Page 30 - Managing Change in Organizations

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Management structures and management in action
structure and control, the impact of the ‘crash’ and subsequent losses under-
mined the confidence of employees, including senior management? To what
extent had its corporate image been ‘dented’, leaving it open to the attention of
the financial press? Well, we cannot answer all these questions here, much as the
managers in the workshop could only debate them without drawing final con-
clusions. However, one thing is clear. Organizational structures can be an influ-
ential element in whether or not an organization can be effective.

Management structures and management in action

It is conventional to establish and describe various management structures. Broadly
speaking there are six alternative ‘model’ structures:
1 The simple or entrepreneurial structure.
2 The functional structure.
3 The product structure.
4 The divisional structure.
5 The matrix structure.
6 The federal structure.
However, we shall see that it is not as simple as this; nevertheless let us quickly
review these six structures.

The entrepreneurial structure

This is the simplest of these model structures. Everything typically depends on
the entrepreneur or owner of the business. They make the decisions. They under-
take much of the work. Other employees are taken on to carry out specific tasks.
Little or no identifiable departmental structuring exists. These are flexible organ-
izations. Trading companies are often structured in this flexible way. Partnerships
are typically a variant of this structure.

Growth and geographical dispersion, and the need for outside investment, can
create pressures to change from this structure. For example, in the property industry
many estate agency partnerships have either been acquired by financial institu-
tions or, having generated internal growth, have established divisional structures.
Increased competition and, more importantly, business opportunity are creating
the pressure for change. The managing director of a holding company now owning
some 300 estate agency outlets, organized into geographical divisions, recently
made two compelling points about this industry. First, for every £1 profit he could
make selling property in the domestic market he could make £7 if he could sell an
endowment policy linked to a mortgage. This opportunity was attracting financial
institutions into the market. Second, the public image of estate agents was low.
Organizing the industry could help to improve the service it provided by improved
information provision to clients. It might also allow the industry to improve its
image by developing and enforcing codes of practice. Whatever the truth of these
predictions, the pressures for change are self-evident.

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