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STRUCTURAL FORMS AND FUNCTIONS Structure provides the architecture for pursuing an organization’s strategic goals. It is a blueprint for expectations and exchanges among internal players (executives, managers,

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employees) and external constituencies (such as customers, competitors, regulators, and clients). Like an animal’s skeleton or a building’s framework, structure both enhances and constrains what an organization can do. The alternative design possibilities are virtually in!nite, limited only by human preferences and capacities, technological limits, and constraints in the surroundings.

We often assume that people prefer structures with more choices and latitude (Leavitt, 1978), but this is not always the case. A study by Moeller (1968), for example, explored the effects of structure on teacher morale in two school systems. One was loosely structured and encouraged wide participation in decision making. Centralized authority and a clear chain of command characterized the other. Moeller was surprised to !nd the opposite of what he expected: Faculty morale was higher in the district with a tighter structure. Teachers seemed to prefer clarity of expectations, roles, and lines of authority.

United Parcel Service, “Big Brown,” provides a contemporary example of the bene!ts of structural certainty and clarity. In the company’s early days, UPS delivery employees were “scampering messenger boys” (Niemann, 2007). Since then, computer technology has curtailed employee discretion, and every step from pickup to delivery is highly pro- grammed. Detailed instructions specify placement of packages on delivery trucks. Drivers follow computer-generated routes (which minimize mileage and left turns to save time and gas). Newly scheduled pickups automatically download into the nearest driver’s route plan.

UPS calculates in advance the numbers of steps to your door. If a driver sees you while walking briskly to your door, you’ll receive a friendly greeting. Look carefully and you’ll probably notice the automated van lock the driver carries. Given such a tight leash, youmight expect demoralized employees. But, the technologymakes the job easier and enables drivers to be more productive. As one driver remarked to us with a smile, “We’re happy robots.”

Do these examples prove that a tighter structure is better? Sometimes the opposite is true. Adler and Borys (1996) argue that the type of structure is as important as the amount or rigidity. There are good rules and bad ones. Formal structure enhances morale if it helps us get our work done. It has a negative impact if it gets in our way, buries us in red tape, or makes it too easy for management to control us. Equating structure to rigid bureaucracy confuses “two very different kinds of machines, those designed to de-skill work and those designed to leverage users’ skills” (p. 69).

Structure, then, need not be machinelike or in”exible. Structures in stable environments are often hierarchical and rules oriented. But recent years have witnessed remarkable inventiveness in designing structures emphasizing “exibility, participation, and quality. A prime example is BMW, the luxury automaker whose success formula relies on a combination of stellar quality and rapid innovation. “Just about everyone working for

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the Bavarian automaker—from the factory “oor to the design studios to the marketing department—is encouraged to speak out. Ideas bubble up freely and there is never a penalty for proposing a new way of doing things, no matter how outlandish. The company has become an industry benchmark for high-performance premium cars, customized produc- tion, and savvy brand management” (Edmondson, 2006, p. 72. Copyright! 2006 McGraw- Hill Companies, Inc.).

Dramatic changes in technology and the business environment have rendered old structures obsolete at an unprecedented rate, spawning a new interest in organizational design (Nadler, Gerstein, and Shaw, 1992; Bryan and Joyce, 2007; Roberts, 2004). Pressures of globalization, competition, technology, customer expectations, and workforce dynamics have prompted organizations worldwide to rethink and redesign structural prototypes. A swarm of items compete for managers’ attention—money, markets, people, and techno- logical competencies, to name a few. But a signi!cant amount of time and attention must be devoted to social architecture—designing structures that allow people to do their best:

CEOs often opt for the ad hoc structural change, the big acquisition, or a focus on� where and how to compete. They would be better off focusing on organizational� design. Our research convinces us that in the digital age, there is no better use of a� CEO’s time and energy than making organizations work better. Most companies� were designed for the industrial age of the past century,when capitalwas the scarce� resource, interaction costs were high and hierarchical authority and vertically� integrated structures were the keys to ef!cient operation. Today superior per- formance “ows from the ability to !t these structures into the present century’s� very different sources of wealth creation (Bryan and Joyce, 2007, p. 1).�

BASIC STRUCTURAL TENSIONS Two issues are central to structural design: how to allocate work (differentiation) and how to coordinate diverse efforts after parceling out responsibilities (integration). Even in a group as small and intimate as a family, it is important to settle issues concerning who does what, when the “what” gets done, and how individual efforts mesh to ensure harmony. Every family will !nd an arrangement of roles and synchronization that works—or suffer the fallout.

Division of labor—or allocating tasks—is the keystone of structure. Every living system creates specialized roles to get important work done. Consider an ant colony: “Small workers . . . spend most of their time in the nest feeding the larval broods; intermediate- sized workers constitute most of the population, going out on raids as well as doing other

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jobs. The largest workers . . . have a huge head and large powerful jaws. These individuals are . . . soldiers; they carry no food but constantly run along the “anks of the raiding and emigration columns” (Topoff, 1972, p. 72).

Like ants, humans long ago discovered the virtues of specialization. A job (or position) channels behavior by prescribing what someone is to do—or not do—to accomplish a task. Prescriptions take the form of job descriptions, procedures, routines, protocols, or rules (Mintzberg, 1979). On one hand, these formal constraints can be burdensome, leading to apathy, absenteeism, and resistance (Argyris, 1957, 1964). On the other, they help to ensure predictability, uniformity, and reliability. If manufacturing standards, aircraft maintenance, hotel housekeeping, or prison sentences were left solely to individual discretion, problems of quality and equity would abound.

Once an organization spells out positions or roles, managers face a second set of key decisions: how to group people into working units. They have several basic options (Mintzberg, 1979):

• Function: Groups based on knowledge or skill, as in the case of a university’s academic departments or the classic industrial units of research, engineering, manufacturing, marketing, and !nance.

• Time: Units de!ned by when they do their work, as by shift (day, swing, or graveyard shift).

• Product: Groups organized by what they produce, such as detergent versus bar soap, wide-body versus narrow-body aircraft.

• Customer: Groups established around customers or clients, as in hospital wards created around patient type (pediatrics, intensive care, or maternity), computer sales depart- ments organized by customer (corporate, government, education, individual), or schools targeting students in particular age groups.

• Place: Groupings around geography, such as regional or international of!ces in corporations and government agencies or neighborhood schools in different parts of a city.

• Process: Grouping by a complete “ow of work, as with “the order ful!llment process. This process “ows from initiation by a customer order, through the functions, to delivery to the customer” (Galbraith, 2001, p. 34).

Creating roles and units yields the bene!ts of specialization but creates challenges of coordination and control—how to ensure that diverse efforts mesh. Units tend to focus on

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their separate priorities and strike out on their own, as New York’s police and !re departments did on 9/11. The result is suboptimization—individual units may perform splendidly in terms of their own goals, but the whole may add up to much less than the sum of the parts. This problem plagued Tom Ridge, who was named by President George W. Bush as the director of homeland security in the aftermath of the 9/11 terrorist attacks. His job was to resolve coordination failures among the government’s many different units that dealt with security. But he was more salesman and preacher than boss, and he lacked the authority to compel compliance. Ridge’s slow progress led President Bush to create a cabinet-level Department of Homeland Security. The goal was to cluster independent security agencies under one central authority.

As often happens, the new structure created its own problems. Folding the Federal Emergency Management Agency into the mix reduced FEMA’s autonomy and shifted its priorities toward security and away from its core mission of disaster relief. The same agency that had responded nimbly to hurricanes and earthquakes in the 1990s was slow and ponderous in the aftermath of Hurricane Katrina and lacked authority and budget to move without a formal okay from the new Secretary of Homeland Security (Cooper and Block, 2006).

Successful organizations employ a variety of methods to coordinate individual and group efforts and to link local initiatives with system-wide goals. They do this in two primary ways: vertically, through the formal chain of command, and laterally, through meetings, com- mittees, coordinating roles, or network structures.We next look at each of these strategies in detail.

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