Relations Analysis

The final step in the analysis of the kind of structure needed is an analysis of relations. With whom will a manager in charge of an activity have to work, what contribution does he have to make to managers in charge of other activities, and what contribution do these managers, in turn, have to make to him?

Traditionally we tend to define the job of a manager only in terms of the activity he heads, that is, only downward. We have already seen that this is inadequate. Indeed, the first thing to consider in defining a manager’s job is the contribution his activity has to make to the larger unit of which it is a part. In other words, the upwards relationship must be analyzed first and must be established first.

One example of relations analysis and of its results is that of a large railroad. Traditionally railroads place the two engineering functions concerned respectively with the design of new, and the maintenance of existing, equipment and facilities under the transportation function which is concerned with the physical movements of goods and passengers. If the engineering functions are defined in terms of the downward relationships of their respective managers, this tradition makes sense. For seen in this way, these functions are adjuncts to transportation. But the moment the question is asked: What is the upward relationship of the two engineering managers, the traditional organization structure is seen as fallacious and as a serious impediment to good railroad management. Perhaps the most important job of either engineering manager is to advise top management and to participate in the long range decision on what the railroad’s business should be. They are directly charged, by virtue of their job and technical knowledge with making the decisions on one of the most important objectives: the supply of physical resources. They have major responsibility both for setting innovation objectives and for attaining them. Their jobs should therefore be organized so as to bring them directly into the counsels of top management, if not to make them members of the chief executive team. Otherwise basic decisions affecting the long range future of the business, if not its very survival, will be taken without the necessary knowledge. Even if the decisions themselves are the right decisions, they will not be understood by the people who have to carry them out – the two engineering managers – and likely to be sabotaged by them upward relations, in other words require that these functions be by themselves, outside the transportation function and directly reporting to top management.

But the sideways relations must also be analyzed. The contribution which a manager makes to the managers of other activities is always an important part of his job and may be the most important one.

A good example is the job of the marketing manager. In his downward relationship he is a “sales manager” in charge of a sales force engaged in obtaining orders. But if this relationship determines the organizational structure of the job as it has traditionally done the most important contributions the enterprise from its marketing activity may not be made at all. To do its job properly, engineering must obtain from the marketing activity information on new products needed and on modification of old products. It must obtain guidance on product development and design. It must obtain pricing information. Similarly, only from the marketing activity can manufacturing obtain such vital information as the anticipated volume of sales and the delivery schedules. Purchasing similarly depends on information which only the marketing manager can supply. And in turn the marketing manager requires information and guidance from all these functions to discharge adequately his downward relationship, that is, his responsibility for running the sales department. Indeed, the sideways relations have become so important that more and more companies either subordinates the sales manager to a manager to manager of marketing charged primarily with the sideways relations, or split the marketing activity in two, as marketing and a selling function, the managers of which have equal status and operate independently though in close co-operation.

Analyzing relations is not only indispensable to the decisions of what king of a structure is needed. It is also necessary to make the vital decision how the structure should be manned. Indeed, only an analysis of the relations in a job makes possible intelligent and successful staffing.

These three analyses – of activities, of decisions, of relations – should always be kept as simple and as brief as possible.