Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Understanding Facebook’s organizational structure
Facebook’s multi-faceted matrix organizational structure is well suited to the needs of the company and its diverse range of products and services. More specifically, the matrix structure allows tech companies like Facebook to innovative, be creative, and expand at the same time. While the company is now known as Meta, it’s important to note that the organizational structure remains unaltered with the exception of financial reporting.
In terms of leadership, Facebook has a predominant flat organizational structure where there are fewer leaders compared to subordinates who tend to possess more autonomy in their roles. Note that Facebook is not a company where individuals dream of working in a corner office. Those in positions of leadership work on the same desks as team members and Mark Zuckerberg occupies an accessible and visible office with glass walls. The CEO is also noted for hosting Q+A sessions every Friday where even interns can ask him probing questions.
In the next section, we’ll take a look at the other aspects of Facebook’s organizational structure.
Function-based teams
Facebook arranges corporate teams according to their business functions and the particular needs of the company as an online social media business. An executive or senior manager leads each team and, because of the matrix structure, there may be some overlap between teams and the product-based and geographic divisions.
Nevertheless, the primary corporate function-based teams include:
Human Resources.
Product Management.
Investor Relations.
Global Public Policy.
Business & Marketing.
Legal.
Marketing.
Security.
Privacy.
Accounting.
Technology.
Information.
Operations.
Finance.
Chief Executive.
Geographic divisions
Geographic divisions help Facebook make sense of the various social network and online advertising dynamics that differ from region to region. These dynamics may be influenced by culture, consumer behavior, or attitudes toward social media itself.
Facebook has four, broad geographic divisions:
North America.
Latin America.
Europe, Middle East & Africa.
Asia & South Pacific.
Each region is run by a management team that reports to corporate operations and executives.
Product divisions
Product divisions may become increasingly important for Facebook in the future as it shifts focus away from its core social networking service to other technologies such as the metaverse and artificial intelligence.
Currently, there are three product divisions:
Family of Apps – this includes Instagram, Facebook Messenger, and WhatsApp, for example.
New Platforms and Infrastructure – such as artificial intelligence, blockchain, virtual reality, and augmented reality.
Central Product Services – a division that encompasses any feature that operates across multiple products or apps, such as those related to security and advertisements.
Meta, from hierarchical, slow, and bureaucratic to flatter, leaner, and more efficient! (2023-forward)
How is the new Meta looking like today? The company is getting reorganized around a few core principles. And a massively reduced headcount, which is going back to pre-pandemic levels.
The company’s re-shape is also coming with an additional lay-off of 10,000 people.
By September 2022, Facebook’s (Meta) employees count had peaked at 87,314. Yet, as revenue slew down for the first time in years, the company announced a layoff of 13% of the company’s workforce, bringing the headcount to 75,964. By March 2023, Meta announced another round of layoffs, dubbed “The Year of Efficiency,” which brought the headcount down to less than 66 thousand employees.
In fact, as Facebook grew, it moved from a flat organization to a hierarchical one, where the information flow got stuck between managerial layers.
In Facebook, post-pandemic (2022) the company found itself in a sluggish organization, where the managerial layer had gone out of control, and with individual contributors who had to report to many managers to get things done!
Zuckerberg: In our Year of Efficiency, we will make our organization flatter by removing multiple layers of management.
To make the company flatter, thus enabling the information flow between people doing the work and management to get much faster, Meta will transition many managers to become individual contributors.
And many individual contributors to report at almost every level.
Meaning the company is cutting out various management layers.
Leaner is better
Zuckerberg: Since we reduced our workforce last year, one surprising result is that many things have gone faster. In retrospect, I underestimated the indirect costs of lower-priority projects.
In this respect, it’s important to remark how Facebook, when moving from a startup to a big tech player, ultimately transitioned from flatarchy (information flow between individual contributors and managers very thin) to a hierarchical organization (multiple managerial layers across the organization).
That effect sharpened throughout the pandemic as Meta moved into fully-remote mode.
Keep technology the main thing
Zuckerberg: We are a technology company, and our ultimate output is what we build for people. Everything else we do is in service of that.
Over the years, Marketing, Sales and administrative roles had become instrumental to the organization, whereas now Meta will be focusing on returning to a more optimal ratio of engineers to other roles.
Invest in tools to get more efficient
Zuckerberg: building AI tools to help engineers write better code faster, enabling us to automate workloads over time or identify obsolete processes that we can phase out.
Another key point is about the AI race, which Meta (while being among the first movers back in the 2010s) found itself behind due to its unsuccessful focus on the Metaverse.
And yet by early 2023, Zuckerberg acknowledged that Meta was going to do all it could to get back on track in the Generative AI race, both by empowering its engineering teams through AI and by leveraging generative AI within its core products.
In-person time to build relationships and get more done
Zuckerberg: Our early analysis of performance data suggests that engineers who joined Meta in-person and then transferred to remote or remained in-person performed better on average than those who joined remotely.
During the pandemic, Meta announced how the company was going fully remote.
Yet the experiment didn’t work as expected for them.
Indeed, one thing they noticed is that while long-time employees who had worked together in-person before, once they had moved to remote, that didn’t affect much their productivity.
For new hires, things looked quite different. In short, the new hires who had never been exposed to in-person work were less productive.
Why?
I guess the central assumption there is that you can’t quickly transfer the culture of the company to new hires if they have not been exposed to the company’s culture in in-person.
Again, this is what Meta noticed for its own organization, which can’t be generalized across the spectrum of all other organizations.
Key takeaways:
Facebook is characterized by a matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions.
Facebook arranges corporate teams according to their business functions and the particular needs of the company as an online social media business. The matrix structure of Facebook means there may be some overlap between corporate teams and its product-based and geographic divisions.
Facebook’s geographic divisions help it account for how social media and advertising is perceived across different cultures and regions. Product-based divisions may change in the future as the company shifts its focus toward advanced technologies.
Facebook, the main product of Meta is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm).
ARPU, or average revenue per user, is a key metric for attention merchants like Facebook. It assesses the ability of the platform to monetize its users. For instance, by the end of 2022, Meta’s ARPU worldwide was $10.86. While in US & Canada, it was $58.77; in Europe, it was $17.29; in Asia, $4.61 and in the rest of the world, it was $3.52.
Facebook, rebranded as Meta in 2021, is primarily owned by Mark Zuckerberg, founder and CEO. Zuckerberg keeps tight control over the ownership and decision-making of the company. Other large individual shareholders comprise former COO Sheryl Sandberg and co-founder Eduardo Saverin. Large institutional investors include BlackRock, Vanguard, and Fidelity.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly. Still, it leverages the data users provide and technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data and its algorithms sold to advertisers for visibility.
Facebook, the main product of Meta, is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion was from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm).
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organizational structure is organized around the leadership of Mark Zuckerberg and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.
TikTok is a Chinese creative social media platform driven by short-form video content enabling users to interact and generate content at scale. TikTok primarily makes money through advertising, and it generated $4.6 billion in advertising revenues in 2021, thus making it among the most popular attention-based business models or attention merchants.
Instagram makes money via visual advertising. As part of Facebook products, the company generates revenues for Facebook Inc.’s overall businessmodel. Acquired by Facebook for a billion dollars in 2012, today Instagram is integrated into the overall Facebook business strategy. In 2018, Instagram founders, Kevin Systrom and Mike Krieger left the company, as Facebook pushed toward tighter integration of the two platforms.
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, and it generated more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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