Running head: WEEK FIVE ASSIGNMENT
Week Five Assignment
Lynn Haiar
LEAD 575 – Organizational Structures & Behavior
April 04, 2013
Dr. Whitney Stevens
Southwestern College
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Abstract
Leaders must adapt to change. They are faced with external factors which influence
organizational structure and ultimately span of control. Then adapt again if the company agrees
to acquire another company or vice versa agreeing for another to acquire them. In this paper,
span of control is addressed as well as when a narrow or wide approach is more beneficial.
Additionally, merger strategy is discussed as well as how a merger could affect both companies
and which strategy is best for which scenario. Lastly, the paper reviews a dynamic company that
has evolved its organizational structure throughout the last thirty years in order to keep up with
technology as well as competitors.
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Week Five Assignment
A leader(s) of a company must identify the span of control for all departments within
their company. This isn’t always an easy task. There is not a text book or standard rule to give
the leader the exact calculation. This is often from experience and learned knowledge and can
affect the function and performance greatly. This is the same for a merger. The leader must
decide what type of merger strategy to utilize for the best of the company’s culture and
performance. Not always an easy task, but one that must be analyzed well to come to the best
conclusion for success. To place an example to learned concepts, the great company, Nokia, is
reviewed in concepts of organizational structure as well as span of control.
Span of Control
When studying the topic Span of Control. The professor asked his class to answer the
following. “Administrative theorists concluded many decades ago that the most effective
organizations have a narrow span of control. Yet today’s top-performing manufacturing firms
have a wide span of control. Why is this possible? Under what circumstances, if any, should
manufacturing firms have a narrow span of control?”
“Span of control (also called span of management) refers to the number of people
directly reporting to the next level in the hierarchy” (McShane & Von Glinow, 2013, p. 379).
The previous thought process was that managers could not manage a large group of people who
directly reported to them. However, in today’s manufacturing plants utilize a much wider span
of control. This is mostly due to the employees performing routine tasks which have
standardization and the use of self-directed teams. When employees perform repetitive or
routine tasks, there is less need for managerial direction. Also when the staff is more of a
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professional nature, they tend to run themselves needing less interaction with the direct manager.
These people tend to be able to make decision appropriately even when faced with internal or
external obstacles.
It is crucial to business practices to periodically evaluate if a company needs to go more
narrow or wide. With the premise to save money or increase efficiency, one can become to lean.
In June 2010, one of the greatest lean manufacturing companies, Toyota announced they were
actually going to narrow their span of control in their technology development department and
bring back front line supervisors. “About1, 000 employees who have been with the company for
about 10 years will move into supervisory positions” (Miller, 2010). This will bring the ratio to
a very narrow 5:1. Their goal was to pilot this change for one year and then re-evaluate.
Merger Strategy
In the same class, Organizational Structures & Behavior, the class studied merger
strategy. The professor stated, “Acme Corp. is planning to acquire Beta Corp., which operates in
a different industry. Acme's culture is entrepreneurial and fast-paced, whereas Beta employees
value slow, deliberate decision making by consensus.” He then asked, “Which merger strategy
would you recommend to minimize culture shock when Acme acquires Beta?”
“Mergers have a substantial disruptive effect on the organizations involved, often leading
to neglected strategy, employee stress, and customer problems” (McShane & Von Glinow, 2013,
p. 415). This is sometimes due to focus on financial or other areas instead of culture. There are
four strategies for merging different organizational cultures. The first is assimilation. This would
be if Beta Corp embraces the Acme Corp culture. This would work if Beta Corp had a weak
culture. The second strategy is deculturation. This does not work very often, but would be if
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Acme Corp imposed its culture on Beta Corp and they were unwilling. The third strategy is
integration. An example of this would be if both Acme Corp and Beta Corp combined their
cultures into a new culture. Lastly, the fourth strategy is separation. This would be if both Acme
Corp and Beta Corp remained distinct entities with minimal involvement. This could be
beneficial if they had conflicting contracts which could lead to conflicts of interest.
I would not recommend the first strategy, assimilation since Beta does not have a weak
culture. Actually they have quite the opposite and work well together by making decision by
consensus. I would also not recommend the second strategy, deculturation. I cannot think of a
time this would work and make a healthy environment. I would recommend strategy three,
integration, and four, separation, for further review. I would be difficult if not impossible to
recommend only one with the limited amount of information we have on both companies. If
these two companies had conflicts such as a non-competing clause in contracts option four may
be the best option at least until the contracts are renewed or renegotiated. I do believe ultimately
the third strategy would be best even if it is not immediate. This would allow cultures to join,
but not collide while legal issues are navigated and a team atmosphere can be created.
Nokia
Nokia’s corporation and organizational structure has changed dramatically over the last
three decades. When studying organizational structure, the professor asked the class three
questions regarding Nokia. The first, “what form of departmentalization has Nokia relied on
throughout most of the past three decades? Why have these forms of departmentalization been
adopted?” The second, “Evaluate Nokia’s changing organizational structure against the
changing characteristics of the external environment over this time. Has the structure mostly
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contributed to Nokia’s success or been a hindrance to it?” The third, “Although not explicitly
described in this case, in your opinion, in what parts of Nokia would you expect to find the most
organic organizational structure, particularly low formalization and high decentralization? What
parts of Nokia would be most mechanistic?”
In the first question, he asked about the form of departmentalization. Nokia seem to rely
on a product divisional structure. This type of structure was probably adopted due to its ability
to handle growth. “The intent is to break up a company’s growing product line into a number of
smaller, more manageable subunits to reduce bureaucratic costs due to communication,
measurement, and other problems” (Hill & Jones, 2012, p. 443).
External changes had a large influence with Nokia prompting them to change as well to
meet the customer’s needs and desires as well as have a competitive advantage. However, they
lost some of what they gained by not realizing and keeping up with the growth and development
of smart phones by competitors such as Apple, Google, and Research in Motion. With the
acknowledgement of this they have since restructured again to accommodate and focus on this
growth in hopes to achieve superior status again. The type of divisional structure that Nokia
adapted has contributed to their success. It has allowed them to change multiple times due to
external changes and adapt as well as be competitive. In addition, this type of structure has the
ability to carefully analyze “the performance of each product group [because it] is easy to
monitor and evaluate, and corporate managers at the center can move more quickly to intervene
if necessary” (Hill & Jones, 2012, p. 444). This type of environment allows a set reward system
to function well with each individual product group level in addition to a corporate level reward
system.
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One would expect to find the most organic organizational structure, particularly low
formalization and high decentralization in design. This is where the employees “operate with a
wide span of control, decentralized decision making, and little formalization” (McShane & Von
Glinow, 2013, p. 384). One must be able to have some freedom when designing and developing
new products. If everyone stuck to the rules and not think outside the box, there is no way a
company could produce a product that was innovative and creative before another competitor.
On the other hand, when Nokia or other companies are assembling the approved, hopefully
innovative new design, it would be the utmost importance to have a more mechanistic approach.
This is where the employees have a “narrow span of control and high degree of formalization
and centralization (McShane & Von Glinow, 2013, p. 384). There should be a formal process in
order to change how a product is being made. A company does not want or need one product to
go out the door in one-hundred different ways.
Conclusion
As a leader, there are many concepts to learn. One can learn from text books,
experiences, but also from studying other companies. Why re-invent the wheel again? It is great
when a concept can be learned, but then an example can used making much more of an impact
on the learned knowledge such as in the case of Nokia. With these exercises, the members of
this class are one step closer to possibly being a great leader themselves.
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References
Hill, C.W. & Jones, G.R.. (201). Strategic management: An integrated approach (9th ed). Mason,
OH:South-Western.
McShane, S. & Von Glinow, M. (2013). Organizational Behavior: Emerging Knowledge and
Practice for the Real World (6th ed). Boston: McGraw-Hill.
Miller, Jon, (2010). Toyota to reduce span of control in engineering, Retrieved May 4, 2013,
from
http://www.gembapantarei.com/2010/06/toyota_to_reduce_span_of_control_in_engineeri
ng_1.html