How does structure influence what happens in the workplace? Essentially, it is a blueprint for officially sanctioned expectations and exchanges among internal players (executives, managers, employees) and external constituencies (such as customers and clients). Like an animal’s skeleton or a building’s framework, structural form both enhances and constrains what an organization can accomplish. The alternative design possibilities are virtually infinite, limited only by human preferences and capacity.
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 structured loosely and encouraged wide participation in decision making. The other was tightly controlled, with centralized authority and a clear chain of command. Moeller found the opposite of what he expected: faculty morale was higher in the district with a tighter structure.
United Parcel Service, “Big Brown,” provides a current example of Moeller’s finding. In the company’s early days, UPS delivery employees were “scampering messenger boys” (Niemann, 2007). Since then, computer technology has replaced employee discretion, and every step from pickup to delivery is highly routinized. Detailed instructions specify where and in what order packages are to be placed on delivery trucks. Drivers follow computer-generated routes (which minimize mileage and left turns, to save time and gas). Newly scheduled pickups are automatically inserted into the nearest driver’s route plan. If a driver sees you as he trots to your door, you’ll get a friendly greeting. Look carefully and you’ll notice the truck keys on the ring finger of the left hand. Given such a tight leash, you might expect demoralized employees. But the technology makes the job easier and enables drivers to be more productive. As one remarked with a smile, “We’re happy robots.”
Do these examples prove that a tighter structure is better? Not necessarily. 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 machine—machines designed to de-skill work and those designed to leverage users’ skills” (p. 69).
Structure, then, need not be machinelike or inflexible. Structures in stable environments are often hierarchical and rules-oriented. But recent years have witnessed remarkable inventiveness in designing structures emphasizing flexibility, 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 the Bavarian automaker—from the factory floor 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. Detroit’s rigid and bloated bureaucracies are slow to respond to competitive threats and market trends, while BMW’s management structure is flat, flexible, entrepreneurial—and fast. That explains why, at the very moment GM and Ford appear to be in free fall, BMW is more robust than ever. The company has become the industry benchmark for high-performance premium cars, customized production, and savvy brand management” (Edmondson, 2006, p. 72).
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). 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 technological competencies, to name a few. But a significant amount of time and attention must be devoted to social architecture—designing structure that allows people to do their best:
CEOs typically 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 capital was the scarce resource, interaction costs were high, and hierarchical authority and vertically integrated structures were the keys to efficient operation. Today superior performance flows from the ability to fit 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 once responsibilities have been parceled out (integration). Even in a group as small and intimate as a family, it’s important to settle issues concerning who does what, when the “what” gets done, and how individual efforts mesh to ensure harmony. Every family will find 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 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 flanks 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 hand, they help to ensure predictability, uniformity, and reliability. If manufacturing standards, airline 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):
• Functional 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 finance.
• Units created on the basis of time, as by shift (day, swing, or graveyard shift).
• Groups organized by product: detergent versus bar soap, wide-body versus narrow-body aircraft.
• Groups established around customers or clients, as in hospital wards created around patient type (pediatrics, intensive care, or maternity), computer sales departments organized by customer (corporate, government, education, individual), or schools targeting students in particular age groups.
• Groupings around place or geography, such as regional offices in corporations and government agencies or neighborhood schools in different parts of a city.
• Grouping by process: a complete flow of work, as with “the order fulfillment process. This process flows from initiation by a customer order, through the functions, to delivery to the customer” (Galbraith, 2001, p. 34).
Creating roles and units yields the benefits of specialization but creates problems of coordination and control—how to ensure that diverse efforts mesh. Units tend to focus on their separate priorities and strike out on their own, as New York’s police and fire departments did on 9/11. The result is suboptimization, an emphasis on achieving unit goals rather than focusing on the overall mission. Efforts become fragmented, and performance suffers.
This problem plagued Tom Ridge, who was named by President George W. Bush as the director of homeland security in the aftermath of the terrorist attacks. Ridge struggled to pull together previously autonomous agencies. But he was more salesman and preacher than boss—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. Unfortunately, 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 more focus on security and less on disaster management. 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 corporation-wide goals. They do this in two primary ways: vertically, through the formal chain of command, and laterally, through meetings, committees, coordinating roles, or network structures. We next look at each of these strategies in detail.