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CONCLUSION The structural frame looks beyond individuals to examine the social architecture of work. Though sometimes equated with red tape, mindless memos, and rigid bureaucrats, the approach is much broader and more subtle. It encompasses the freewheeling, loosely structured entrepreneurial task force as well as the more tightly controlled railway company or postal department. If structure is overlooked, an organization oftenmisdirects energy and resources. It may, for example, waste time and money on massive training programs in a vain effort to solve problems that have much more to do with social architecture than with people’s skills or attitudes. It may !re managers and bring in new ones, who then fall victim to the same structural “aws that doomed their predecessors.
At the heart of organizational design are the twin issues of differentiation and integra- tion. Organizations divide work by creating a variety of specialized roles, functions, and units. They must then use both vertical and horizontal procedures to mesh the many elements together. There is no one best way to organize. The right structure depends on prevailing circumstances and considers an organization’s goals, strategies, technology, people, and environment. Understanding the complexity and variety of design possibilities can help create formal prototypes that work for, rather than against, both people and collective purposes.
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4 c h a p t e r
Structure and Restructuring
When society requires to be rebuilt, there is no use in attempting to rebuild it on the old plan.
—John Stuart Mill
In 2004, a crisis over journalistic standards ensnared the British Broad- casting Corporation (BBC) in a !urry of parliamentary hearings, resigna-
tions, and public recrimination. The controversy so tarnished the respected institution’s reputation that top of”cials took steps to ensure that it would never happen again.
They initiated a number of structural changes: a journalism board to monitor editorial policy, guidelines on journalistic procedures, forms to !ag trouble spots that managers were required to complete, and a 300-page volume of editorial guidelines. The cumulative effect of the changes was a multilayered bureaucracy that limited managerial discretion and fostered a hierarchy of approve-disapprove boxes. These were to be passed up the chain of command as an alternative to probing questions at lower levels in the organization.
Some cures make the patient worse, and this newly restructured system resulted in two crises more damaging than the one in 2004. In October 2012, the BBC came under heavy “re when it became known that it had broadcast a glowing tribute to a well-known former BBC TV host, Jimmy Savile, but killed an investigative report detailing evidence that Savile had been a serial child molester. The following month, the BBC aired a report wrongly accusing a member of Margaret Thatcher’s government of being a pedophile.
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Postmortem investigations attributed both errors directly to BBC’s restructured, highly bureaucratized system.
In another case, when Larry Summers, an economist and former treasury secretary, became president of Harvard University in 2001, he soon concluded that the venerable university needed a structural overhaul, and he subsequently issued a series of presidential directives. He attacked the undergraduate grading system, in which half of the students received As and 90 percent graduated with honors. He stiffened standards for awarding tenure, encouraged more foreign study, and directed faculty (especially senior professors) to spend more time with students. He stepped across curricular boundaries to call for an emphasis on educational reform and more interdisciplinary courses. He proposed a center for medicine and science to encourage more applied research. Finally, he announced a bold move to build an additional campus across the Charles River to house new growth and development. Summers’s initiatives aimed to tighten Harvard’s famously decentralized structure and to imbue the president’s of”ce with more clout.
Restructuring worked about as well for Summers as it had for the BBC—he was forced out after serving the shortest term for a Harvard president in more than a century. Reorganizing or restructuring is a powerful but high-risk approach to improvement. Major initiatives to redesign structure and processes often prove neither durable nor bene”cial. Designing a structure, putting all the parts in place, and satisfying every interested party is dif”cult and hazardous. Although restructuring is a manager’s strategy of choice to improve performance, a Boston Group Study estimates 50 percent of the efforts fail (BSG, 2012). Other estimates put the mis”re rate even higher (HBR, 2000).
But it is also true that, over the past 100 years, management innovations such as decentralization, capital budgeting techniques, and self-governing teams have done more than any other kind of innovation to allow companies to cross new performance thresholds (Hamel, 2006). American automakers scratched their heads for 20 years trying to “gure out what made Toyota so successful. They tried all kinds of process innovations but “nally reached the conclusion that Toyota had simply given their employees more authority to make decisions and solve problems (Hamel, 2006).
An organization’s structure at any moment represents its resolution of an enduring set of basic tensions or dilemmas, which we discuss in opening this chapter. Then, drawing on the work of Henry Mintzberg and Sally Helgesen, we describe two views of the alternatives organizations may consider in aligning structure with mission and environ- ment. We conclude with case examples illustrating both opportunities and challenges that managers encounter when attempting to create more workable and successful structural designs.
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STRUCTURAL DILEMMAS Finding an apt system of authority, roles, and relationships is an ongoing, universal struggle. Managers rarely face well-de”ned problems with clear-cut solutions. Instead, they confront enduring structural dilemmas, tough trade-offs without easy answers.
Differentiation versus Integration The tensionbetween assigningwork and synchronizing sundry efforts creates a classic dilemma, as seen in Chapter 3. The more complex a role structure (lots of people doing many different things), theharder it is to sustain a focused, tightly coupled enterprise.Recall the challenge facing Larry Summers as he tried to bring a higher level of coordination to a highly decentralized university. As complexity grows, organizations need more sophisticated—and more costly— coordination strategies. Lateral strategies need to supplement top-down rules, policies, and commands.
Gap versus Overlap If key responsibilities are not clearly assigned, important tasks fall through the cracks. Conversely, roles and activities can overlap, creating con!ict, wasted effort, and unintended redundancy. A patient in a prestigious teaching hospital, for example, called her husband and pleaded with him to rescue her. She couldn’t sleep at night because hospital staff, especially nurses’ aides and interns, kept waking her, often to repeat a procedure or administer a medication that someone else had done a short time before. Conversely, when she wanted something, pressing her nurses’ call button rarely produced any response.
The new cabinet-level Department of Homeland Security, created in the wake of the 9/11 terrorist attacks, was intended to reduce gaps and overlaps among the many agencies responsible for responding to domestic threats. Activities incorporated into the new department included immigration, border protection, emergency management, and intel- ligence analysis. Yet the two most prominent antiterrorism agencies, the FBI and the CIA— with their long history of mutual gaps, overlaps, and bureaucratic squabbling—remained separate and outside the new agency (Firestone, 2002).
Underuse versus Overload If employees have too little work, they become bored and get in other people’s way. Members of the clerical staff in a physician’s of”ce were able to complete most of their tasks during the morning. After lunch, they “lled their time talking to family and friends. As a result, the of”ce’s telephone lines were constantly busy, making it dif”cult for patients to ask questions and schedule appointments. Meanwhile, clients and routine paperwork swamped
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the nurses, who were often brusque and curt because they were so busy. Patients complained about impersonal care. Reassigning many of the nurses’ clerical duties to of”ce staff created a better structural balance.
Lack of Clarity versus Lack of Creativity If employees are unclear about what they are supposed to do, they often tailor their roles to “t personal preferences instead of shaping them to meet system-wide goals. This frequently leads to trouble. Most McDonald’s customers are not seeking novelty and surprise in their burgers and fries. But when responsibilities are over-de”ned, people conform to prescribed roles and protocols in “bureaupathic” ways. They rigidly follow job descriptions, regardless of how much the service or product suffers.
“You lost my bag!” an angry passenger shouted, confronting an airline manager.� The manager responded, “How was the !ight?” “I asked about my bag,” said the passenger.� “That’s not my job,” the manager replied. “Check with baggage claim.” The passenger did not leave as a satis”ed customer.�
Excessive Autonomy versus Excessive Interdependence If the efforts of individuals or groups are too autonomous, people often feel isolated. School- teachers may feel lonely and unsupported because they work in self-contained classrooms and rarely see other adults. Yet efforts to create closer teamworkhave repeatedly run agroundbecause of teachers’ dif”culties in working together. In contrast, if too tightly connected, people in roles andunits aredistractedand spend toomuch timeonunnecessary coordination. IBMlost anearly lead in the personal computer business in part because new initiatives required so many approvals—from levels and divisions alike—that new products were overdesigned and late to market. The same problem hindered Hewlett-Packard’s ability to innovate in the late 1990s.
Too Loose versus Too Tight One critical structural challenge is how to hold an organization together without holding it back. If structure is too loose, people go astray, with little sense of what others are doing. But rigid structures sti!e !exibility and encourage people to waste time trying to beat the system.
We can see some of the perils of a loose structure in the former accounting “rm Andersen Worldwide, indicted in 2002 for its role in the Enron scandal. Efforts to shred documents and alter memos at Andersen’s Houston of”ce went well beyond questionable accounting procedures. At its Chicago headquarters, Andersen had an internal audit team, the Professional Standards Group, charged with reviewing the work of regional of”ces.
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Unlike other large accounting “rms, Andersen let frontline partners closest to the clients overrule the internal audit team. This fostered local discretion that was a selling point to customers but came back to haunt the “rm. As a result of the lax controls, “the rainmakers were given the power to overrule the accounting nerds” (McNamee and Borrus, 2002, p. 33).
The opposite problem is common in managed health care. Insurance companies give clerks far from the patient’s bedside the authority to approve or deny treatment or to review medical decisions, often frustrating physicians and patients. Doctors lament spending time talking to insurance representatives that would be better spent seeing patients. Insurance providers sometimes deny treatments that physicians see as urgent. In one case, a hospital- based psychologist diagnosed an adolescent as likely to commit sexual assault. The insurer questioned the diagnosis and denied hospitalization. The next day, the teenager raped a “ve- year-old girl.
Goal-less versus Goal-bound In some situations, few people know what the goals are; in others, people cling closely to goals long after they have become irrelevant or outmoded. In the 1960s, for example, the Salk vaccine virtually eradicated polio. This medical breakthrough also brought to an end the existing goal of the March of Dimes organization, which for years had championed “nding a cure for the crippling disease. The organization rebounded by shifting its strategy to focus on preventing birth defects.
