Human resource requirements have changed dramatically in recent decades. Many lower-level jobs now require higher levels of skill. A better-educated workforce expects and often demands more discretion in daily work routines. Increasing specialization has professionalized many functions. Professionals typically know more than their supervisors about technical aspects of their work. They expect autonomy and prefer reporting to professional colleagues. Trying to tell a Harvard professor what to teach is an exercise in futility. In contrast, giving too much discretion to a youthful, low-skilled McDonald’s worker could become a disaster for both employee and customers.
Dramatically different structural forms are emerging as a result of changes in workforce demographics. Deal and Kennedy (1982) predicted early on the emergence of the atomized or network organization, made up of small, autonomous, often geographically dispersed work groups tied together by information systems and organizational symbols. Drucker makes a similar observation in noting that businesses increasingly “move work to where the people are, rather than people to where the work is” (1989, p. 20).
Challenges of Global Organization
In sum, numerous forces affecting structural design create a knotty mix of challenges and tensions. It is not simply a matter of deciding whether we should be centralized like McDonald’s or decentralized like Harvard. Many organizations find that they have to do both and somehow accommodate the competing structural tensions.
Two electronics giants, Matsushita in Japan and Philips in the Netherlands, have competed with one another around the globe for half a century. Over time, Matsushita developed a strong headquarters, while Phillips was more decentralized, with strong units in different countries. The pressures of global competition pushed both to become more alike (Bartlett, 2006). Philips struggled to gain the efficiencies that come from selling the same products around the world. Meanwhile, as Matsushita gradually discovered, “No company can operate effectively on a global scale by centralizing all key decisions and then farming them out for implementation. It doesn’t work.… No matter how good they are, no matter how well supported analytically, the decision-makers at the center are too far removed from individual markets and the needs of local customers” (Ohmae, 1990, p. 87).
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 often misdirects 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 people’s skills or attitudes. It may fire managers and bring in new ones, who then fall victim to the same structural flaws that doomed their predecessors.
At the heart of organizational design are the twin issues of differentiation and integration. Organizations divide work by creating a variety of specialized roles, functions, and units. They must then use both vertical and horizontal procedures to lash 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.
1. The supercarrier USS Kennedy was decommissioned in May 2007 after almost forty years of service.
Bolman, Lee G., Terrence E. Deal. Reframing Organizations: Artistry, Choice, and Leadership, 4th Edition, 4th Edition. John Wiley & Sons P&T, 11/2007. <vbk:9781118178102#outline(3)>.
chapter FOUR Structure and Restructuring
Larry Summers took the helm as president of Harvard in 2001. An economist and former U.S. treasury secretary, Summers concluded that the venerable university needed an overhaul. From the president’s office, he issued a series of authoritative new directives. He attacked the undergraduate grading system, in which half of the students received A’s and 90 percent graduated with honors. He stiffened standards for awarding tenure, encouraged more foreign study, and asked 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 office with more clout.
How did his plans pan out? Prior experience with restructuring teaches that a crash was likely, and, in this instance, it was a big one. Summers was forced out after the shortest term for a Harvard president in more than a century.
Major initiatives to redesign structure and processes have often proved neither durable nor beneficial. Moving from designing a structure to putting all the parts in place and satisfying every interested party is difficult and hazardous. The attempt after the 9/11 attacks to bring related agencies under the Homeland Security umbrella provides another example of the perils of restructuring. We can get an idea of the effects of this attempt by looking at one organization—the Federal Emergency Management Agency (FEMA).
Before 9/11, FEMA was an autonomous operation. Its main goal was to respond to domestic disasters caused by hurricanes, earthquakes, and other whims of Mother Nature. FEMA was created in 1979 by a stroke of President Jimmy Carter’s official pen. It was an effort to integrate separate emergency agencies—hurricane, earthquake, flood—under a single authority. The hitch was that the blend also included Mount Weather, a super-secret national counterespionage group that was housed in separate quarters, replete with guards and other accoutrements shrouding a clandestine operation. This self-styled elite dismissed their colleagues in the rest of FEMA as a “bunch of weenies who went out and chased storms” (Cooper and Block, 2006, p. 55). In fact, FEMA was a two-headed agency. Structurally, as a disaster relief agency, it was itself a disaster, provoking an insider’s comment, “How can you help others when you can’t even take care of yourself?” (p. 56).
Enter James Lee Witt, a political appointee tapped to head FEMA in 1993, who promised to remake the agency into an integrated organization capable of delivering the goods when disaster struck. He envisioned catastrophes as political opportunities to showcase taxpayers’ dollars at work. One of his first actions was to restructure FEMA to focus on disaster relief rather than splitting its mission to encompass national security. He also developed the agency’s role in preparing for rather than just responding to national tragedies.
FEMA demonstrated its new configuration in responding successfully to earthquakes in Seattle and in Northridge, California, as well as other national disasters of the new millennium. But after September 11, 2001, terrorism rather than national disasters topped the federal agenda. FEMA was folded into a new agency, the Department of Homeland Security. Tom Ridge was appointed to head the mix of diverse, previously independent operations. The overarching goal: stop terrorism.
Structurally, the change gave FEMA another reporting level and left its funding for disaster relief vulnerable to the new emphasis on terrorism. The flaws in this arrangement became evident when Hurricane Katrina scored a bull’s-eye on New Orleans. FEMA’s response to the unparalleled disaster sometimes looked like an episode of the Keystone Kops or the Three Stooges. Who was in charge, who reported to whom, and basic logistical decisions appeared more happenstance than planned. More could be learned from CNN than from the official chain of command.
In the usual political blame game, FEMA’s head, Michael Brown, took the hit. But the real culprit was not an individual. It was a restructuring plan that didn’t work out. The core assumptions of the structural frame were overlooked or ignored. The costs in property damage and human lives were enormous, and the reputation of a previously successful government agency was tarnished.
Reorganizing, or restructuring, is a powerful but high-risk approach to improvement. An organization’s structure at any moment represents its resolution of an enduring set of basic tensions or dilemmas. We begin this chapter by describing these dilemmas. Then, drawing on the work of Henry Mintzberg and Sally Helgesen, we describe two unique views of the alternatives organizations may consider in aligning structure with mission and environment. We conclude with several case examples illustrating both opportunities and challenges managers encounter when attempting to create a more workable structural design.
Finding a satisfactory system of roles and relationships is an ongoing, universal struggle. Managers rarely face well-defined problems with clear-cut solutions. Instead, they confront enduring structural dilemmas, tough trade-offs without easy answers.