Organizations struggle daily with organizational problems that occur in the work force. From reengineering to developing a new structure, some organizations go through it almost daily to try and iron out so flaws in their design to make sure they get the maximum production and maximum efficiency. For instance this advertising company Aquarius Advertising Agency is having a big problem with their structure. The main issue in this case is the need for reorganization and reengineering of the structure of the company. The hierarchal schema and lack of horizontal cooperation has caused the company personnel to have conflicts with each other and thus their business is suffering. Aquarius Advertising needs a structural framework that encourages employees to engage in horizontal information sharing.
The reason why this is happening to Aquarius Advertising Agency is apparent in the working relationships of the employees at Aquarius. The account executives are frustrated with the specialists because they are going around them instead of through them to make decisions for the clients. It is apparent that structure of the organization is wrong for this company because too many problems are occurring and the clients are suffering. If the personnel changed at Aquarius the problems would remain because of the structure of the organization this is one indication that the framework needs modification.
Another reason that the structure needs to change is because of the rapid turnover of accounts and the inability of Aquarius to efficiently respond to these changes. However the most significant reason and cause for the main issue in this case is the conflict between the different units in the organization. Without cooperation and better communication the company may fail and the structural framework and hierarchy needs to change so that the employees can work well together to satisfy the clients.
Currently Aquarius is working with a functional and hierarchal structure and this design has been proven not to be the right framework for this company. It is crucial that the agency flattens out their structure and increases their horizontal linkages in order to meet the goals of the organization. This is a fast moving company and if the company doesn’t act quick then they could possibly lose more and more clients than what they are now with their current drop in turnover ratio. There three main structural designs that Aquarius could consider to put in full effect. The first structure that could possibly suit the agency is the divisional structure. The divisional structure or product structure organizes the agency into divisions according to organizational outputs. At Aquarius if a divisional structure were chosen the employees would be grouped into units comprised of different client accounts or major projects for the company.
This structure brings the various specialists together in divisions that support the specific projects needs. The difference between the divisional structure and the current functional structure that the company uses is that the divisional structure supports a rapidly changing environment because each unit is smaller and more collaborative. Also the divisional structure doesn’t have to make as many decisions because the decision making and the authority lies in the lower lever of the hierarchy.
Choosing the divisional structure would most likely lead to a more unified working environment for the account managers and the specialists because they would be grouped into smaller units working together to reach the clients goals. However, a divisional structure is best suited for large organizations and Aquarius Advertising Agency is a medium sized company and may not have enough employees to spread throughout the different projects. For this reason the divisional structure alone would not be the best alternative for the company design.
Another reorganization strategy that Aquarius could consider is the matrix structure. The matrix organization is an effort to fuse the advantages of the functional structure (the current structure at Aquarius) and the divisional structure (mentioned above). This structure is best suited for organizations like Aquarius that are medium sized and project driven. The distinctive feature of the matrix organization is that both the divisional and functional structures are executed at the same time. The account executives and functional managers would have equivalent authority within the organization and employees report to both of them. The matrix structure solves the problem that Aquarius currently faces in regards to the horizontal linkages. With this structure the agency specialists would be required to communicate and collaborate with the account executives because of the newly implemented horizontal authority lines.
Information sharing is necessary in a matrix organization and numerous people may be necessary for the same client account. In general the account executive has the total responsibility and accountability for the success of the clients account. The functional departments such as operations and marketing have the responsibility to maintain technical quality on the project. At Aquarius the individuals involved in the client’s accounts currently lack good interpersonal skills which will be a problem if the matrix structure is implemented.
The specialists already have difficulty following the lines of authority with respect to the account executives and with the matrix structure a dual authority would be created which could cause even more problems for the company. If the specialists continued to sidestep the authority of the account executives then Aquarius would have an intricate management system in place that still does not create coordination among the functions that they need. At this time due to the lack of interpersonal and conflict resolution skills amongst the individuals at Aquarius the matrix structure would not be the best alternative for the organization.
The external environment is rapidly changing for the advertising industry and in order to be successful Aquarius needs to be flexible to these changes. This is one of the reasons that a hybrid structure for Aquarius would be the best recommendation for the organization. The hybrid structure best suited for Aquarius is a combination of the functional and horizontal structures and takes advantage of the strength of the two designs. Below is an organizational chart for the new hybrid structure at Aquarius. This hierarchy is flatter in this structure than the current functional design in place at the agency. The departments of legal counsel, policy committee, executive vice president, financial managers and human resources are all grouped according to the different functions each department provides and they are in direct contact and with the president and board of directors of the company.
Maintaining the functional structure with these departments insures that the authority over them resides in the hands of top management of the company. The horizontal structure in this hybrid consists of the account executives having direct authority over the teams that are compromised of the different specialists at the agency. The use of project teams will provide strong coordination over the long period of time that a client has an account at the agency.
Teams will provide strong horizontal organization and with the use of information technologies the client accounts can be managed efficiently. The collaboration of the different team members with the account executives insures that the client accounts will be well managed and decisions are made as a group instead of by different specialist departments acting alone. The account executives must then report to the functional departments to validate that they are making decisions best suited for the organization.
The hybrid structure brings together the usefulness of having the functional departments remain intact at the top of the hierarchy while organizing the specialists into teams aligned to work together for one account. This structure relieves the organization of a severely vertical hierarchy and implements a system where there will be more cooperation and coordination between the account executives and the agency specialists. The reengineering of an organizations structure takes time and consideration on many levels of the company.
I think the most important aspect managers have to make about the structural design of an organization is deciding the right balance between the vertical and horizontal coordination. The hybrid structure laid out in the organizational chart above would bring the best results for the Aquarius Advertising Agency. A combination of the functional and horizontal structures insures that some vertical authority remains however, more horizontal communication and cooperation will lead to a more efficient work environment.
Courtney from Study Moose
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