Structural Assumptions

The central beliefs of the structural frame reflect confidence in rationality and faith that a suitable array of roles and responsibilities will minimize distracting personal static and maximize people's performance on the job. Where the human resource approach (to be discussed in Chapters 6 through 8) emphasizes dealing with issues by changing people (through coaching, training, rotation, promotion, or dismissal), the structural perspective argues for putting people in the right roles and relationships. Properly designed, these formal arrangements support and accommodate both collective goals and individual differences.

Six assumptions undergird the structural frame:

1. Organizations exist to achieve established goals and objectives and devise strategies to reach those goals.
2. Organizations increase efficiency and enhance performance through specialization and appropriate division of labor.
3. Suitable forms of coordination and control ensure that diverse efforts of individuals and units mesh.
4. Organizations work best when rationality prevails over personal agendas and extraneous pressures.
5. Effective structure fits an organization's current circumstances (including its strategy, technology, workforce, and environment).
6. When performance suffers from structural flaws, the remedy is problem solving and restructuring.

Origins of the Structural Perspective

The structural view has two principal intellectual roots. The first is the work of industrial analysts bent on designing organizations for maximum efficiency. The most prominent of these, Frederick W. Taylor (1911), was the father of time-and-motion studies; he founded an approach that he labeled “scientific management.” Taylor broke tasks into minute parts and retrained workers to get the most from each motion and moment spent at work. Other theorists who contributed to the scientific management approach (Fayol, [1919] 1949; Urwick, 1937; Gulick and Urwick, 1937) developed principles focused on specialization, span of control, authority, and delegation of responsibility.

A second pioneer of structural ideas was the German economist and sociologist Max Weber, who wrote around the beginning of the twentieth century. At the time, formal organization was a relatively new phenomenon. Patriarchy rather than rationality was still the primary organizing principle. A father figure—who ruled with almost unlimited authority and power—dominated patriarchal organizations. He could reward, punish, promote, or fire on personal whim. Seeing an evolution of new structural models in late-nineteenth-century Europe, Weber described “monocratic bureaucracy” as an ideal form that maximized efficiency and norms of rationality. His model outlined several major features that were relatively novel at the time, although they are commonplace now:

• A fixed division of labor
• A hierarchy of offices
• A set of rules governing performance
• A separation of personal from official property and rights
• The use of technical qualifications (not family ties or friendship) for selecting personnel
• Employment as primary occupation and long-term career (Weber, 1947)

After World War II, Blau and Scott (1962), Perrow (1986), Thompson (1967), Lawrence and Lorsch (1967), Hall (1963), and others rediscovered Weber's ideas. Their work inspired a substantial body of theory and research amplifying the bureaucratic model. They examined relationships among the elements of structure, looked closely at why organizations develop one structure over another, and analyzed the effects of structure on morale, productivity, and effectiveness.

Strategy

Strategy comes from a Greek word that originally referred to the art of military leaders. It was imported into the business context in the twentieth century as a way to talk about an organization's overall approach to goals and methods. Strategy has been defined in many ways. Mintzberg (1987), for example, offers five of them, all beginning with the letter P:

1. Plan: a conscious and intentional course of action.
2. Perspective: an organization's way of framing where it wants to go and how it intends to get there.
3. Pattern: a consistent pattern of decisions.
4. Position: the way an organization positions itself in relationship to its environment.
5. Ploy: a plan or decision whose purpose is to provoke a reaction from competitors.

Some of Mintzberg's Ps focus on thinking while others are more about action. All are elements of a coherent strategy. Roberts (2004) argues that the job of the general manager is to define a strategy that includes objectives, a statement of scope, a specification of the organization's competitive advantage, and the logic for how the organization will succeed. Structural logic dictates that an organization's success requires alignment of strategy, structure, and environment. But, as Chandler noted in 1962, “structure follows strategy.” A good strategy needs to be specific enough to provide direction but elastic enough to adapt to changing circumstances.

Eastman Kodak provides a classic case in point. Kodak developed a strategy that made it a dominant player in the film industry for many decades, but stayed with its approach too long and finally ended in bankruptcy. In 1880, George Eastman developed a formula for gelatin-based dry plates, the basis for the then nascent field of photography. For the next 125 years the company's strategy sought to capitalize on this technology by introducing products such as the Kodak Brownie camera, Kodachrome, the Kodak Instamatic camera, and gold standard motion picture film—as well as producing thousands of patents in related fields. Pursuing this strategy the company's performance soared. At its zenith, Kodak employed over 145,000 people and earned billions of dollars in sales (Brachmann, 2014). It was one of America's best-known and most-admired companies.

Threats to Kodak's film-based strategy surfaced as early as 1950 with the introduction of instant photography and the Polaroid camera. In the 1980s, Fujifilm, an upstart Japanese competitor, was able to mass produce film and sell it at a cheaper price to discount retailers like Walmart. Kodak couldn't compete and lost a large share of the film market (Brachmann, 2014).

The death knell for Kodak came in the midseventies with the invention of the digital camera. Ironically, it was invented in one of the company's labs by one of its own engineers. Upper management's reaction: “It's cute but don't tell anyone about it” (Chunka, 2012). Kodak's protection of its film-based strategy and inability to see that digital would capture the market led to its decline and eventual bankruptcy filing in January, 2012.

What kept Kodak from adapting to a changing world? The strategy led to an organizational structure that channeled the activities and thinking of top management in one primary direction: film! In that context, any effort to promote digital cameras required swimming upstream against a strong current.

A similar thing happened at Xerox. Xerox researchers had developed the concepts for the graphical user interface and mouse, but the company's structure and business model were built around photocopying, not computers. Steve Jobs at Apple and Bill Gates at Microsoft immediately saw the market potential that Xerox executives missed. Kodak and Xerox, like many other companies, were never able to capitalize on their own inventions because they fell outside the corporate strategy. Christensen (1997) calls it “the innovator's dilemma,” and notes that one reason firms get stuck in the past is that standard cost-benefit analysis usually tells them that they will get a better return by investing in the tried and true instead of something new and unproven. As at Kodak and Xerox, the game is usually lost before the numbers tell a different story.

Structural Forms and Functions

Structure provides the architecture for pursuing an organization's strategic goals. It is a blueprint for expectations and exchanges among internal players (executives, managers, employees) and external constituencies (such as customers, competitors, regulators, and clients). Like an animal's skeleton or a building's framework, structure both enhances and constrains what an organization can do. The alternative design possibilities are virtually infinite, limited only by human preferences and capacities, technological limits, and constraints in the surroundings.

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 loosely structured and encouraged wide participation in decision making. Centralized authority and a clear chain of command characterized the other. Moeller was surprised to find the opposite of what he expected: Faculty morale was higher in the district with a tighter structure. Teachers seemed to prefer clarity of expectations, roles, and lines of authority.

United Parcel Service, “Big Brown,” provides a contemporary example of the benefits of structural certainty and clarity. In the company's early days, UPS delivery employees were “scampering messenger boys” (Niemann, 2007). Since then, computer technology has curtailed employee discretion, and every step from pickup to delivery is highly programmed. Detailed instructions specify placement of packages on delivery trucks. Drivers follow computer-generated routes (which minimize mileage and left turns to save time and gas). Newly scheduled pickups automatically download into the nearest driver's route plan.

UPS calculates in advance the numbers of steps to your door. If a driver sees you while walking briskly to your door, you'll receive a friendly greeting. Look carefully and you'll probably notice the automated van lock the driver carries. 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 driver remarked to us with a smile, “We're happy robots.”

Do these examples prove that a tighter structure is better? Sometimes the opposite is true. 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 machines, those 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. The company has become an industry benchmark for high-performance premium cars, customized production, and savvy brand management” (Edmondson, 2006, p. 72. Copyright © 2006 McGraw-Hill Companies, Inc.).

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; Roberts, 2004). 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 structures that allow people to do their best:

CEOs often 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 after parceling out responsibilities (integration). Even in a group as small and intimate as a family, it is 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, they help to ensure predictability, uniformity, and reliability. If manufacturing standards, aircraft 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):

• Function: 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.
• Time: Units defined by when they do their work, as by shift (day, swing, or graveyard shift).
• Product: Groups organized by what they produce, such as detergent versus bar soap, wide-body versus narrow-body aircraft.
• Customer: 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.
• Place: Groupings around geography, such as regional or international offices in corporations and government agencies or neighborhood schools in different parts of a city.
• Process: Grouping by 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 challenges 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—individual units may perform splendidly in terms of their own goals, but the whole may add up to much less than the sum of the parts. This problem plagued Tom Ridge, who was named by President George W. Bush as the director of homeland security in the aftermath of the 9/11 terrorist attacks. His job was to resolve coordination failures among the government's many different units that dealt with security. But he was more salesman and preacher than boss, and 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.

As often happens, 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 security and away from its core mission of disaster relief. 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 system-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.

Vertical Coordination

With vertical coordination, higher levels coordinate and control the work of subordinates through authority, rules and policies, and planning and control systems.

Lateral Coordination

Behavior in organizations is often remarkably untouched by commands, rules, and systems. Lateral techniques—formal and informal meetings, task forces, coordinating roles, matrix structures, and networks—pop up to fill the gaps. Lateral forms are typically less formal and more flexible than authority-based systems and rules. They are often simpler and quicker as well.

Designing a Structure That Works

In designing a structure that works, managers have a set of options for dividing the work and coordinating multiple efforts. Structure needs to be designed with an eye toward strategy, the nature of the environment, the talents of the workforce, and the available resources (such as time, budget, and other contingencies). The options are summarized in Exhibit 3.1.

Conclusion

The structural frame looks beyond individuals to examine the social architecture of work. Though sometimes equated with red tape, mindless memos, and rigid bureaucrats, the approach is much broader and more subtle. It encompasses the freewheeling, loosely structured entrepreneurial task force as well as the more tightly controlled railway company or postal department. If structure is overlooked, an organization often misdirects energy and resources. It may, for example, waste time and money on massive training programs in a vain effort to solve problems that have much more to do with social architecture than with people's skills or attitudes. It may fire managers and bring in new ones, who then fall victim to the same structural flaws that doomed their predecessors.

At the heart of organizational design are the twin issues of differentiation and integration. Organizations divide work by creating a variety of specialized roles, functions, and units. They must then use both vertical and horizontal procedures to mesh the many elements together. There is no one best way to organize. The right structure depends on prevailing circumstances and considers an organization's goals, strategies, technology, people, and environment. Understanding the complexity and variety of design possibilities can help create formal prototypes that work for, rather than against, both people and collective purposes.