In flat organizations, decision making is forced to lower organizational levels. Therefore, the decisions can be erratic and inconsistent. This statement is certainly dependent upon who makes the decision at any given point in time. If there are fewer decision levels; therefore, the loss of key people can have a negative impact on these organizations. Resources may be so sparse that the culture can become extremely dependent upon the values of single individuals(such as the owner or CEO).
Tall (Vertical) Organizations:
In a vertical organization, the lower levels have their decisions reviewed by the individuals above them. This also means that communications are not rapid. Additionally, it can take much more time and effort to have people respond to certain directives. As jobs are added to handle the details of decision making, more layers of management are created.
Decisions are made slowly.
Vertical, feedback is frequently filtered.
Upper management is often out of the loop on localized quality or customer issues.
The vertical organizational culture can become too bureaucratic.
Management attention can be directed at who gets the corner office or whose desk is bigger instead of servicing the customer or becoming more efficient.
The people in functional organizations can become very specialized in their field of expertise. Well, rounded individuals may be difficult to find. Coordination of projects or problems can be more difficult than in a flat organization. There is a danger that sub-organizational values and shared assumptions may become too inbred.
In a product organization, there can be a duplication of selected services. Individuals may lack overall corporate focus since they are concerned with a smaller piece of the pie. Although segments of the company are better directed at meeting competitor challenges, they can also compete against each other for company resources and consumer markets.
This arrangement presents similar problems as encountered with functional organizations. Additionally, many undesirable nationalistic or regional cultural features may arise.
In matrix organizations, a specialist can report to two or more people, violating the one boss rule. It is often difficult for the specialist to decide which superior to respond to first. It is somewhat important not to upset the manager who evaluates performance and awards merit raises. The biggest problems with organizational culture in a matrix organization can be competing values and occupational subcultures.
The entire employee selection process is much more stringent for a team-based structure. Additionally, management time is directed at employee training and support. An organization that is experiencing severe short-term threats should not undertake this rather lengthy organizational rollout. There are also threats to all levels of management, particularly middle management. The loss of some of these individuals would mean a tremendous loss in job knowledge and expertise. A multitude of teams can spawn a multitude of occupational subcultures. There can also be a loss of clarity in business goals based on the numerous communication channels.
In traditional, functionally designed organizations, segments of vital activities are captive within and across many departments. For any customer order, each department has the responsibility to process its part of the order as efficiently and as effectively as possible. Various department heads are responsible for the activities within their department, which allows for good management controls and procedures, but no one owns the overall process and the results. Functional departments develop strong functional mindset and will approach problems differently than other functional units. It is difficult when departments speak different“languages,” or have conflicting goals. The functional specialists will tend to focus on departmental matters and the immediate superior’s goals, not the customer or the industry. This describes the creation of a silo mindset. An example of such a conflict occurs when manufacturing is trying to meet the end of the month shipments, but the quality is holding the shipments because of nonconforming product.
Departments or functions at the same level (lateral) should be grouped together to produce the required output. The units are all interdependent of each other if the firm is to succeed. The following tips for improving subsystem integration:
Rules and procedures: everyone understands what to do.
Hierarchical referral: coordination problems goto a common superior.
Planning: objectives and targets are known by everyone.
Direct contact among managers: face-to-face contact among managers.
Liaison roles: cross trading of personnel to work in each other’s unit
Task forces and teams: people from different units on task forces.
Matrix organization: create a matrix structure for specific projects.