One reason for the growing use of teams and networks is that many companies are recognizing the limits of traditional vertical organization structures in today’s fast shifting environment. In general the trend is towards breaking down barriers between departments, and many companies are moving towards horizontal structures based on work processes rather than departmental functions. However, regardless of the type of structure, every organization needs mechanisms for horizontal integration and coordination. The structure of an organization is not complete without designing the horizontal as well as the vertical dimensions of its structure.
The need for coordination:
As organizations grow and evolve, two things happen. First, new positions and departments are added to deal with factors in the external environment or with new strategic needs. For example, many organizations have established Information Technology departments to cope with the new information systems, or chief knowledge officers to find ways to leverage organizational knowledge in today’s information based economy. A company may add positions and departments to meet changing needs. They grow more complex with hundreds of positions and departments performing incredibly diverse activities.
Senior managers have to find a way to group together all of these departments together. The formal chain of command and the supervision it provides is effective, but it is not enough. The organization needs systems to process information and enable communication among people in different levels.
Without coordination a company’s left hand will not act in concert with the right hand, causing problems and conflicts. Coordination is required regardless of whether the organization has a functional, divisional or team structure. Employees identify with their immediate department or team, taking its interest to heart and may not want to compromise with other units for the good of the organization as a whole.
Coordination is the outcome of information and cooperation. Managers can design systems and structures to promote horizontal coordination. Although the vertical functional structure is effective in stable environments it does not provide the horizontal coordination needed in times of rapid change. Innovations such as cross functional teams, task forces, and project managers work within the vertical structure but provide a means to increase horizontal communication and cooperation. The next stage involves reengineering to structure the organization into teams working on horizontal processes. The vertical hierarchy is flattened with perhaps only a few senior executives in traditional support functions such as finance and human resources.
A task force is a temporary team or committee designed to solve a short term problem involving several departments. Task force members represent their departments and share information that enables coordination. For example, National Corporation created two task forces in human resources to consolidate all employment services into a single area. The task force looked at job banks, referral programs, employment procedures and applicant tracking systems; found ways to perform these functions for all divisions in human resource departments, and then disbanded. In addition to creating task forces, companies also set up cross functional teams, as described earlier. A cross functional team furthers horizontal coordination because participants from several departments met regularly to solve on-going problems of common interest . This is similar to a task force except that it works with continuing rather than temporary problems and might exist for several years. Team members think in terms of working together for the benefit of the whole rather than just for their own department.
Companies also use project managers to increase coordination between functional departments. A project manager is a person who is responsible for coordinating the activities of several departments for the completion of a specific project. Project managers are critical today because many organizations are almost constantly reinventing themselves, creating flexible structures, and working on projects with an ever changing assortment of people and organizations. Project managers might work on several different projects at one time and might have to move in and out of new projects at a moment’s notice.
The distinctive feature of the project manager position is that the person is not a member of one of the departments being coordinated. Project managers are located outside of the departments and have the responsibility for coordinating with several departments to achieve desired project outcomes. Product managers set budget goals, marketing targets and strategies and obtain the cooperation from advertising, production, and sales personnel needed for implementing product strategy.
In some organizations project managers are included on the organization chart. The project manager is drawn to one side of the chart to indicate authority over the project but not over the people assigned to it. Dashed lines to the project manager indicate responsibility for coordination and communication with assigned team members, but department managers retain line authority over functional employees.
Project managers might also have titles such as product manager, integrator program manager, or process owner. Project managers need excellent people skills. They use expertise and persuasion to achieve coordination among various departments, and their jobs involve getting people together, listening, building trust, confronting problems and resolving conflicts and disputes in the best interest of the project and the organization.
Many organizations move to a stronger horizontal approach such as the use of permanent teams, project managers, or process owners after going through a redesign procedure called re-engineering.