week-6
What Is Organizational Structure?
Identify the six elements of an organization’s structure.
An organizational structure defines how job tasks are formally divided, grouped, and coordinated. Managers need to address six key elements when they design their organization’s structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization.2 Exhibit 15-1 presents each of these elements as answers to an important structural question, and the following sections describe them.
organizational structure
The way in which job tasks are formally divided, grouped, and coordinated.
Work Specialization
Early in the twentieth century, Henry Ford became rich by building automobiles on an assembly line. Every Ford worker was assigned a specific, repetitive task such as putting on the right front wheel or installing the right front door. By dividing jobs into small standardized tasks that could be performed over and over, Ford was able to produce a car every 10 seconds, using employees who had relatively limited skills.
Ford demonstrated that work can be performed more efficiently if employees are allowed to specialize. Today, we use the term work specialization, or division of labor, to describe the degree to which activities in the organization are divided into separate jobs. The essence of work specialization is to divide a job into a number of steps, each completed by a separate individual. In essence, individuals specialize in doing part of an activity rather than the entirety.
work specialization
The degree to which tasks in an organization are subdivided into separate jobs.
The Key Question The Answer Is Provided by
1. To what degree are activities subdivided Work into separate jobs? specialization
2. On what basis will jobs be grouped together? Departmentalization
3. To whom do individuals and groups report? Chain of command
4. How many individuals can a manager efficiently and effectively direct? Span of control
5. Where does decision-making authority lie? Centralization and decentralization
6. To what degree will there be rules and regulations to direct employees and managers? Formalization
Exhibit 15-1
Key Design Questions and Answers for Designing the Proper Organizational Structure
By the late 1940s, most manufacturing jobs in industrialized countries featured high work specialization. Because not all employees in an organization have the same skills, management saw specialization as a means of making the most efficient use of its employees’ skills and even successfully improving them through repetition. Less time is spent in changing tasks, putting away tools and equipment from a prior step, and getting ready for another. Equally important, it’s easier and less costly to find and train workers to do specific and repetitive tasks, especially in highly sophisticated and complex operations. Could Cessna produce one Citation jet a year if one person had to build the entire plane alone? Not likely! Finally, work specialization increases efficiency and productivity by encouraging the creation of special inventions and machinery.
Thus, for much of the first half of the twentieth century, managers viewed work specialization as an unending source of increased productivity. And they were probably right. When specialization was not widely practiced, its introduction almost always generated higher productivity. By the 1960s, it increasingly seemed a good thing could be carried too far. Human diseconomies from specialization began to surface in the form of boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover, which more than offset the economic advantages (see Exhibit 15-2). Managers could increase productivity now by enlarging, rather than narrowing, the scope of job activities. Giving employees a variety of activities to do, allowing them to do a whole and complete job, and putting them into teams with interchangeable skills often achieved significantly higher output, with increased employee satisfaction.
Most managers today recognize the economies specialization provides in certain jobs and the problems when it’s carried too far. High work specialization helps McDonald’s make and sell hamburgers and fries efficiently and aids medical specialists in most health maintenance organizations. Amazon’s Mechanical Turk program, TopCoder, and others like it have facilitated a new trend in microspecialization in which extremely small pieces of programming, data processing, or evaluation tasks are delegated to a global network of individuals by a program manager who then assembles the results.3 For example, a manager who has a complex but routine computer program to write might send a request for specific subcomponents of the code to be written and tested by dozens of subcontracted individuals in the network (which spans the entire globe), enabling the project to be completed far more quickly than if a single programmer were writing the parts. This emerging trend suggests there still may be advantages to be had in specialization, particularly for offices where job sharing and part time work are prevalent.4
Exhibit 15-2
Economies and Diseconomies of Work Specialization
Wherever job roles can be broken down into specific tasks or projects, specialization is possible. This opens the potential for employers to use online platforms to assign multiple workers to tasks from a broader functional role like marketing.5 Thus, whereas specialization of yesteryear focused on breaking manufacturing tasks into specific duties within the same plant, today’s specialization breaks complex tasks into specific elements by technology, by expertise, and often globally. Yet the core principle is the same.
Departmentalization
Once jobs have been divided through work specialization, they must be grouped so common tasks can be coordinated. The basis by which jobs are grouped is called departmentalization .
departmentalization
The basis by which jobs in an organization are grouped together.
One of the most popular ways to group activities is by functions performed. A manufacturing manager might organize a plant into engineering, accounting, manufacturing, personnel, and supply specialists departments. A hospital might have departments devoted to research, surgery, intensive care, accounting, and so forth. A professional football franchise might have departments entitled player personnel, ticket sales, and travel and accommodations. The major advantage of this type of functional departmentalization is efficiencies gained from putting like specialists together.
We can also departmentalize jobs by the type of product or service the organization produces. Procter & Gamble places each major product—such as Tide, Pampers, Charmin, and Pringles—under an executive who has complete global responsibility for it. The major advantage here is increased accountability for performance because all activities related to a specific product or service are under the direction of a single manager.
When a firm is departmentalized on the basis of geography, or territory, the sales function, for instance, may have western, southern, midwestern, and eastern regions, each, in effect, a department organized around geography. This form is valuable when an organization’s customers are scattered over a large geographic area and have similar needs based on their location. Toyota recently changed its management structure into geographic regions “so that they may develop and deliver ever better products,” said CEO Akio Toyoda.6
Photo 15-1 Departmentalization by four customer segments—consumers, software developers, small businesses, and large corporations—helps Microsoft better understand and respond to each group’s needs. Products and services Microsoft designs for consumers include Bing, Windows, Xbox, Surface, and Skype.
Source: AP Photo/Nell Redmond.
Process departmentalization works for processing customers as well as products. If you’ve ever been to a state motor vehicle office to get a driver’s license, you probably went through several departments before receiving your license. In one typical state, applicants go through three steps, each handled by a separate department: (1) validation by the motor vehicles division, (2) processing by the licensing department, and (3) payment collection by the treasury department.
A final category of departmentalization uses the particular type of customer the organization seeks to reach. Microsoft, for example, is organized around four customer markets: consumers, large corporations, software developers, and small businesses. Customers in each department have a common set of problems and needs best met by having specialists for each.
Chain of Command
While the chain of command was once a basic cornerstone in the design of organizations, it has far less importance today.7 But contemporary managers should still consider its implications, particularly for industries that deal with potential life-or-death situations. The chain of command is an unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.
chain of command
The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.
We can’t discuss the chain of command without also discussing authority and unity of command. Authority refers to the rights inherent in a managerial position to give orders and expect them to be obeyed. To facilitate coordination, each managerial position is given a place in the chain of command, and each manager is given a degree of authority in order to meet his or her responsibilities. The principle of unity of command helps preserve the concept of an unbroken line of authority. It says a person should have one and only one superior to whom he or she is directly responsible. If the unity of command is broken, an employee might have to cope with conflicting demands or priorities from several superiors, as is often the case in organization charts’ dotted-line reporting relationships.
authority
The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.
unity of command
The idea that a subordinate should have only one superior to whom he or she is directly responsible.
Times change, and so do the basic tenets of organizational design. A low-level employee today can access information in seconds that was available only to top managers a generation ago. Operating employees are empowered to make decisions previously reserved for management. Add the popularity of self-managed and cross-functional teams as well as the creation of new structural designs that include multiple bosses, and you can see why authority and unity of command may appear to hold less relevance. Many organizations still find they can be most productive by enforcing the chain of command. Indeed, one survey of more than 1,000 managers found that 59 percent of them agreed with the statement, “There is an imaginary line in my company’s organizational chart. Strategy is created by people above this line, while strategy is executed by people below the line.”8 However, this same survey found that lower-level employees’ buy-in to the organization’s strategy was inhibited by their reliance on the hierarchy for decision making.
Span of Control
How many employees can a manager efficiently and effectively direct? This question of span of control is important because it largely determines the number of levels and managers an organization has. All things being equal, the wider or larger the span, the more efficient the organization.
span of control
The number of subordinates a manager can efficiently and effectively direct.
Exhibit 15-3
Contrasting Spans of Control
Assume two organizations each have about 4,100 operative-level employees. One has a uniform span of four and the other a span of eight. As Exhibit 15-3 illustrates, the wider span will have two fewer levels and approximately 800 fewer managers. If the average manager makes $50,000 a year, the wider span will save $40 million a year in management salaries! Obviously, wider spans are more efficient in terms of cost. However, at some point when supervisors no longer have time to provide the necessary leadership and support, they reduce effectiveness and employee performance suffers.
Narrow or small spans have their advocates. By keeping the span of control to five or six employees, a manager can maintain close control.9 But narrow spans have three major drawbacks. First, they’re expensive because they add levels of management. Second, they make vertical communication in the organization more complex. The added levels of hierarchy slow down decision making and tend to isolate upper management. Third, narrow spans encourage overly tight supervision and discourage employee autonomy.
The trend in recent years has been toward wider spans of control. They’re consistent with firms’ efforts to reduce costs, cut overhead, speed decision making, increase flexibility, get closer to customers, and empower employees. However, to ensure performance doesn’t suffer because of these wider spans, organizations have been investing heavily in employee training. Managers recognize they can handle a wider span best when employees know their jobs inside and out or can turn to co-workers when they have questions.
Centralization and Decentralization
Centralization refers to the degree to which decision making is concentrated at a single point in the organization. In centralized organizations, top managers make all the decisions, and lower-level managers merely carry out their directives. In organizations at the other extreme, decentralized decision making is pushed down to the managers closest to the action or even to work groups
centralization
The degree to which decision making is concentrated at a single point in an organization.
The concept of centralization includes only formal authority—that is, the rights inherent in a position. An organization characterized by centralization is inherently different structurally from one that’s decentralized. A decentralized organization can act more quickly to solve problems, more people provide input into decisions, and employees are less likely to feel alienated from those who make decisions that affect their work lives. Recent research indicates the effects of centralization and decentralization can be predicted: Centralized organizations are better for avoiding commission errors (bad choices), while decentralized organizations are better for avoiding omission errors (lost opportunities).10
Management efforts to make organizations more flexible and responsive have produced a recent trend toward decentralized decision making by lower-level managers, who are closer to the action and typically have more detailed knowledge about problems than top managers. Sears and JCPenney have given their store managers considerably more discretion in choosing what merchandise to stock. This allows those stores to compete more effectively against local merchants. Similarly, when Procter & Gamble empowered small groups of employees to make many decisions about new-product development independent of the usual hierarchy, it was able to rapidly increase the proportion of new products ready for market.11 Research investigating a large number of Finnish organizations demonstrated that companies with decentralized research and development offices in multiple locations were better at producing innovation than companies that centralized all research and development in a single office.12
Decentralization is often necessary for companies with offshore sites because localized decision making is needed to respond to each region’s profit opportunities, client base, and specific laws, while centralized oversight is needed to hold regional managers accountable. Failure to successfully balance these priorities can harm not only the company, but also its relationships with foreign governments, as in the groundbreaking 2013 case brought by Argentina’s government against Britain’s HSBC Holdings bank for wrongdoing at its Argentina subsidiary. If the charges in the case prove correct, the local branch aided tax evasion and money laundering through phantom accounts at the local subsidiary.13 Perhaps this is a situation in which tighter corporate oversight could have made this impossible.
How Willing Am I to Delegate?
In the Self-Assessment Library (available in MyManagementLab), take assessment III.A.2 (How Willing Am I to Delegate?).
Formalization
Formalization refers to the degree to which jobs within the organization are standardized. If a job is highly formalized, the incumbent has a minimal amount of discretion over what to do and when and how to do it. Employees can be expected always to handle the same input in exactly the same way, resulting in a consistent and uniform output. There are explicit job descriptions, lots of organizational rules, and clearly defined procedures covering work processes in organizations in which there is high formalization. Where formalization is low, job behaviors are relatively unprogrammed, and employees have a great deal of freedom to exercise discretion in their work. Formalization not only eliminates the possibility of employees engaging in alternative behaviors, but even removes the need for employees to consider alternatives.
formalization
The degree to which jobs within an organization are standardized.
The degree of formalization can vary widely between and within organizations. Publishing representatives who call on college professors to inform them of their company’s new publications have a great deal of freedom in their jobs. They have only a general sales pitch, which they tailor as needed, and rules and procedures governing their behavior may be little more than the requirement to submit a weekly sales report and suggestions on what to emphasize about forthcoming titles. At the other extreme, clerical and editorial employees in the same publishing houses may need to be at their desks by 8:00 a.m. and follow a set of precise procedures dictated by management. Recent research from 94 high-technology Chinese firms showed that formalization is a detriment to team flexibility in decentralized organization structures, suggesting that formalization does not work as well where duties are inherently interactive, or where there is a need to be flexible and innovative.14
Common Organizational Designs
Identify the characteristics of a bureaucracy.
We now turn to three of the more common organizational designs: the simple structure, the bureaucracy, and the matrix structure.
The Simple Structure
What do a small retail store, an electronics firm run by a hard-driving entrepreneur, and an airline’s “war room” in the midst of a pilot’s strike have in common? They probably all use the simple structure.
simple structure
An organization structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.
We can think of the simple structure in terms of what it is not rather than what it is. The simple structure is not elaborate.15 It has a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization. It is a “flat” organization; it usually has only two or three vertical levels, a loose body of employees, and one individual in whom the decision-making authority is centralized.
Most companies start as a simple structure, and many innovative technology-based firms with short expected lifespans like cell phone app development firms remain compact by design.16 The simple structure is most widely adopted in small businesses in which the manager and owner are one and the same. Exhibit 15-4 is an organization chart for a retail men’s store owned and managed by Jack Gold. Jack employs five full-time salespeople, a cashier, and extra workers for weekends and holidays, but he “runs the show.” Though he is typical, large companies in times of crisis often simplify their structures as a means of focusing their resources. When Anne Mulcahy took over as CEO at Xerox, its product mix and management structure were overly complex. She simplified both, cutting corporate overhead by 26 percent. “It’s a case of placing your bets in a few areas,” she said.17
Exhibit 15-4
A Simple Structure (Jack Gold’s Men’s Store)
The strength of the simple structure lies in its simplicity. It’s fast, flexible, inexpensive to operate, and accountability is clear. One major weakness is that it becomes increasingly inadequate as an organization grows because its low formalization and high centralization tend to create information overload at the top. As size increases, decision making typically becomes slower and can eventually come to a standstill as the single executive tries to continue making all the decisions. This proves the undoing of many small businesses. If the structure isn’t changed and made more elaborate, the firm often loses momentum and can eventually fail. The simple structure’s other weakness is that it’s risky—everything depends on one person. One illness can literally destroy the organization’s information and decision-making center.
The Bureaucracy
Standardization! That’s the key concept that underlies all bureaucracies. Consider the bank where you keep your checking account; the department store where you buy clothes; or the government offices that collect your taxes, enforce health regulations, or provide local fire protection. They all rely on standardized work processes for coordination and control.
The bureaucracy is characterized by highly routine operating tasks achieved through specialization, strictly formalized rules and regulations, tasks grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command. Bureaucracy is a dirty word in many people’s minds. However, it does have advantages. Its primary strength is its ability to perform standardized activities in a highly efficient manner. Putting like specialties together in functional departments results in economies of scale, minimum duplication of people and equipment, and employees who can speak “the same language” among their peers. Bureaucracies can get by with less talented—and hence less costly—middle- and lower-level managers because rules and regulations substitute for managerial discretion. Standardized operations and high formalization allow decision making to be centralized. There is little need for innovative and experienced decision makers below the level of senior executives.
bureaucracy
An organization structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.
Listen in on a dialogue among four executives in one company: “You know, nothing happens in this place until we produce something,” said the production executive. “Wrong,” commented the research and development manager. “Nothing happens until we design something!” “What are you talking about?” asked the marketing executive. “Nothing happens here until we sell something!” The exasperated accounting manager responded, “It doesn’t matter what you produce, design, or sell. No one knows what happens until we tally up the results!” This conversation highlights that bureaucratic specialization can create conflicts in which functional-unit goals override the overall goals of the organization.
The other major weakness of a bureaucracy is something we’ve all witnessed: obsessive concern with following the rules. When cases don’t precisely fit the rules, there is no room for modification. The bureaucracy is efficient only as long as employees confront familiar problems with programmed decision rules.
The Matrix Structure
Describe a matrix organization.
You’ll find the matrix structure in advertising agencies, aerospace firms, research and development laboratories, construction companies, hospitals, government agencies, universities, management consulting firms, and entertainment companies.18 It combines two forms of departmentalization: functional and product. Companies that use matrix-like structures include ABB, Boeing, BMW, IBM, and P&G.
matrix structure
An organization structure that creates dual lines of authority and combines functional and product departmentalization.
Photo 15-2 Hospitals benefit from standardized work processes and procedures common to a bureaucratic structure because they help employees perform their jobs efficiently. The nursing staff in the maternity ward of a New Zealand hospital shown here adhere to formal rules and regulations in providing care to moms and newborns.
Source: AFP/Getty Images.
The strength of functional departmentalization is putting like specialists together, which minimizes the number necessary while allowing the pooling and sharing of specialized resources across products. Its major disadvantage is the difficulty of coordinating the tasks of diverse functional specialists on time and within budget. Product departmentalization has exactly the opposite benefits and disadvantages. It facilitates coordination among specialties to achieve on-time completion and meet budget targets. It provides clear responsibility for all activities related to a product, but with duplication of activities and costs. The matrix attempts to gain the strengths of each while avoiding their weaknesses.
The most obvious structural characteristic of the matrix is that it breaks the unity-of-command concept. Employees in the matrix have two bosses: their functional department managers and their product managers.
Exhibit 15-5 shows the matrix form in a college of business administration. The academic departments of accounting, decision and information systems, marketing, and so forth are functional units. Overlaid on them are specific programs (that is, products). Thus, members in a matrix structure have a dual chain of command: to their functional department and to their product groups. A professor of accounting teaching an undergraduate course may report to the director of undergraduate programs as well as to the chairperson of the accounting department.
Exhibit 15-5
Matrix Structure for a College of Business Administration
The strength of the matrix is its ability to facilitate coordination when the organization has a number of complex and interdependent activities. Direct and frequent contacts between different specialties in the matrix can let information permeate the organization and more quickly reach the people who need it. The matrix reduces “bureaupathologies”—the dual lines of authority reduce people’s tendency to become so busy protecting their little worlds that the organization’s goals become secondary.19 A matrix also achieves economies of scale and facilitates the allocation of specialists by providing both the best resources and an effective way of ensuring their efficient deployment.
The major disadvantages of the matrix lie in the confusion it creates, its tendency to foster power struggles, and the stress it places on individuals.20 Without the unity-of-command concept, ambiguity about who reports to who is significantly increased and often leads to conflict. It’s not unusual for product managers to fight over getting the best specialists assigned to their products. Bureaucracy reduces the potential for power grabs by defining the rules of the game. When those rules are “up for grabs” in a matrix, power struggles between functional and product managers result. For individuals who desire security and absence from ambiguity, this work climate can be stressful. Reporting to more than one boss introduces role conflict, and unclear expectations introduce role ambiguity. The comfort of bureaucracy’s predictability is replaced by insecurity and stress.
New Design Options
Senior managers in a number of organizations have been developing new structural options with fewer layers of hierarchy and more emphasis on opening the boundaries of the organization.21 In this section, we describe two such designs: the virtual organization and the boundaryless organization. We’ll also discuss how efforts to reduce bureaucracy and increase strategic focus have made downsizing routine.
The Virtual Organization
Identify the characteristics of a virtual organization.
Why own when you can rent? That question captures the essence of the virtual organization (also sometimes called the network, or modular, organization), typically a small, core organization that outsources its major business functions.22 In structural terms, the virtual organization is highly centralized, with little or no departmentalization.
virtual organization
A small, core organization that outsources major business functions.
The prototype of the virtual structure is today’s movie-making organization. In Hollywood’s golden era, movies were made by huge, vertically integrated corporations. Studios such as MGM, Warner Brothers, and 20th Century Fox owned large movie lots and employed thousands of full-time specialists—set designers, camera people, film editors, directors, and even actors. Today, most movies are made by a collection of individuals and small companies who come together and make films project by project.23 This structural form allows each project to be staffed with the talent best suited to its demands, rather than just with the people employed by the studio. It minimizes bureaucratic overhead because there is no lasting organization to maintain. And it lessens long-term risks and their costs because there is no long term—a team is assembled for a finite period and then disbanded.
Philip Rosedale runs a virtual company called LoveMachine that lets employees send brief electronic messages to one another to acknowledge a job well done; the messages can be then used to facilitate company bonuses. The company has no full-time software development staff—instead, LoveMachine outsources assignments to freelancers who submit bids for projects like debugging software or designing new features. Programmers work from around the world, including Russia, India, Australia, and the United States.24 Similarly, Newman’s Own, the food products company founded by Paul Newman, sells hundreds of millions of dollars in food every year yet employs only 28 people. This is possible because it outsources almost everything: manufacturing, procurement, shipping, and quality control.
Exhibit 15-6 shows a virtual organization in which management outsources all the primary functions of the business. The core of the organization is a small group of executives whose job is to oversee directly any activities done in-house and to coordinate relationships with the other organizations that manufacture, distribute, and perform other crucial functions for the virtual organization. The dotted lines represent the relationships typically maintained under contracts. In essence, managers in virtual structures spend most of their time coordinating and controlling external relations, typically by way of computer network links.
Exhibit 15-6
A Virtual Organization
The major advantage of the virtual organization is its flexibility, which allows individuals with an innovative idea and little money to successfully compete against larger, more established organizations. Virtual organizations also save a great deal of money by eliminating permanent offices and hierarchical roles.25
Virtual organizations’ drawbacks have become increasingly clear as their popularity has grown.26 They are in a state of perpetual flux and reorganization, which means roles, goals, and responsibilities are unclear, setting the stage for political behavior. Cultural alignment and shared goals can be lost because of the low degree of interaction among members. Team members who are geographically dispersed and communicate infrequently find it difficult to share information and knowledge, which can limit innovation and slow response time. Sometimes, as with Lululemon’s shipments of unintentionally see-through yoga pants, the consequences of having geographically remote managers can be embarrassing and even financially harmful to the company.27 Ironically, some virtual organizations are less adaptable and innovative than those with well-established communication and collaboration networks. A leadership presence that reinforces the organization’s purpose and facilitates communication is thus especially valuable.
The Boundaryless Organization
Show why managers want to create boundaryless organizations.
General Electric’s former chairman, Jack Welch, coined the term boundaryless organization to describe what he wanted GE to become: a “family grocery store.”28 That is, in spite of GE’s monstrous size (2012 revenues were $144.8 billion),29 Welch wanted to eliminate vertical and horizontal boundaries within it and break down external barriers between the company and its customers and suppliers. The boundaryless organization seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. Although GE has not yet achieved this boundaryless state—and probably never will—it has made significant progress toward that end. So have other companies, such as Hewlett-Packard, AT&T, Motorola, and 3M. Let’s see what a boundaryless organization looks like and what some firms are doing to make it a reality.
boundaryless organization
An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.
glOBalization! The World Is My Corporate Headquarters
“ Going global” has meant many things in the evolution of worldwide business: sourcing materials from abroad, selling products overseas, and sending employees worldwide among them. In all earlier models, the common theme was that the corporate office is here, and global means out there. This thinking is changing. Enter the rise of office-less companies such as Automattic Inc., with 123 employees working in 26 countries, and Kalypso LP, with 150 employees around the globe. Neither company has a corporate headquarters or, truly, an office of any sort. The implications of this new understanding of what it means to be a global business are logistical, structural, and human.
On the logistics end of getting work done, office-less companies utilize every technology available, from Skype to blogs. Sensitive information is limited to phone discussions, though the difficulty of scheduling virtual meetings can be tricky across a number of time zones. When needed and at least annually, employees fly to designated intermediate spots for face-to-face time. Employees live where they want or where a strategic company presence for clients is desired.
The office-less company isn’t a good fit for every industry. The complete decentralization of the organization’s physical structure dictates a nonhierarchical organization chart. High employee autonomy and empowerment to make decisions means supervision must be very light in order for the company to compete and take advantage of business opportunities specific to one employee’s region, which the rest of the company cannot see.
With hiring possibilities worldwide, the company must also be clear about who can recruit new candidates and how to fit them into the organizational structure. Though the office-less company sounds like a good opportunity to maximize the worldwide talent pool, it presents challenges on a human level. According to Bill Poston, founding-partner of Kalypso, the office-less company doesn’t work for people “who are uncomfortable with ambiguity.” With the technology available, workers aren’t isolated, but the necessary lack of hierarchy means some workers may feel underappreciated. Strong hiring and orientation methods may counteract these challenges, however, and Automattic even has job candidates work on projects before being hired to determine whether they will work well in its office-less environment. Research supports the idea that testing candidates for their natural fit is preferable to subjecting employees to surveillance technology, whether keystroke counts or body sensors.
The office-less company is still a rarity in the world, but its popularity is growing. It’s very possible that truly global corporations of the future will need to consider a decentralization strategy that includes either many headquarters—or no headquarters at all.
Sources: T. Johns and L. Gratton, “The Third Wave of Virtual Work,” Harvard Business Review (January–February 2013), pp. 66–73; R. E. Silverman, “Step Into the Office-Less Company,” The Wall Street Journal (September 15, 2012), p. B6; and R. E. Silverman, “Tracking Sensors Invade the Workplace,” The Wall Street Journal (March 7, 2013), p. B1.
By removing vertical boundaries, management flattens the hierarchy and minimizes status and rank. Cross-hierarchical teams (which include top executives, middle managers, supervisors, and operative employees), participative decision-making practices, and the use of 360-degree performance appraisals (in which peers and others above and below the employee evaluate performance) are examples of what GE is doing to break down vertical boundaries. At Oticon A/S, a $160 million-per-year Danish hearing aid manufacturer, all traces of hierarchy have disappeared. Everyone works at uniform mobile workstations, and project teams, not functions or departments, coordinate work.
Functional departments create horizontal boundaries that stifle interaction among functions, product lines, and units. The way to reduce them is to replace functional departments with cross-functional teams and organize activities around processes. Xerox now develops new products through multidisciplinary teams that work on a single process instead of on narrow functional tasks. Some AT&T units prepare annual budgets based not on functions or departments but on processes, such as the maintenance of a worldwide telecommunications network. Another way to lower horizontal barriers is to rotate people through different functional areas using lateral transfers. This approach turns specialists into generalists.
Photo 15-3 BMW Group operates as a boundaryless organization in designing, developing, and producing its BMW, Rolls-Royce, and Mini cars. The automaker’s plant shown here in Jakarta, Indonesia, is part of BMW’s flexible global production network that responds quickly to fluctuations in customer demands and market requirements.
Source: Bloomberg via Getty Images.
When fully operational, the boundaryless organization also breaks down geographic barriers. Today, most large U.S. companies see themselves as global corporations; many, like Coca-Cola and McDonald’s, do as much business overseas as in the United States, and some struggle to incorporate geographic regions into their structure. In other cases, the boundaryless organization approach is need-based. Such is the case with Chinese companies, which have made 93 acquisitions in the oil and gas industry since 2008 to meet forecasted demand their resources in China cannot meet.30 The boundaryless organization provides one solution because it considers geography more of a tactical, logistical issue than a structural one. In short, the goal is to break down cultural barriers.
One way to do so is through strategic alliances.31 Firms such as NEC Corporation, Boeing, and Apple each have strategic alliances or joint partnerships with dozens of companies. These alliances blur the distinction between one organization and another as employees work on joint projects. Research from 119 international joint ventures (IJVs) in China indicates that these partnerships allow firms to learn from each other and obtain higher new product performance especially where a strong learning culture exists.32 And some companies allow customers to perform functions previously done by management. Some AT&T units receive bonuses based on customer evaluations of the teams that serve them. Finally, telecommuting is blurring organizational boundaries. The security analyst with Merrill Lynch who does her job from her ranch in Montana or the software designer in Boulder, Colorado, who works for a San Francisco firm are just two of the millions of workers operating outside the physical boundaries of their employers’ premises.
The Leaner Organization: Downsizing
The goal of the new organizational forms we’ve described is to improve agility by creating a lean, focused, and flexible organization. Downsizing is a systematic effort to make an organization leaner by closing locations, reducing staff, or selling off business units that don’t add value.
Source: Based on February 28, 2012 press release “Office Space per Worker Will Drop to 100 Square Feet or Below.” http://www.corenetglobal.org/files/home/info_center/global_press_releases/pdf/pr120227_officespace.pdf.
Photo 15-4 Naveen Selvadurai is the co-founder of Foursquare, a social networking service that transfers its inputs into outputs by using location-based mobile platform technology. Nonroutineness characterizes the work of employees at Foursquare, an organic organization that adapts quickly and flexibly to rapid changes in its environment.
Source: Park Jin Hee/Xinhua/Photoshot/Newscom.
The radical shrinking of Motorola Mobility in 2012 and 2013 is a case of downsizing to survive after its merger with Google. In response to declining demand for its smartphones, Motorola cut the workforce by 20 percent in August 2012. When the company posted a $350 million fourth-quarter loss in 2012, with a 40 percent revenue decline, it cut the workforce again, by 10 percent. Google calls this “rightsizing” and hopes a new Motorola phone will save the company from further layoffs.33
Other firms downsize to direct all their efforts toward their core competencies. American Express claims to have been doing this in a series of layoffs over more than a decade: 7,700 jobs in 2001; 6,500 jobs in 2002; 7,000 jobs (10 percent of its workforce) in 2008; 4,000 jobs in 2009. The 2013 cut of 5,400 jobs (8.5 percent of the remaining workforce) represents “its biggest retrenchment in a decade.” Each layoff has been accompanied by a restructuring to reflect changing customer preferences, away from personal customer service and toward online customer service. According to CEO Ken Chennault, these “restructuring initiatives” are “designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth . . . and to maintain marketing and promotion investments.”34
Some companies focus on lean management techniques to reduce bureaucracy and speed decision making. Starbucks adopted lean initiatives in 2009, which encompassed all levels of management and also focused on faster barista techniques and manufacturing processes. Customers have generally applauded the shortened wait times and product consistency at this well-run corporation. Starbucks continues to reap returns from its lean initiatives, posting notable revenue gains each quarter.35
Despite the advantages of being a lean organization, the impact of downsizing on organizational performance has been a source of controversy.36 Reducing the size of the workforce has an immediately positive outcome in the form of lower wage costs. Companies downsizing to improve strategic focus often see positive effects on stock prices after the announcement. A recent example of this is with Russia’s Gorky Automobile Factory (GAZ), which realized a profit for the first time in many years after President Bo Andersson fired 50,000 workers, half the workforce.37 On the other hand, among companies that only cut employees but don’t restructure, profits and stock prices usually decline. Part of the problem is the effect of downsizing on employee attitudes. Those who remain often feel worried about future layoffs and may be less committed to the organization.38 Stress reactions can lead to increased sickness absences, lower concentration on the job, and lower creativity. In companies that don’t invest much in their employees, downsizing can also lead to more voluntary turnover, so vital human capital is lost. The result is a company that is more anemic than lean.
Companies can reduce negative impacts by preparing in advance, thus alleviating some employee stress and strengthening support for the new direction.39 Here are some effective strategies for downsizing. Most are closely linked to the principles for organizational justice we’ve discussed previously:
Investment. Companies that downsize to focus on core competencies are more effective when they invest in high-involvement work practices afterward.
Communication. When employers make efforts to discuss downsizing with employees early, employees are less worried about the outcomes and feel the company is taking their perspective into account.
Participation. Employees worry less if they can participate in the process in some way. Voluntary early-retirement programs or severance packages can help achieve leanness without layoffs.
Assistance. Severance, extended health care benefits, and job search assistance demonstrate a company cares about its employees and honors their contributions.
In short, companies that make themselves lean can be more agile, efficient, and productive—but only if they make cuts carefully and help employees through the process.
An Ethical Choice Ethical Concerns of Deskless Workplaces
Once upon a time, students fresh from business schools couldn’t wait for that first cubicle to call home, mid-level managers aspired to an office of their own, and executives coveted the corner office on the top floor. These days, the walls are coming down. At online retailer Zappos, not even the CEO wants an office, and all 1,300 employees are welcome throughout the open spaces. Other firms like Google have followed the trend, giving rise to new workplace designs of public rooms with lounge areas and large, multiperson tables.
According to Edward Danyo, manager of workplace strategy at pharmaceuticals firm GlaxoSmithKline, shared environments create great work gains, including what he estimates is a 45 percent increase in the speed of decision making. But there are ethical concerns for the dismantling of the physical and mental organizational structure. Here are some questions for you to consider for managing employees in one of these workplaces of the future:
Where will confidential discussions take place? As a manager, you need to be able to address issues with your employees privately, and your employees likewise need to feel welcome to meet with you and human resource professionals privately. In some contemporary workplace designs, ad hoc conference rooms address the need for separate gatherings. This may not be optimal if the walls are made of glass, if your employees will feel stigmatized when called into a meeting room with you or a human resources professional, or if your employees become reluctant to approach human resources staff with issues. As a manager, you will need to be sensitive to employees’ concerns.
How can differences in personality traits be overcome? Just like in a middle-school cafeteria, employees high in extraversion will be more comfortable building collaborative relationships without assigned workspaces, while highly introverted individuals may be uncomfortable without an established office structure where they can get to know others over time. Your input on team building will be even more important to keep your projects moving forward.
How can personal privacy be maintained? Zappos gives employees personal lockers, asks employees to angle laptop screens away from neighbors, and tries to make open spaces more private by encouraging ear buds to create a sound barrier between working employees. It may be best to think of the deskless office as being as public as, for instance, a library. You will need to communicate the company’s expectations and protocol for reporting violations to your employees and respond to their concerns.
How can you assure your clients of confidentiality? Even walled, soundproof rooms for virtual or live meetings may not provide the desired level of security for clients who need to know their business will stay on a need-to-know basis. As a manager, you will need to help create an environment in which clients can trust that their interactions with your employees will be secure.
Where will electronic and paper files be stored, and how will access to them be limited? Cloud-based storage is common, and paper files are at the lowest levels ever in organizations, but security issues for each need to be considered in organizational design, and access needs to be assigned from the organizational chart. You will be responsible for knowing which of your employees has access to files in the cloud and physically.
How will expectations and accountabilities be enforced? In an environment without offices and sometimes without job titles, there is an even greater need for clearly assigned goals, roles, and expectations. Open, collaborative structures may foster the diffusion of responsibility we discussed as problems of groups and teams in Chapters 9 and 10 .
Sources: S. Henn, “‘Serendipitous Interaction’ Key to Tech Firms’s Workplace Design,” NPR (March 13, 2013), www.npr.org/blogs/alltechconsidered/2013/03/13/174195695/serendipitous-interaction-key-to-tech-firms-workplace-design; H. El Nasser, “What Office? Laptops are Workspace,” USA Today (June 6, 2012), pp. 1B–2B; R. W. Huppke, “Thinking Outside the Cubicle,” Chicago Tribune (October 29, 2012), pp. 2-1, 2-3; “Inside the New Deskless Office,” Forbes (July 16, 2012), p. 34; and E. Maltby, “My Space Is Our Space,” The Wall Street Journal (May 21, 2012), p. R9.
Why Do Structures Differ?
Demonstrate how organizational structures differ, and contrast mechanistic and organic structural models.
We’ve described organizational designs ranging from the highly structured bureaucracy to the amorphous boundaryless organization. The other designs we discussed exist somewhere in between.
Exhibit 15-7 recaps our discussions by presenting two extreme models of organizational design. One we’ll call the mechanistic model. It’s generally synonymous with the bureaucracy in that it has highly standardized processes for work, high formalization, and more managerial hierarchy. The other extreme, the organic model, looks a lot like the boundaryless organization. It’s flat, has fewer formal procedures for making decisions, has multiple decision makers, and favors flexible practices.40
mechanistic model
A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization.
organic model
A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.
Exhibit 15-7
Mechanistic versus Organic Models
With these two models in mind, let’s ask a few questions: Why are some organizations structured along more mechanistic lines whereas others follow organic characteristics? What forces influence the choice of design? In this section, we present the major causes or determinants of an organization’s structure.41
Organizational Strategy
Because structure is a means to achieve objectives, and objectives derive from the organization’s overall strategy, it’s only logical that structure should follow strategy. If management significantly changes the organization’s strategy, the structure must change to accommodate.42 Most current strategy frameworks focus on three strategy dimensions—innovation, cost minimization, and imitation—and the structural design that works best with each.43
To what degree does an organization introduce major new products or services? An innovation strategy strives to achieve meaningful and unique innovations. Obviously, not all firms pursue innovation. Apple and 3M do, but conservative retailer Marks & Spencer doesn’t. Innovative firms will use competitive pay and benefits to attract top candidates and motivate employees to take risks. Some degree of mechanistic structure can actually benefit innovation. Well-developed communication channels, policies for enhancing long-term commitment, and clear channels of authority all may make it easier for rapid changes to occur smoothly.
innovation strategy
A strategy that emphasizes the introduction of major new products and services.
An organization pursuing a cost-minimization strategy tightly controls costs, refrains from incurring unnecessary expenses, and cuts prices in selling a basic product. This describes the strategy pursued by Walmart and the makers of generic or store-label grocery products. Cost-minimizing organizations pursue fewer policies meant to develop commitment among their workforce.
cost-minimization strategy
A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting.
Organizations following an imitation strategy try to both minimize risk and maximize opportunity for profit, moving new products or entering new markets only after innovators have proven their viability. Mass-market fashion manufacturers that copy designer styles follow this strategy, as do firms such as Hewlett-Packard and Caterpillar. They follow smaller and more innovative competitors with superior products, but only after competitors have demonstrated the market is there. Italy’s Moleskine SpA, a small maker of fashionable notebooks, is another example of imitation strategy, but in the reverse; looking to open more retail shops around the world, it is employing the expansion strategies of larger, successful fashion companies Salvatore Ferragamo SpA and Brunello Cucinelli.44
imitation strategy
A strategy that seeks to move into new products or new markets only after their viability has already been proven.
Exhibit 15-8 describes the structural option that best matches each strategy. Innovators need the flexibility of the organic structure, whereas cost minimizers seek the efficiency and stability of the mechanistic structure. Imitators combine the two structures. They use a mechanistic structure to maintain tight controls and low costs in their current activities but create organic subunits in which to pursue new undertakings.
Strategy Structural Option
Innovation Organic: A loose structure; low specialization, low formalization, decentralized
Cost minimization Mechanistic: Tight control; extensive work specialization, high formalization, high centralization
Imitation Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings
Exhibit 15-8
The Strategy–Structure Relationship
Organization Size
An organization’s size significantly affects its structure. Organizations that employ 2,000 or more people tend to have more specialization, more departmentalization, more vertical levels, and more rules and regulations than do small organizations. However, size becomes less important as an organization expands. Why? At around 2,000 employees, an organization is already fairly mechanistic; 500 more employees won’t have much impact. But adding 500 employees to an organization of only 300 is likely to significantly shift it toward a more mechanistic structure.
Technology
Technology describes the way an organization transfers inputs into outputs. Every organization has at least one technology for converting financial, human, and physical resources into products or services. Ford Motor Company uses an assembly-line process to make its products. Colleges may use a number of instructional technologies—the ever-popular lecture method, case analysis, the experiential exercise, programmed learning, and online instruction and distance learning. Regardless, organizational structures adapt to their technology.
technology
The way in which an organization transfers its inputs into outputs.
Photo 15-5 It’s a common practice in China for managers in service businesses to gather employees before their workday and give them a pep talk and training. The barbershop employees shown here in Foshan accept the daily ritual because power distance is high in China, making workers tolerant of mechanistic structures.
Source: ChinaFotoPress/ZUMA Press/Newscom.
Numerous studies have examined the technology–structure relationship.45 What differentiates technologies is their degree of routineness. Routine activities are characterized by automated and standardized operations. Examples are injection-mold production of plastic knobs, automated transaction processing of sales transactions, and the printing and binding of this book. Nonroutine activities are customized and require frequent revision and updating. They include furniture restoring, custom shoemaking, genetic research, and the writing and editing of this book. In general, organizations engaged in nonroutine activities tend to prefer organic structures, while those performing routine activities prefer mechanistic structures.
Environment
An organization’s environment includes outside institutions or forces that can affect its performance, such as suppliers, customers, competitors, government regulatory agencies, and public pressure groups. Dynamic environments create significantly more uncertainty for managers than do static ones. To minimize uncertainty in key market arenas, managers may broaden their structure to sense and respond to threats. For example, most companies, including Pepsi and Southwest Airlines, have added social networking departments to counter negative information posted on blogs. Or companies may form strategic alliances, such as when Microsoft and Yahoo! joined forces to better compete with Google in the online search provider arena.
environment
Institutions or forces outside an organization that potentially affect the organization’s performance.
Any organization’s environment has three dimensions: capacity, volatility, and complexity.46 Capacity refers to the degree to which the environment can support growth. Rich and growing environments generate excess resources, which can buffer the organization in times of relative scarcity.
Volatility describes the degree of instability in the environment. A dynamic environment with a high degree of unpredictable change makes it difficult for management to make accurate predictions. Because information technology changes at such a rapid place, for instance, more organizations’ environments are becoming volatile.
Finally, complexity is the degree of heterogeneity and concentration among environmental elements. Simple environments—like the tobacco industry where the methods of production, competitive and regulatory pressures, and the like haven’t changed in quite some time—are homogeneous and concentrated. Environments characterized by heterogeneity and dispersion—like the broadband industry—are complex and diverse, with numerous competitors.
Exhibit 15-9 summarizes our definition of the environment along its three dimensions. The arrows indicate movement toward higher uncertainty. Thus, organizations that operate in environments characterized as scarce, dynamic, and complex face the greatest degree of uncertainty because they have high unpredictability, little room for error, and a diverse set of elements in the environment to monitor constantly.
Exhibit 15-9
Three-Dimensional Model of the Environment
Given this three-dimensional definition of environment, we can offer some general conclusions about environmental uncertainty and structural arrangements. The more scarce, dynamic, and complex the environment, the more organic a structure should be. The more abundant, stable, and simple the environment, the more the mechanistic structure will be preferred.
Organizational Designs and Employee Behavior
Analyze the behavioral implications of different organizational designs.
We opened this chapter by implying that an organization’s structure can have significant effects on its members. What might those effects be?
A review of the evidence leads to a pretty clear conclusion: You can’t generalize! Not everyone prefers the freedom and flexibility of organic structures. Different factors stand out in different structures as well. In highly formalized, heavily structured, mechanistic organizations, the level of fairness in formal policies and procedures is a very important predictor of satisfaction. In more personal, individually adaptive organic organizations, employees value interpersonal justice more.47 Some people are most productive and satisfied when work tasks are standardized and ambiguity minimized—that is, in mechanistic structures. So, any discussion of the effect of organizational design on employee behavior has to address individual differences. To do so, let’s consider employee preferences for work specialization, span of control, and centralization.48
Myth or Science? “Employees Can Work Just as Well from Home”
This statement is true, but not unequivocally. Employees who work from home even part of the time report they are happier, and as we saw in Chapter 3, happier employees are likely to be more productive than their dissatisfied counterparts. From an organization’s perspective, companies are realizing gains of 5 to 7 extra work hours a week for each employee working from home. There are also cost savings, from reduced overhead for office space and utilities to elimination of unproductive social time. Employers of a home-based workforce can establish work teams and organizational reporting relationships with little attention to office politics, opening the potential to more objectively assign roles and responsibilities. These may be some of the reasons organizations have increasingly endorsed the concept of telecommuting, to the point where 3.1 million U.S. employees are now company-employed to work from home.
Although we can all think of jobs that may never be conducive to working from home (such as many in the service industry), not all positions that could be based from home should be. Research indicates the success of a work-from-home position depends on the job’s structure even more than on its tasks. The amount of interdependence needed between employees within a team or in a reporting relationship sometimes requires epistemic interdependence, which is each employee’s ability to predict what other employees will do. Organization consultants pay attention to how employee roles relate in the architecture of the organization chart, realizing that intentional relationship building is key. Thus, while an employee may complete the tasks of a job well by working alone from home, the benefits of teamwork can be lost. We don’t yet fully understand the impact of working at a physical distance without sharing time or space with others, but it is perhaps the reason that Yahoo!, Best Buy, and other corporations are reining their employees back into the office.
The success of a work-from-home program depends on the individual, the job, and the culture of the organization. Work from home can be satisfying for employees and efficient for organizations, but we are learning that there are limits.
Sources: M. Mercer, “Shirk Work? Working at Home Can Mean Longer Hours,” TriCities.com (March 4, 2013), www.tricities.com/news/opinion_columns/article_d04355b8-83cb-11e2-bc31-0019bb30f31a.html; P. Puranam, M. Raveendran, and T. Knudsen, “Organization Design: The Epistemic Interdependence Perspective,” Academy of Management Review 37, no. 3 (2012), pp. 419–440; N. Shah, “More Americans Working Remotely,” The Wall Street Journal (March 6, 2013), p. A3; and R. E. Silverman and Q. Fottrell, “The Home Office in the Spotlight,” The Wall Street Journal (February 27, 2013), p. B6.
The evidence generally indicates that work specialization contributes to higher employee productivity—but at the price of reduced job satisfaction. However, work specialization is not an unending source of higher productivity. Problems start to surface, and productivity begins to suffer, when the human diseconomies of doing repetitive and narrow tasks overtake the economies of specialization. As the workforce has become more highly educated and desirous of jobs that are intrinsically rewarding, we seem to reach the point at which productivity begins to decline as a function of specialization more quickly than in the past. While decreased productivity often prompts companies to add oversight and inspection roles, the better answer may be to reorganize work functions and accountability.49
There is still a segment of the workforce that prefers the routine and repetitiveness of highly specialized jobs. Some individuals want work that makes minimal intellectual demands and provides the security of routine; for them, high work specialization is a source of job satisfaction. The question, of course, is whether they represent 2 percent of the workforce or 52 percent. Given that some self-selection operates in the choice of careers, we might conclude that negative behavioral outcomes from high specialization are most likely to surface in professional jobs occupied by individuals with high needs for personal growth and diversity.
It is probably safe to say no evidence supports a relationship between span of control and employee satisfaction or performance. Although it is intuitively attractive to argue that large spans might lead to higher employee performance because they provide more distant supervision and more opportunity for personal initiative, the research fails to support this notion. Some people like to be left alone; others prefer the security of a boss who is quickly available at all times. Consistent with several of the contingency theories of leadership discussed in Chapter 12, we would expect factors such as employees’ experiences and abilities and the degree of structure in their tasks to explain when wide or narrow spans of control are likely to contribute to their performance and job satisfaction. However, some evidence indicates that a manager’s job satisfaction increases as the number of employees supervised increases.
We find fairly strong evidence linking centralization and job satisfaction. In general, less centralized organizations have a greater amount of autonomy. And autonomy appears positively related to job satisfaction. But, again, while one employee may value freedom, another may find autonomous environments frustratingly ambiguous.
Our conclusion: To maximize employee performance and satisfaction, managers must take individual differences, such as experience, personality, and the work task, into account. Culture should factor in, too.
We can draw one obvious insight: other things equal, people don’t select employers randomly. They are attracted to, are selected by, and stay with organizations that suit their personal characteristics.50 Job candidates who prefer predictability are likely to seek out and take employment in mechanistic structures, and those who want autonomy are more likely to end up in an organic structure. Thus, the effect of structure on employee behavior is undoubtedly reduced when the selection process facilitates proper matching of individual characteristics with organizational characteristics. Furthermore, companies should strive to establish, promote, and maintain the unique identity of their structures since skilled employees may quit as a result of dramatic changes.51
Research suggests national culture influences the preference for structure.52 Organizations that operate with people from high power-distance cultures, such as Greece, France, and most of Latin America, find their employees are much more accepting of mechanistic structures than are employees from low power-distance countries. So consider cultural differences along with individual differences when predicting how structure will affect employee performance and satisfaction.
Finally, the changing landscape of organizational structure designs has implications for the individual progressing on a career path. Recent research interviews with managers in Japan, the United Kingdom, and the United States indicate that employees who have weathered downsizing and resulting hybrid organizational structures consider their future career prospects diminished. While this may or may not be true, it shows that organizational structure does affect the employee and thus must be carefully designed.53