Page 32 - Managing Change in Organizations

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Management structures and management in action
to ignore broader matters and corporate planning or they tend to ignore the oper-
ational matters, creating a managerial ‘vacuum’ within which coordination may
become difficult. Divisionalization involves breaking the organization down into
relatively autonomous units called divisions. Each division might serve a particular
product or a particular market; each will have its own divisional chief executive and
management committee or board; each might be organized on functional, product
or even matrix lines (see below); each may have a different structure.
This structure creates the following four advantages:
1 Cost and profit performance are matters for the divisional managers. The
group chief executive need not be concerned with these issues ordinarily.
2 The main functions of a group are overall financial planning and manage-
ment, strategic planning, business development and management develop-
ment. However, clearly, divisional managers need to be involved and much
care needs to be given to establishing the involvement of the divisions.
Various options are feasible.
3 Each division is free to respond to the demands of its own markets within a
framework created by overall strategic plans and budgets.
4 This structure allows accountability to be ‘pushed’ down the organization, pro-
viding a balance between corporate development and control and local, mar-
ket autonomy. However, striking the balance can be difficult in practice.

The matrix structure

The various structures I have described are attempts to combine market and func-
tional focus to organizational work. The matrix structure is one in which both foci
are given importance throughout the organizational structure. Indeed, the struc-
ture gives each equal importance. However, beware: as we shall see, structure is
not everything. Matrix structures are often found on large construction, aerospace
or computer software development projects. Where an organization deals with
more than one complex project there is a need to coordinate and develop project
and various specialist activities. As the demand for various specialist inputs is vari-

able over the life of a product we need a structure which promotes both effective
deployment on a project when needed and adaptability over time so that
resources can be easily switched between projects. The matrix structure identifies
project management structures, accountable for the project, and functional struc-
tures, accountable for each discipline, say engineering, operations and so on.
Matrix structures have three advantages:
1 They allow for the development of cohesive and effective teams of specialists
working towards the objectives of a key project.
2 They provide for the professional and career development of specialist staff.
3 They provide for the flexible use of specialist staff.
However, the difficulty of handling a matrix structure can lie in the problem of
reconciling the need for flexibility with the need for project coordination and
control. This reconciliation implies good working relationships between project
and functional management which may, in practice, be difficult to establish.

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