In designing a structure that works, managers have a set of options for dividing up the work and coordinating multiple efforts. Structure needs to be designed with an eye toward desired ends, the nature of the environment, the talents of the workforce, and the available resources (such as time, budget, and other contingencies). The options are summarized in Exhibit 3.1.
Vertical or Lateral?
As noted, vertical coordination rests on top-down command and control. It is efficient but not always effective, and it depends on employees’ willingness to follow directives from above. More decentralized and interactive lateral forms of coordination are often needed to keep top-down control from stifling initiative and creativity. Lateral coordination is often more effective but costlier than its vertical counterparts. A meeting, for example, provides an opportunity for face-to-face dialogue and decision making, but risks squandering time and energy. Personal and political agendas often undermine the meeting’s purpose. A task force fosters creativity and integration around pressing problems but may divert attention from ongoing operating issues. The effectiveness of coordinators who span boundaries depends on their credibility and skills in handling others. Coordinators are also prone to schedule meetings that take still more time from actual work (Hannaway and Sproull, 1979). Matrix structures provide lateral linkage and integration but are notorious for creating conflict and confusion. Networks are inherently difficult to manage.
Exhibit 3.1. Basic Structural Options.
Organizations have to use both vertical and horizontal procedures for coordination. The optimal blend of the two depends on the unique challenges in a given situation. Vertical coordination is generally superior if an environment is stable, tasks are well understood and predictable, and uniformity is essential. Lateral communications work best when a complex task is performed in a turbulent, fast-changing environment. Every organization must find a design that works for its circumstances. Consider the contrasting structures of two highly successful organizations: McDonald’s and Harvard University.