Doing the business

Roisin Ingle hears how efficient management structures are vital for success

The need for a solid structure within all business entities is ‘absolutely fundamental’, according to Ms Angela Tripoli, a lecturer in Business Administration at University College Dublin. ‘Organisational structure concerns who reports to whom in the company and how different elements are grouped together. A new company cannot go forward without this and estab­lished companies must ensure their structure reflects their target markets, goals and available technology.’

Depending on their size and needs there are several organisa­tional structures companies can choose from. Increasingly though, in the constantly evolving busi­ness environment, ‘many firms are opting for a kind of hybrid of all of them’.The most recognizable set up is called the functional structure where a fairly traditional chain of command (incorporating senior management, middle management and junior management) is put in place. The main benefit of this system is clear lines of com­munication from top to bottom but it is generally accepted that it can also be a bureaucratic set up which does not favour speedy deci­sion-making.

More and more companies are organizing themselves along product lines where companies have separate divisions according to the product that is being worked on. ‘In this case the focus is always on the product and how it can be improved.’The importance for multina­tional companies of a good geo­graphic structure, said Ms Tripoli, could be seen when one electrical products manufacturer produced an innovative rice cooker which made perfect rice - according to western standards. When they tried to sell it on the Asian market the product flopped because there were no country managers inform­ing them of the changes that would need to be made in order to satisfy this more demanding market.

The matrix structure first evolved during a project developed by NASA when they needed to pool together different skills from a variety of functional areas. Essentially the matrix structure organizes a business into project teams; led by project leaders, to carry out certain objectives Training is vitally important here in order to avoid conflict between the various members of the teams.During the 1980s a wave of restructuring went through industry around the globe. This process, known as delayering, saw a change in the traditional hierar­chical structures with layers of middle management being removed. This development was driven by new technology and by the need to reduce costs. The over­all result was organizations that were less bureaucratic.

The delayering process has run its course now. Among the trends that currently influence how a

company organizes itself is the move towards centralization and outsourcing. Restructuring has

evolved along with a more ‘customer centric’ approach that can be seen to good effect in the banks. They now categorize their customers and their complex borrow­ing needs into groups instead of along rigid product lines.

Another development can be seen in larger companies, which are giving their employees more freedom to innovate in order to maintain a competitive edge. Ms Julia MacLauchlan, Director of Microsoft’s European Product Development Centre in Dublin, said the leading software company had a very flat organizational structure. ‘There would not be more than around seven levels no between the average software tester and Bill Gates, ’ she said.

Microsoft is a good example of a company that is structured along product lines. In Ireland, where 1, 000 employees work on localization of the software for all Microsoft’s markets, the company is split up into seven business units. Each unit controls the localization of their specific products while working closely with the designers in Microsoft’s Seattle Headquarters. It works, said Ms MacLauchlan, because everyone who works in the unit is ‘incredibly empowered’. ‘Without a huge bureaucratic infrastructure people can react a lot more quickly to any challenges and work towards the company’s objectives.’

Profile Intermediate, Oxford Business English