During the past thirty years there has been a so-called hidden revolution in the introduction and development of new organizational structures. Management has come to realize that organizations must be dynamic in nature; that is, they must be capable of rapid restructuring should environmental conditions so dictate. These environmental factors evolved from the increasing competitiveness of the market, changes in

*Case Study also appears at end of chapter.

technology, and a requirement for better control of resources for multiproduct firms. More than thirty years ago, Wallace identified four major factors that caused the onset of the organizational revolution1:

• The technology revolution (complexity and variety of products, new materials and processes, and the effects of massive research)

• Competition and the profit squeeze (saturated markets, inflation of wage and material costs, and production efficiency)

• The high cost of marketing

• The unpredictability of consumer demands (due to high income, wide range of choices available, and shifting tastes)

Much has been written about how to identify and interpret those signs that indicate that a new organizational form may be necessary. According to Grinnell and Apple, there are five general indications that the traditional structure may not be adequate for managing projects2:

• Management is satisfied with its technical skills, but projects are not meeting time, cost, and other project requirements.

• There is a high commitment to getting project work done, but great fluctuations in how well performance specifications are met.

• Highly talented specialists involved in the project feel exploited and misused.

• Particular technical groups or individuals constantly blame each other for failure to meet specifications or delivery dates.

• Projects are on time and to specifications, but groups and individuals aren't satisfied with the achievement.

Unfortunately, many companies do not realize the necessity for organizational change until it is too late. Management looks externally (i.e., to the environment) rather than internally for solutions to problems. A typical example would be that new product costs are rising while the product life cycle may be decreasing. Should emphasis be placed on lowering costs or developing new products?

If we assume that an organizational system is composed of both human and nonhuman resources, then we must analyze the sociotechnical subsystem whenever organizational changes are being considered. The social system is represented by the organization's personnel and their group behavior. The technical system includes the technology, materials, and machines necessary to perform the required tasks.

Behavioralists contend that there is no one best structure to meet the challenges of tomorrow's organizations. The structure used, however, must be one that optimizes company performance by achieving a balance between the social and the technical requirements. According to Sadler3:

Since the relative influence of these (sociotechnical) factors change from situation to situation, there can be no such thing as an ideal structure making for effectiveness in organizations of all kinds, or even appropriate to a single type of organization at different stages in its development.

1. W. L. Wallace, "The Winchester-Western Division Concept of Product Planning" (New Haven: Olin Mathieson Corporation, January 1963), pp. 2-3.

2. S. K. Grinnell and H. P. Apple, "When Two Bosses Are Better Than One," Machine Design, January 1975, pp. 84-87.

3. Philip Sadler, "Designing an Organizational Structure," Management International Review, Vol. 11, No. 6, 1971, pp. 19-33.


Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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