Right – simple structures (at the two and three level) gives the CEO much of the decision-making say. CEOs at this level are comfortable with making decisions in many areas because they have a closer eye on the activities within the organization. When do you think the simple structure is ready to become complex? Does the CEO have a say in this, or does business law dictate this?
The simple structure is ready to become complex as the organization grows. As the size of business and product breadth increases, specialization becomes increasingly more important and this gives rise to more functions and departments. With increasing span of control for the executive management, need arises to add more layers of management for effective control.
Thus also happens as the business transitions from the stage of growth to maturity. More control is required to innovation.
With the mergers and acquisitions, more horizontal and vertical layers are added giving rise to a more complex structure. So expansion, diversification, growth, mergers and acquisitions all lead to a simple organization structure becoming more complex and decision making being distributed away from the CEO as three executive team size increases and more layers of management are added. So it is dictated more by the business law than the CEO.