Management Myth # 4—A Business is Best Organized around Functions

The newly appointed CEO, Samantha, identifies as her first major challenge, the imperative to break down the boundaries between departments in the government agency she now leads. Samantha observes the agency is organized around several “silos”it’s a typical bureaucracy. Even at the senior management level, this is evident. The most important cross-functional teamthe senior management team—is disjointed and not operating as a team. Managers arrive at executive meetings with their functional “hat” on and fail to consider issues from the perspective of the overall organization. Samantha knows she has a problem and has her work cut out in breaking down these traditional departmental boundaries and the rivalries they breed

She notices the level of cooperation between departments is negligible, even non-existent in some cases. Samantha is determined to change this. She reviews the organizational structure, based on the functional model segmented across several distinct functions.

With its concentration on vertical lines of communication, the functional model’s capacity for adaptive performance is severely curtailed. Approval to make a reasonably simple decision, for instance, can pass through several hands and this can take unnecessary time.

© The Author(s) 2017

T. Baker, Performance Management for Agile Organizations, DOI 10.1007/978-3-319-40153-9_7

She decides to form a number of cross-functional project teams. Samantha includes these new teams in a revised organizational chart. One team is formed to look at improving communication across the agency, for example. Representatives are chosen by the new CEO from all six departments. Another cross-functional project team is set up to review and improve several archaic systems and processes that are not consistent across the agency.

Peter, from the marketing department, is invited by Samantha to be part of one of these project teams. He is quite excited about being chosen, recognizing the need to improve cross-functional communication throughout the organization. Peter goes to talk to the marketing manager in her office. Mary is less than enthusiastic when Peter tells her about this development.

“I wish the CEO had spoken to me first, ” Mary said to Peter in response to the news. “I cant afford to release you to attend these ‘talk jests. ’ Peter, you are too valuable to the department. We’re already short-staffed. How often does she want you to attend these meetings?”

“I don’t know, ” replied Peter. “She hasn’t told me yet.

“Well, it sounds like a complete waste of time. Your primary responsibility is to my department, Peter, ” said Mary. “You’re a critical person in this department, and I’ll have to speak to the CEO about this and let her know my feelings.

Peter leaves Mary’s office deflated and confused. He’d thought this was a great opportunity to break down the silos in the agency and improve communication across the organization. He can’t understand his boss’s reaction.1

Structuring business around specialized clusters or functions has been in existence since the birth of the bureaucracy. Taylor’s scientific management philosophy was founded on the concept of workers being organized around functional specialties. Most companies still operate this way; many have tried shifting to alternative structures, such as the matrix or product models, with mixed success. It raises the question: Is the limited success of these other organizing structures due to the models themselves, or the people who lead and work in them?

In the matrix model, for instance, employees endeavor to keep dual lines of accountability with their hierarchical boss and their project manager. The purpose of the matrix model is to have the best of both worlds: functional control and project flexibility. Several experts argue that it’s not the matrix design that’s faulty; it’s the people who lead them.2 I agree.

The key to making the matrix model work—or any structural arrangement, for that matter—is two-fold: possessing and using superior interpersonal skills, and developing an entirely different attitude about the worth of the functional-based working arrangement.

The appropriate communication skills needed to make the matrix model work—or any other non-functional model—boils down to being a leader instead of behaving like a manager. It means exercising influence to get one’s way, rather than using the designated authority of the managerial position in the organizational hierarchy. This is especially the case in a matrix model; the project manager doesn’t have a formally titled functional position in the organizational framework. Good project man- agers—leading in a predominantly functional workplace—rely on their influencing capabilities before their technical prowess.

Although leadership skills are paramount, it seems counterintuitive for employees working in a fast-paced, flexible, and agile working environment to receive most of the information from one—or even two— bosses. The single vertical line of communication is the backbone of the functional-based organizing structure. Despite the deliberate efforts to move away from this archaic work arrangement, it’s more challenging to escape this hierarchical power trap than it ought to be. Firms adopting a matrix design to enable the increasingly project-oriented work environment, have trouble letting go of the old hierarchy. Leaders seem powerless to prevent the vertical chain-of-command dominating decision-making over the cross-functional project work. Even with the best of intentions— with alternative organizing structures—functional thinking rules.

Changing this military mindset is the key. Before I share a new organizing model that attempts to do this, let’s first understand the three most popular organizing structures and their strengths and weaknesses.

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