Legalidad y seguridad jurídica

To understand an organization, you have to consider all of its com-ponents. Organizations are networks of related parts. Each element works together to support efficient operations. The new MBA buzz-word for it all is organizational architecture.

A noteworthy feature of the diagram is that the individual is at the center. The reason for this is that organizations are made not of brick and mortar but of people. Organizations affect those individu-als. The theories in the previous sections focused on the individual.

In the following sections the macro-view of the organizations is ex-plored in MBA terms.

As shown in the diagram, six elements define organizations.

Some are self-explanatory, but others have special MBA significance that you should be aware of.

Strategy. Strategy describes an explicit or implicit plan for success in the marketplace. When an airline decides to lure customers with

ei-THE BASIC ORGANIZATIONAL MODEL

ther lower prices or better service, that is a corporate strategy. (Later in the book, I devote an entire chapter to this truly MBA topic.)

Policies and Procedures. Policies are formal rules that, in all but small companies, are captured in a handbook, while procedures are the observable ways in which a company conducts business. Vaca-tion and benefits are policies that are codified. Routine tasks such as how waste paper should be separated for recycling may not be com-mitted to paper. It’s a procedure that is understood.

Organizational Structures. Structure vocabulary is a lexicon that no

MBA can be without. It is a frequent subject of discussion in corpo-rate meetings and is also an important tool for managing organiza-tional behavior. Structures describe the hierarchy of authority and accountability in an organization. These “formal” relationships are frequently diagrammed in organization charts. Most companies use some mix of structures to accomplish their goals. People who are di-rectly involved in producing or marketing the firm’s products or ser-vices are called line employees. The others who advise, serve, and support the line are called staff employees. Line and staff employees can be organized along the following lines:

Functional Product Customer Geographic Divisional Matrix Amorphous

Functional. The functional form divides work by tasks, e.g., ad-vertising, accounting, finance, and sales. These departments report to the senior executives.

Product. The product structure groups all functions necessary to de-liver a specific product. Product managers manage individual prod-ucts as smaller businesses within a company. Black & Decker, for example, is divided into separate units responsible for power tools, small appliances, and accessories (see top chart, right).

Customer. The customer structure focuses on—you guessed it—the customer. Activities, such as production and marketing, are grouped with other functions to satisfy specific customer needs. The cus-tomer structure is common in service industries. Banks often divide responsibility by customer type. For instance, some loan officers are trained to serve business clients, others to serve individuals. Each

“Organizational Structure,” written by Professor James Clawson, Case UVA-OB-361, Figures 1–8. Copyright © 1988 by the Darden Graduate Business School Foundation, Charlottesville, Virginia.

has “expert” knowledge to deal with his or her customers’ specific needs (see bottom chart, right).

Geographic. In this arrangement work is divided by location. Geo-graphic structures cut across customers and products. Regional offices are established to manage the business. This is especially true of international businesses, where each country’s office would adopt its own structure (see top chart, page 144).

Divisional. Divisions are independent businesses operating under the umbrella of a parent corporation. Unlike the previous four struc-tures, divisions run somewhat autonomously. They do it all them-selves, from marketing to buying raw materials. However, most divisions use the parent company for financing. For example, the Philip Morris Companies includes Miller Brewing, Kraft Foods, and Philip Morris Tobacco. These three businesses are centrally owned but separately operated. Within each of the divisions there may be other organizational substructures. For example, Miller may use the geographic form and Kraft Foods may use a product structure (see bottom chart, left).

Matrix. The matrix structure departs from the principle of unity of command: only one boss for each employee. Here there are two or more lines of authority. The matrix is common in businesses in-volved in large, complex projects that require highly specialized skills. In this structure, both the product and the functional

struc-tures coexist. Employees report to both a project manager in charge of their assigned product and a functional manager who controls specific activities such as manufacturing, finance, and marketing. As you might expect, this organizational form can be confusing. It re-quires a staff that is flexible and professional. The defense and com-puter industries often opt for the matrix structure to handle large development projects (see top chart, page 146).

Amorphous. This is my personal favorite. The amorphous structure is no formal structure at all. It’s the free bird. In these companies highly motivated and productive managers create and dissolve re-porting relationships as the task at hand requires. In these compa-nies, the structure incrementally grows as events dictate. Digital Equipment Corporation is said to have grown with an amorphous structure (see bottom chart, page 146).

Hybrid. These entities are composed of a mix of operational struc-tures. Most companies fall into this category. General Electric has a divisional corporate structure that includes the NBC television net-work, GE Lighting, GE Capital, and GE Aerospace. But within each division, there are geographic manufacturing organizations, matrix research staffs, and customer-sales-grouped organizations. In the example on page 147 a single business is organized in a functional/

product hybrid. The brand managers control their products and marketing, but they do not have complete control over the financing or operations of the business.

The choice of structure dramatically affects the operations of a company. There needs to be a fit between the business activities re-quired and the corporate apparatus set up to produce and deliver the service.

Managers should select a structure that reflects their goals and strategy. The structure that is set up enables individuals to interact in ways that will best achieve goals. Informal reporting relationships form spontaneously, and these fail to be represented in the organiza-tional charts kept by the personnel department. Recognizing both

the formal and informal structures is crucial in executing a success-ful action plan.

An important issue related to reporting relationships is the span of control. The span describes the number of people who report to a manager. During restructuring, downsizing, and recessions this topic becomes popular. Using a decreased span of control, large corpora-tions often fire middle-manager MBAs. The remaining managers have more staff. If a sales organization changes from a policy of one regional manager for every three regions to one for every four, that displaces 25 percent of the regional managers. MBAs call these lay-offs a reduction in force (RIF), demassing, or restructuring. It’s a nice, antiseptic way for managers to describe the firing of many peo-ple. Span-of-control policies are powerful organizational tools.

Systems. Each organization develops systems for allocating, con-trolling, and monitoring money, things, and people. Systems also

perform informational activities by gathering information and chan-neling it to interested users. Systems fall into one of six categories:

Money Allocation, Control, and Monitoring —Accounting, investment, and budgeting systems

Object Allocation, Control, and Monitoring — Inventory and production systems

People Allocation, Control, and Monitoring — Human resource planning, employee data and appraisals

Future Anticipation — Strategic planning, marketing-sales planning, business development functions

People Reward and Incentives — Compensation schemes, bonus plans, profit-sharing plans

Integrative — Mixes of the first five. In well-managed companies, integrated systems forecast sales, which in turn dictates production schedules required to meet that need.

It is crucial to understand the systems of an organization, be-cause they are the tools for change. Systems provide both a means and, at times, a barrier to corporate change.

Climate. This is a nebulous term that refers to the emotional state of an organization’s members. Many companies hire expensive con-sultants to perform satisfaction studies to determine the “climate”

of their organization so that improvements can be made. In service industries where people are the most valuable assets, such as law firms, investment banking houses, and consulting practices, the climate of the firm plays an important role in determining service quality.

Culture. This is another hazy term. Culture is the mix of behaviors, thoughts, beliefs, symbols, and artifacts that are conveyed to people throughout an organization over time. It may extend to such silly things as an unwritten rule that all men must wear white pinpoint oxford shirts or corporate lapel pins. Culture may include a belief

about desired employee conduct. “Senior executives must always work past six o’clock.” “It’s important to look busy at all times.” A main criterion for recruiting is often the perceived “fit” of inter-viewees with the organization. If a person does not appear to “fit”

into the corporate culture, then he or she in many recruiters’ eyes will probably not be an effective employee.

The six elements of an organization (strategy, policies, structure, systems, climate, and culture) dynamically affect one another. Each element interacts with the environment as a business strives toward its goals. The problem definition/action planning process requires that a manager look at all six elements of the organization model to determine which action levers will exist to implement positive change. If the environment changes, the organizational elements must adapt. MBAs like to refer to companies that can change as learning organizations.

Organizations that are stuck in the same old pattern of thinking and acting are said to be trapped by their paradigms or mind-set.

High-priced consultants often counsel stagnant companies on how to break their old paradigms so that they can change and succeed.

Use the word paradigm several times in a conversation tomorrow, and you’re one step closer to becoming a Ten-Day MBA.