Structures

ORGANISATION

UNIT 8.

DISCUSSION What would motivate you in a job? Put the following list in your order
of preference:

• the kind of work you do

• the freedom to act on your own initiative

• a sense of achievement

• the opportunity to be creative

• the chance to travel

• prestige

• a high salary

• financial security

• other things (which?)

reading TYPES OF COMPANY STRUCTURES

Most organizations have a hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each successive level. There is a clear line or chain of com­mand running down the pyramid. All the people in the organization know what decisions they are able to make, who their superior (or boss) is (to whom they report), and who their immediate subordinates are (to whom they can give instructions).

Some people in an organization have colleagues who help them: for example, there might be an Assistant to the Marketing Manager. This is known as a staff position: its holder has no line authority, and is not inte­grated into the chain of command, unlike, for example, the Assistant Mar­keting Manager, who is number two in the marketing department.

Yet the activities of most companies are too complicated to be organ­ized in a single hierarchy. Shortly before the First World War, the French industrialist Henry Fayol organized his coal-mining business according to

PART II. FINANCE

VOCABULARY NOTES

the functions that it had to carry out. He is generally credited with invent­ing functional organization. Today most large manufacturing organizations have a functional structure, including (among others) production, finance, marketing, sales, and personnel or staff departments. This means, for example, that the production and marketing departments cannot take financial decisions without consulting the finance department.

Functional organization is efficient, but there are two standard criti­cisms. Firstly, people are usually more concerned with the success of their department than that of the company, so there are permanent battles between, for example, finance and marketing, or marketing and produc­tion, which have incompatible goals. Secondly, separating functions is unlikely to encourage innovation.

Yet for a large organization manufacturing a range of products, having a single production department is generally inefficient. Consequently, most large companies are decentralized, following the model of Alfred Sloan, who divided General Motors into separate operating divisions in 1920. Each division had its own engineering, production and sales departments, made a different category of car (but with some overlap, to encourage internal competition), and was expected to make a profit.

Businesses that cannot be divided into autonomous divisions with their own markets can simulate decentralization, setting up divisions that deal with each other using internally determined transfer prices. Many banks, for example, have established commercial, corporate, private banking, international and investment divisions.

An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management, in which people report to more than one superior. For example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and for a geographical region, as well as the managers responsible for the traditional functions of finance, sales and production. This is one way of keeping authority at lower levels, but it is not necessa­rily a very efficient one. Thomas Peters and Robert Waterman, in their well-known book In Search of Excellence, insist on the necessity of pushing authority and autonomy down the line, but they argue that one element -probably the product - must have priority; four-dimensional matrices are far too complex.

A further possibility is to have wholly autonomous, temporary groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. Teams are often not very good for decision­making, and they run the risk of relational problems, unless they are small and have a lot of self-discipline. In fact they still require a definite leader, on whom their success probably depends.

successive - послідовний incompatible - несумісний

subordinate - підлеглий transfer price - трансфертна ціна

staff - тут штабний dimension - вимір

personnel - кадри to run a risk - наражатися на ризик
permanent - постійний

UNIT 8. ORGANISATION STRUCTURES

Дата добавления: 2014-12-23