Existing structures seldom completely meet the anticipated needs of an organization. Most require some kind of ongoing modification if they are to be ready for new or expanded objectives and obstacles. Existing organizations reflect what the designers believed to be the needs of the enterprise at the time they were created.
Analysis of the benefits that should be provided by the structure may indicate that only slight modifications are needed. This of course allows for the creation of an ideal situation with a minimum of disruption. One or two positions may be created or a position may be moved a level or two in the hierarchy to meet a need. The nucleus of a specialized group may be created so that it is in place and functioning prior to an anticipated expansion.
The manager who must totally redesign an organization structure usually must proceed at a faster pace than the manager who need only modify the structure. The following sections look first at some of the alternative types of structures available to the manager, then present some advantages and disadvantages of each, and, finally, discuss some hazards to avoid when restructuring an organization.
Organizational structures are basically ways of dividing work. The critical question is which division is most effective. Six basic types are available, singly or in combination: function, product, customer, process, geography, and matrix.
Functional organization divides work into specific areas, each concentrating on one cluster of major objectives. Manufacturing companies are often structured along specialized functional lines and include divisions such as research, manufacturing, quality control, sales, finance, and personnel.
A distribution company that is functionally organized might be grouped to highlight sales, distribution, marketing, finance, personnel, and purchasing. An insurance company might be grouped to distinguish public relations, personnel, general counsel, secretary, investment operations, insurance operations, and sales operations. A consulting engineering and construction company might be divided into process engineering and the development, general engineering, procurement, construction, sales, and staff functions.
Different functional groups are prominent in different organizations depending on the objectives identified by the top manager. Each group concentrates on its own work, develops a high degree of efficiency, its own esprit-de-corps, and internal professional loyalty. There is a tendency to look on other functional groups as adversaries, which may be counter-productive to achieving overall objectives. Functionally structured organizations require a great deal of well-thought-out coordination by the top manager. One of the prime reasons for the failure of functionally organized enterprises to achieve their objectives is the lack of planned coordination at the top. Functional organizations usually provide opportunities for promotion at several levels for the personnel within the group.
The manager who must modify or redesign an existing structure should be aware of several design hazards as he tries to balance the optimum type of organization structure with the benefits needed. The following sections id
entify the more common hazards. Although it may be necessary to incorporate one of these structural elements into a design, the manager should do it only with a complete awareness of the disadvantages that each poses." Major design hazards include:
I. Creation of too many levels
a) Results in communication difficulties.
b) Is expensive.
c) Manager is far removed from the work, and organization is not responsive to directives. Difficult to get things done.
d) Authorities and responsibilities are too narrowly defined.
e) Managers find it difficult to get approvals. Decision making is slow.
Emphasis is placed on maintaining the status quo.
2. Duplication of Effort
a) Results in wasted effort.
b) Results in conflict between groups.
c) Results in confusion as to where to take a problem.
d) Authority relationship difficult to define.
e) Primary responsibility cannot be pinned down.
3. Different Objectives in the Same Group
a) Quality may be sacrificed for production.
b) Top manager loses checks and balances.
c) Production superintendent may not be able to balance conflicting objectives.
d) The caliber of final inspection may be lower.
4. Reporting to More than One Boss
a) Individual may receive conflicting orders.
Analysis of the benefits that should be provided by the structure may indicate that only slight modifications are needed. This of course allows for the creation of an ideal situation with a minimum of disruption. One or two positions may be created or a position may be moved a level or two in the hierarchy to meet a need. The nucleus of a specialized group may be created so that it is in place and functioning prior to an anticipated expansion.
The manager who must totally redesign an organization structure usually must proceed at a faster pace than the manager who need only modify the structure. The following sections look first at some of the alternative types of structures available to the manager, then present some advantages and disadvantages of each, and, finally, discuss some hazards to avoid when restructuring an organization.
Organizational structures are basically ways of dividing work. The critical question is which division is most effective. Six basic types are available, singly or in combination: function, product, customer, process, geography, and matrix.
Functional organization divides work into specific areas, each concentrating on one cluster of major objectives. Manufacturing companies are often structured along specialized functional lines and include divisions such as research, manufacturing, quality control, sales, finance, and personnel.
A distribution company that is functionally organized might be grouped to highlight sales, distribution, marketing, finance, personnel, and purchasing. An insurance company might be grouped to distinguish public relations, personnel, general counsel, secretary, investment operations, insurance operations, and sales operations. A consulting engineering and construction company might be divided into process engineering and the development, general engineering, procurement, construction, sales, and staff functions.
Different functional groups are prominent in different organizations depending on the objectives identified by the top manager. Each group concentrates on its own work, develops a high degree of efficiency, its own esprit-de-corps, and internal professional loyalty. There is a tendency to look on other functional groups as adversaries, which may be counter-productive to achieving overall objectives. Functionally structured organizations require a great deal of well-thought-out coordination by the top manager. One of the prime reasons for the failure of functionally organized enterprises to achieve their objectives is the lack of planned coordination at the top. Functional organizations usually provide opportunities for promotion at several levels for the personnel within the group.
The manager who must modify or redesign an existing structure should be aware of several design hazards as he tries to balance the optimum type of organization structure with the benefits needed. The following sections id
entify the more common hazards. Although it may be necessary to incorporate one of these structural elements into a design, the manager should do it only with a complete awareness of the disadvantages that each poses." Major design hazards include:I. Creation of too many levels
a) Results in communication difficulties.
b) Is expensive.
c) Manager is far removed from the work, and organization is not responsive to directives. Difficult to get things done.
d) Authorities and responsibilities are too narrowly defined.
e) Managers find it difficult to get approvals. Decision making is slow.
Emphasis is placed on maintaining the status quo.
2. Duplication of Effort
a) Results in wasted effort.
b) Results in conflict between groups.
c) Results in confusion as to where to take a problem.
d) Authority relationship difficult to define.
e) Primary responsibility cannot be pinned down.
3. Different Objectives in the Same Group
a) Quality may be sacrificed for production.
b) Top manager loses checks and balances.
c) Production superintendent may not be able to balance conflicting objectives.
d) The caliber of final inspection may be lower.
4. Reporting to More than One Boss
a) Individual may receive conflicting orders.
b) Individual has priority problems.
c) Bosses may get into conflict over the individual.
d) Raises the question of who has authority to hire, fire, give raises.
5. Improper Designation or Use of Assistants
a) Role of assistant may be unclear and cause confusion.
b) Title can similarly cause confusion.
c) Determination of level of assistant on staff may lead to dissension.
6. Moses Complex
c) Bosses may get into conflict over the individual.
d) Raises the question of who has authority to hire, fire, give raises.
5. Improper Designation or Use of Assistants
a) Role of assistant may be unclear and cause confusion.
b) Title can similarly cause confusion.
c) Determination of level of assistant on staff may lead to dissension.
6. Moses Complex
a) Manager's efforts are spread too thin.
b) One or more functions usually get neglected.
c) Coordination becomes a major problem for manager.
b) One or more functions usually get neglected.
c) Coordination becomes a major problem for manager.
d) Manager may delay decisions.
7. One-Over-One - (Managers use assistant managers as buffers)
a) Third-level managers must get through two levels to get action.
b) Unless work is split neatly, there is constant duplication.
7. One-Over-One - (Managers use assistant managers as buffers)
a) Third-level managers must get through two levels to get action.
b) Unless work is split neatly, there is constant duplication.
c) Top manager has little impact on third-level management.
8. Loads Out of Balance
a) One person is overworked.
b) Some functions under one manager may be neglected.
c) Only one manager has a chance to really understudy the plant manager.
d) Functions of managers may be over emphasized in respect to other service functions.
9. Misplacement of Function (Placement of a general staff department under a specific line department-e.g., Industrial Relations under Production)
a) Staff department will very likely serve only specific production department.
b) Product manager supervises group which serves other functions; may get into conflict of interest.
c) Staff department managers will be handicapped in relations with managers in other functions.
d) Managers in other functions will most likely try to set up their own service groups.
10. Improper Organization Emphasis (Placement of a unit too low or too high in the organization structure-e.g., Engineering reporting to Plant Manager and Production reporting to Engineering)
a) May result in illogical reporting or authority relationships-e.g., product subservient to Engineering.
b) Level of production groups will most likely mean lower salary levels hence, difficulty in attracting and keeping talent.
c) Relationships with other functions are hampered.
d) Plant Manager is remote from the critical.
8. Loads Out of Balance
a) One person is overworked.
b) Some functions under one manager may be neglected.
c) Only one manager has a chance to really understudy the plant manager.
d) Functions of managers may be over emphasized in respect to other service functions.
9. Misplacement of Function (Placement of a general staff department under a specific line department-e.g., Industrial Relations under Production)
a) Staff department will very likely serve only specific production department.
b) Product manager supervises group which serves other functions; may get into conflict of interest.
c) Staff department managers will be handicapped in relations with managers in other functions.
d) Managers in other functions will most likely try to set up their own service groups.
10. Improper Organization Emphasis (Placement of a unit too low or too high in the organization structure-e.g., Engineering reporting to Plant Manager and Production reporting to Engineering)
a) May result in illogical reporting or authority relationships-e.g., product subservient to Engineering.
b) Level of production groups will most likely mean lower salary levels hence, difficulty in attracting and keeping talent.
c) Relationships with other functions are hampered.
d) Plant Manager is remote from the critical.
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