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Chapter 2 • Systems Integration 39

Organization

Planning Organizing Staffing Directing Coordinating Reporting Budgeting

FIGURE 2-1 Functional Model of Organization (POSDCORB) Source: Adapted from
Bernard, C. (1938). The Functions of the Executive. Cambridge: Harvard University Press.

5
supervision, and administration starting in late 1930s. Over the next 50 years the terminology
of functions in organizations has changed, say from planning to management to strategy, but
the concept of categorizing complex activities into organized functions has remained for
control and coordination reasons. The current classification of organizations into divisions or
departments like Accounting, Human Resources, Marketing, Management, and others reflects
this evolution in organizations of breaking complex tasks into smaller manageable tasks that
could be assigned to a group of people who could then be held responsible.

Vertical Silos
In addition to the functional or horizontal division, organizations have also seen a vertical or
6
hierarchical layering of management functions. In the late 1960s, Robert Anthony, an organiza-
tional researcher, at Harvard University, found that organizations also divided responsibility in
hierarchical layers from strategic planning to management control and operation control. For
example, most organizations have their top-level management like CEOs and presidents to plan the
long-term strategy of organizations, whereas midlevel management (e.g., vice presidents or general
managers) focuses on tactical issues and the execution of organizational policy to ensure that the
company is accomplishing its strategic objectives. The lower-level management (e.g., supervisors)
task is to focus on the day-to-day operations of the company. This vertical categorization, even
though not discrete organizational functions, does involve a distinctive set of activities. The
functional silos typically follow the scientific model for business and usually have hierarchical or
multilayered reporting structures, formal leadership, management positions, or both with final
authority on decision making. In this traditional functional (or silo) organization, maintaining
command and control is usually critical for the overall functioning of the business organization.
Thus, when organizations get big and complex they tend to break functions into smaller
units and assign one or more staff the responsibility for these activities. This allows the organiza-
tion to manage complexity as well as the staff to specialize in those activities that enhance

5 Barnard, C. (1938). The Functions of the Executive. Cambridge: Harvard University Press.
6 Anthony, R. (1965). Planning and Control Systems: A Framework for Analysis. Boston, MA: Harvard University
Graduate School of Business Press.