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.
Understanding Tesla’s organizational structure
Tesla is an automotive company like no other, headed by the enigmatic Elon Musk and consistently pushing the boundaries of what many in the industry believe is possible. As a result, it should come as no surprise that the organizational structure of the company is more difficult to define when compared to its peers.
Musk provides little information on how the organization is structured or on the executives that make up Tesla’s senior management. He has made comments in the past that speak of a desire to incorporate a flat organizational structure – a desire no doubt reinforced by his inability to delegate. Indeed, according to a report published by tech news site The Information in 2018, Musk had no fewer than 29 executives reporting directly to him.
From what information does exist, it is likely Tesla uses a dominant functional organizational structure. For instance, there may be a group of employees structured around sales with another structured around engineering. The company may also exhibit other structures or indeed no structure whatsoever, with some former employees noting there was very little bureaucracy or politics in the workplace. To speak to someone from another department, for example, all they needed to do was walk over there and start a conversation.
A lack of structure can also be seen in the way Musk refers to himself as “Technoking” of Tesla to demonstrate how little importance he places on the title of CEO.
As hinted at earlier, Tesla does employ functional centers that cover all business activities. These include finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Functional team heads form the core of Tesla’s centralized control at its headquarters in Austin, Texas, with international operations given little autonomy.
Each center, in turn, supports two key corporate divisions:
- Automotive – which incorporates the design, production, sales, and leasing of electric vehicles and environmental offset credits.
- Energy Generation and Storage – a much smaller segment that deals with the design, production, installation, sales, and leasing of solar energy generation products. This also includes relevant environmental incentives and credits.
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- Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Musk’s preference to avoid delegation means the company embodies characteristics of a flat structure with a higher ratio of subordinates to managers. In certain scenarios, Tesla may exhibit flexible or very little structure whatsoever.
- With that said, Tesla’s dominant organizational structure is functional. One group of employees, for example, may be structured around sales with another structured around engineering.
- Functional heads are based in Austin, Texas, and control most aspects of the company’s domestic and international operations. Each functional group supports two key corporate divisions with financial reporting also occurring in four additional geographic divisions.
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