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2 Organization structures: choice

and leadership

Introduction

Organization structures allow us to organize and deploy resources. They allow us
to define job activities, responsibilities and accountabilities. They provide for
decision making and information flows. They help to establish the power struc-
ture for the organization. They influence the identity and corporate image of the
organization. They establish people’s attitudes, at least in part.
The weekend before writing this chapter for the first edition of this book I was
running a management development workshop for a large investment bank. The
bank had made losses but to no greater extent than other, competing institu-
tions. Yet the financial press had been critical of it and not of others. Moreover,
its parent institution (a large bank which wholly owned the investment bank)
had replaced a number of key senior managers and was engaged in a review of
the investment bank. Meanwhile, the attitudes of staff, middle and senior man-
agers were very problematic, not surprisingly.
Why was that? Well, there had been the stock market fall in autumn 1987. But
the bank’s competitors had experienced the same fall. Much discussion and debate
at the workshop was concluded with the view that the strategy and structure devel-

oped by the investment bank when it was founded was unclear. Many grand state-
ments of objectives had been made but it was much less clear whether the structure
established provided the right balance of information, power and resources to sup-
port the various activities within the organization in achieving those objectives.
Moreover, it was felt that the main deficiency had been in professional manage-
ment. There had been over-reliance on ‘market makers’. Such people may well be
able to exploit market opportunities but had they the skill to create and sustain a
large investment bank? Some of their main competitors had been managed more
closely by parent organizations, they argued, giving them the advantages of both
professional management and ‘market makers’; a better balance had been struck
between control from the ‘parent’ and autonomy of the subsidiary.
Was the structure of the investment bank appropriate to the tasks and oppor-
tunities it faced? Was the relationship and structure between it and the ‘parent’
appropriate? To what extent had the weaknesses in organizational structure left
it vulnerable to the ‘autumn crash’? To what extent had weaknesses of strategy,

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