The Galbraith star model was developed by American organizational theorist Jay R. Galbraith in 1982. The model provides a framework with which an organization can sustain its value propositions and business model over time.
Understanding the Galbraith star model
The Galbraith star model is a framework on which an organization can base its design choices.
To do this, the model guides design choices and policies that management can control to influence employee behavior.
Management can also use the model to identify and then overcome any negative aspects of the company’s structure.
Galbraith’s model consists of five interconnected categories which are diagrammatically arranged to form a star shape.
In the center of the star, the organization itself serves as a center of gravity that holds the five different elements together.
In the next section, we will describe each of these elements in detail.
The five categories of the Galbraith star model
The five categories of Galbraith’s model represent levers that can be pulled to institute organizational alignment.
Strategy
Strategy defines how the organization intends to beat its competitors.
This winning formula consists of goals, objectives, core values, vision, and mission.
It also incorporates the products and services to be sold, the markets to be served, and the value to be offered to the customer.
Strategy is a long-term corporate plan for the next three to five years, but a vision that extends beyond five years is not unusual.
Structure
Structure defines how power and authority within the organization are distributed. The structural policy itself is governed by four key areas:
Shape
The number of employees in a department at each level relative to the number of superiors.
This is related to the span of control.
Power distribution
At the vertical level, this refers to centralized and decentralized decision-making.
At the horizontal level, power distribution refers to the ability of a department to deal with mission-critical issues.
Specialization
The nature and extent of specialization to carry out the work, and
Departmentalization
This clarifies how departments are formed for each structural level and is based on dimensions such as functions, geography, workflow processes, markets, customers, and products.
Processes
Where structure is the anatomy of an organization, it can be helpful to think of processes as its physiology or functioning.
Processes are based on decision-making and information sharing, with management processes having both a vertical and horizontal form.
Vertical processes relate to fund and talent allocation, budgeting, and planning, while horizontal processes deal with workflows such as order fulfillment or product development.
Rewards
When used effectively, rewards systems align employee goals with organizational goals.
To provide employees with the motivation to complete strategic objectives, incentives such as bonuses, promotions, stock options, and salary increases are used.
Galbraith noted that employee rewards systems must be aligned with the structures and processes of the organization.
That is, they are only effective when consistently used in combination with the other categories.
People
This describes HR policies like recruitment, selection, rotation, development, training, and any other policy that provides talent for the organization to carry out its strategy and maintain its structure.
Similar to the employee rewards category, HR policies work best when there is harmony between them and the other design areas.
Key takeaways:
The Galbraith star model is a framework on which an organization can base its design choices. It was developed by American organizational theorist Jay R. Galbraith in 1982.
The Galbraith star model clarifies design choices and policies that management can leverage to influence employee behavior and correct negative aspects of the company’s organizational structure.
The five categories of Galbraith’s model include strategy, structure, processes, rewards, and people. Each category must be aligned with the others for ideal organizational performance.
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.
