Organisation Structure and Design in a Company - Case Study Example

Organisation Structure and Design Student’s Name: Course: Tutor’s Name: Date Key problems at Aquarius Advertising Agency The manner in which an organisation is designed or structured determines how the management is able to identify problems and resolve them before they impact negatively on the larger organisation. The case of Aquarius Advertising Agency (AAA) is a reflection of how an ineffective organisational design can cause unsatisfactory results not only to the management, but also to workers and the clients. Looking at the organisational structure at AAA, one gets the impression that there are too many hierarchies, which may cause delays in decision-making, frustration, stress, anxiety and even dissension internally and externally. As shown from the loss of clients as indicated in the case study, internal confusion, ambiguity and lack of coherence can tear an organisation apart. Luckily for AAA, the events have culminated in the loss of clients and discomfort among workers, and this has awakened the management to the need for change. First, it is worth noting that AAA works in what academics refer to as the knowledge industry (Mat Nor & Rosline, 2005). To leverage the knowledge workers in a manner that will serve the strategic purpose of an organisation, Mat Nor and Rosline (2005, p. 1) observe that companies should assume “a more strategic business partnership-like role”. The observation by the two is supported by Jacobides (2007, p. 455), who argues that the strategic human resource management component in an organisation must ensure that the knowledge workers are supported in a manner that enables them to “map knowledge and plan” initiatives. Additionally, the SHRM component in the organisation needs to ensure that the organisational structures make its easy for the workers to transfer and share knowledge with each other and their managers or supervisors (Thite, 2004). Finally, it is apparent that the SHRM function has to ensure that the knowledge workers’ capacities are aligned with the organisation’s business objectives (Soliman & Spooner, 2000). Analysing the AAA organisational structure based on the above observations, it is clear that there is a disconnection between the knowledge workers in the operations, accounts and marketing departments of the advertising agency and the human resource function. Specifically, the human resource department is a standalone function that does not appear to influence how activities in the organisation are done. This probably explains why one of the client executives complained about too much liberal decision-making on the part of the artists and creative department personnel. By the look of things, AAA also does not have a strict client-company communication policy; there is too liberal ground for the creative department personnel to interact with clients, and this creates room for conflict. The current structure at AAA The organisation chart of Aquarius Advertising Agency is portrayed in Daft (2010, p. 130). In the chart, the management level is made up of the Human Resource Manager and the Financial Manager, both who report to the Executive Vice President (EVP). The EVP is on the same level with the Legal Counsel and the Policy Committee, and the three report to the President, who then reports to the Board. On the lower management levels, AAA has the Marketing Vice President, the Operations Vice President and the Accounts Vice President, all who report directly to the EVP. By so doing, the three bypass the HRM, thus creating an information vacuum, where the human resource department is probably unaware of what the rest of the company is doing. The Accounts Vice President is in charge of the accounts department and receives reports from the Accounts Manager who is in turn in charge of Accounts Executives. The Operations Vice President is on the other hand in charge if the operations department and this includes the TV/radio/Internet department, the newspapers/magazines production department, the copy department and the art department. Finally, the Marketing Vice President is in charge of the research, media and merchandising departments. The three vice presidents work and report separately to the EVP. Why the current structure is not working There are several probable reasons why the current structure is not working: first, it is worth noting that there is no harmony among the three departments that are responsible for attaining AAA’s key business objectives (i.e. the accounts, operations, and marketing departments). Working as fragmented entities and reporting separately to the EVP does not help, especially if the EVP does not create the necessary environment needed to harmonise operations in the three departments. Secondly, the standalone position of the HRM means that the human resource function is not aware of the challenges, needs or success of the workforce. As such, it becomes difficult for the HR function to streamline the workforce in a manner that will enable the organisation to attain its overall business objectives. Thirdly, and borrowing from the one account executive’s complaint in the case study, there is no laid down or agreed client-communication policy in AAA. In advertising theory, the accounts department is in charge of communicating with clients. While such is not cast in stone, AAA would probably create more harmony in its internal and external communication if an accounts executive is present whenever other representatives are communicating to a client. A close look at exhibit 3.23 (Daft, 2010, p. 131) reveals some communication breakdowns that may cause inefficiencies in the organisation, which may result in client dissatisfaction. For example, it is apparent that the Copy Specialist and the Art Specialist never communicate. Yet, general wisdom dictates that the two need to communicate if client requirements are to be met. Such is an indication that the current organisation does not ensure that there is communication between and across organisational units. Without communication, there cannot be coordination, and the desired organisational outcomes cannot be created or attained. As Daft (2010) observes, effective organisational designs are responsible for the creation and realisation of desired business outcomes, coordination in the organisation, and effective and efficient communication in the organisation. Overall, an organisation that has a good structure is effective and efficient in its processes, something that is reflected in its outcomes. If client dissatisfaction and the complaint by one of the client executives is anything to go by, AAA’s structures are neither effective nor efficient. Recommended solution Given that AAA lacks horizontal coordination among the three key departments (i.e. operations, accounts and the marketing departments), it is important for the solution to the problems it is facing to include the redesigning of the organisational structure. These recommendations are founded on McMillan’s (2002, p. 2) views that the organisational design should connect and weave “together all aspects of the organisation’s activities so that it functions as a complete dynamic entity”. Specifically, and as noted by Errikson-Zetterquist, Mullern and Styhre (2011), there is need to improve coordination in modern organisations and this is only possible if the flow of information is enhanced through efficient organisational designs. Several considerations were made when coming up with the recommended design. First, the need for the HR component to play a proactive role in the organisation was identified as essential. Secondly, the finance department was also identified as a function that needs to interact with others especially since budgeting, and financial activities are prominent in an advertising company. As such, finance was identified as a fourth core department that is necessary for purposes of overseeing finances, bookkeeping and office work. To make coordination in AAA more cohesive, the finance department is most suited for placement at the same level as the three other core departments. In other words, the operations, accounts, marketing and finance departments will interact horizontally. The proposed design corresponds to Daft’s (2010) views regarding the horizontal organisation, where he states that it should be dominant in organisations where sharing of tasks and empowerment is needed; where few rules apply; where there is some sort of relaxed or complete elimination of hierarchy; where face to face communication is needed; where teamwork is needed; and where decentralised decision-making is needed. The role of the HR function and those of other managerial positions cannot be overlooked. However, for purposes of streamlining AAA and enhancing flexibility and the reducing the time used in decision-making, it is recommended that the organisation forms cells that contain each skill set. The cells will be similar to work teams, where each skill set is represented. Scarce skills sets such as the legal counsel, the policy committee, the executive vice president, the financial manager and the HR manager will need to focus on distributing their expertise in the different work teams in order to ensure that each cell benefits from their input. A representation of the recommended organisational structure for AAA is seen in the figure 1 below, where, and its justification in literature is similar to figure 2 below. Figure 1 Figure 2: The citizenship cell Source: McMillan (2002, p. 7, adapted from Law, 1998, p. 127). As indicated in figure 2 above, the cell-like design brings together different skills into the design, meaning that the control/monitoring functions are found within the team, as does the management function (i.e. financial, operations, accounts, and marketing managers). Within the cell, the different managers and the employees working under them are able to combine their different skills, knowledge and expertise to come up with effective solutions to clients needs and wants, and through such teamwork, the cells/teams are able to meet the organisational objectives. The proposed reorganisation of the former hierarchy design into the above cell-like design if informed by the fact that AAA should slim down its bureaucracies for purposes of enhancing efficiency and flexibility. Additionally the different divisions and units need to work together in order to consolidate the synergies and advantages of the corporate cohesion. As Mabey, Salaman and Storey (2001, p. 164) note, cross-functional teams are preferable for use in the knowledge industry; however, they only work well where there is minimal use of hierarchy and rules, since such informalities are best suited for the exploitation of ideas and expertise from the workforce (Yahya & Goh, 2002). The proposed organisational structure will most likely attain the success factors defined by McMillan (2002), which are innovation, integration, flexibility and speed. Another reason for the proposed cell-like organisation is that as McMillan observes, such designs enable the teams to self-manage, thus allowing the team members more room to develop unique formulas for success. Notably however, the management function in each cell should play their rightful role in order to ensure that the activities, philosophies and approaches of the cell members mirror the “overall culture of the company” (McMillan, 2002, p. 7). To enhance harmony within the larger organisation, the different cells will need to keep in touch with each other through regular meetings, where the overall AAA policies and philosophies will be shared. This is in line with McMillan’s (2002) recommendation that cells should meet regularly in order to ensure that cohesion at the organisational level is not lost as each cell pursues success individually. Like other players in the knowledge industry, AAA has a dynamical internal environment, with differently skilled professionals. However, all the professionals must work together and in support of each other if the greater company objectives are to be attained. As such, an interactive, team-focused work environment need to be fostered if at all AAA wants to create the flexibility and time-efficient processes it needs to create satisfactory advertisements that will not only keep existing clients hooked to the Agency, but also attract new customers. Through the proposed citizen cell structure, AAA will be a non-linear, non-hierarchical, holistic, self-organising, flexible, diverse and networked organisation. Previously, and based on the organisational structure shown on exhibit 3.22 by Daft (2010, p. 130), it is evident that AAA is a linear, hierarchical, reductionist, controlling, inflexible, uniform and centralised organisation. Where decisions by individuals do not follow the hierarchical structure, the results are not impressive as indicated by the client executive who states that he only knew of some communication between the creative department and the client only after it had already happened. In such a scenario, it appears that some players in the creative department do not appreciate the role that the client executives play. Yet, for an organisation as complex as AAA to succeed, each employee needs to play their rightful role. The SHR function, as part of the skills set in a cell, needs to ensure that each team members plays their rightful complementary role in the group as indicated by Ulrich (1998). In conclusion, it is important to note the importance of moving away from design principles that are inappropriate in modern organisations, and more specifically, those that are inappropriate for the knowledge industries. In the competitive market environment where clients easily substitute a service provider for the next available competitor as indicated by Arzaghi et al. (2008), the need to retain existing customers cannot be underestimated. For AAA, it is a case of not only creating satisfaction internally in order to retain its creative talent, but also a way of ensuring that its client base does not erode as a result of dissatisfaction emanating from a faulty organisational design. Clearly, it is a case of structural logic, where it has been shown that the hierarchical organisational design is not effective. Specifically, the current design creates what Jacobides (2007, p. 455) calls “local frames” that create divisions in an organisation, which should otherwise be working as one united front. This then necessitates a more flexible, accommodating and informal organisational design that will match the situational demands presented by clients, performance demands presented by the shareholders and investors, and the operational demands presented by the workforce. References Arzaghi, M, Berndt, E R, Davis, J C & Silk, A 2008, ‘The unbundling of advertising agency services: an economic analysis’, Working Paper 11-039, Harvard Business School, pp. 2-57. Daft, R L 2010, Organization Theory and Design, 10th edition, Cengage learning, Sydney. Errikson-Zetterquist, U, Mullern, T, & Styhre, A 2011, Organizational Theory: A practice Based Approach, Oxford University Press, London. Jacobides, M G 2007, ‘The inherent limits of organisational structure and the unfulfilled role of hierarchy: lessons from a near-war’, Organisational Science, vol. 18, no. 3, pp. 455-477. Mabey, C., Salaman, G., & Storey, J 2001, ‘Organisational structuring and restructuring’ in Salaman, G. Ed. Understanding business organisations, Routledge, London. Mat Nor, N & Rosline, A K 2005, ‘Managing knowledge workers in a knowledge-based economy: the changing role of human resource management in the MSC status companies, Malaysia’, Research Paper, unpublished, Open University, UK, pp. 1-26. Soliman, F & Spooner, K 2000, ‘Strategies for implementing knowledge management: role of human resource management’, Journal of Knowledge Management, vol. 4, no. 4, pp. 337-345. Thite, M 2004, ‘Strategic positioning of HRM in knowledge-based organisations’, The Learning Organisation: An International Journal, vol. 11, no. 1, pp. 28-44. Ulrich, D 1998, ‘Intellectual capital = competence x commitment’, Sloan Management Review, vol. 39, no. 2, pp. 15-26. Yahya, S & Goh, W 2002, ‘Managing human resources towards achieving knowledge management’, Journal of Knowledge Management, vol. 6, no. 5, pp. 457-468. Read More