marketing programs that increase sales opps and closes Creates a great deal of autonomy for each BU; Can cause an overlap in work if similar job roles are implemented in each BU to do similar programs Each Business Unit (BU) is responsible for Marketing in its entirety. Marketing strategy and programs are run by each BU. Figure 4 Decentralized Is a more organic organizational structure. It still provides a loose chain of command with the executive/leader at the center; however, the ideology is that the exec/leader will “radiate” their vision & knowledge throughout the department. There are bands for each job level that indicate different levels of knowledge transfer and functionality. This model is typically seen in SMBs or start-up companies. Employees may have a hard time deciphering their place in the organization; Immediate chain of command can be difficult to maintain Allows a free flow of knowledge and ideas throughout the organization; Encourages constant communication and collaboration Figure 5 Circular © 2015 Demand Metric Research Corporation. All Rights Reserved.

6. How-To Guide HOW TO SELECT THE RIGHT ORG STRUCTURE Since there are so many ways that a company can organize their infrastructure, there are several characteristics each organization must consider in order to properly select the right org structure for their needs. As mentioned previously in this guide, an org structure must be specific to each company’s size, industry and business needs. Consider the following items when implementing an org structure or restructuring your company: 1.Chain of Command: The chain of command indicates exactly how an organization is structured from the top of the organization (i.e. CEO) all the way down to the bottom. A chain of command can be long (i.e. CEO to SVP to Director to Manager to Specialist) or short (i.e. CEO to Manager). It can also be rigid (see Figure 1) or loose (see Figure 5). SMB: The majority of small to mid-sized businesses will most likely see a short chain of command since there will be less employees than the standard Enterprise. SMBs should consider the benefits of both rigid and loose chains of command. A loose structure provides more flexibility with communication, reporting and adding new roles. A more rigid structure will provide a solid backbone if your company is gearing up for rapid growth. Enterprise: Large corporations will typically have long chains of command as there tend to be more responsibilities that need to be covered. The majority of Enterprises will prefer a more rigid structure as well to ensure all employees are aware of their direct reports. 2.Centralization: In order to determine how centralized your org structure needs to be, you will first need to understand where the decision-making power lies. A centralized org structure (Figure 1) indicates a main source of decision-making power; while, a decentralized org structure (Figure 4) suggests that the decision- making power is spread out through different parts of the organization. Figures 2 and 3 show a combination of the two with parts of Marketing being shared between a “command center” and other parts of the organization. Both SMBs and Enterprises may fall anywhere on the spectrum based on the number of business units required, the number of departmentsneeded and/or the specialization/formalization of job roles. © 2015 Demand Metric Research Corporation. All Rights Reserved.

7. How-To Guide 3.Product/Market/Geographic Needs: Organizations that offer more than one product, serve more than one market segment or do business in more than one location (i.e. regions, countries, continents) must consider how marketing strategy & programs may differ for each product, market and/or location. Single Product/Market/Location: Organizations that do not handle more than one of these should not concern themselves with this characteristic unless new products, markets or geographic locations emerge. Multiple Products/Markets/Locations: Companies that handle more than one of these should consider Figure 2, Figure 3 and Figure 4 from the previous section. Each of these structures have their merits and help multi-faceted organizations divide up responsibilities and knowledge in order to properly serve all customers. As your company grows, encounters internal changes and/or sees developments in the marketplace, you will need to reevaluate your org structure to supplement business needs. An organization’s marketing infrastructure can help or hinder business development, sales success and customer engagement. ACTION PLAN Follow these steps in order to select and implement the proper org structure for your company: 1.Review the org charts in Figures 1 to 5 and the corresponding descriptions. Identify which org chart is most closely oriented to your current structure. 2.Decide how you will arrange or rebuild your new infrastructure. Follow the guidelines in the “How to Select the Right Org Structure” section of this guide and relate it to the associated org charts above. 3.Build your new org chart. Utilize our Modern Marketing as a foundation to build your own Department Structure organizational plan. 4.Share your organizational plans with key executives and begin to disseminate roles, functions and responsibilities through your new channels of leadership and communication. © 2015 Demand Metric Research Corporation. All Rights Reserved.

8. How-To Guide BOTTOM LINE Organizational structures are a critical asset of any company. They promote an understanding of job role/function, a guide for how information should disseminated through the company and a framework for responsibility and reporting. Marketing departments are no exception to the need for an org structure. In fact, as more technologies and programs are introduced into the marketing space, it is imperative that Marketing considers how their functions are arranged and managed. CEOs, CMOs and marketing leaders should review the specific requirements of their businesses in order to properly structure the marketing function for productivity and growth. © 2015 Demand Metric Research Corporation. All Rights Reserved.