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– quick reaction to instructions and orders;
– minimizing duplication of work.
Disadvantages:
– high, sometimes unjustified, administrative staff costs;
– the growth of bureaucracy when functional managers are more interested in their security than in overall success.
Divisional / Market / Grocery
Similar to the linear structure, but the divisions are structured according to the principles of product or market separation. Optimal for companies with a large number of markets and heterogeneous products. For such enterprises it is necessary to create individual basic business processes for each product / region: supply, production, marketing, sales.
DIVISIONAL / MARKET / GROCERY
Pros:
– flexibility – individual strategies and business processes can be developed for each product / region;
– easy coordination and coordination of management decisions;
– high speed of response to emerging problems;
– high performance and management quality thanks to specialization.
Cons:
– as in previous models, there may not be a common goal, each for himself;
– unhealthy competition between structures and directions, growing political differences;
– different productivity;
– low budget efficiency.
Matrix
It is a complex model designed primarily for project implementation. A staff member may have multiple supervisors, and project and resource management is entrusted to the project manager / office.
Sometimes attempts are made to create hybrids of linear-functional and matrix models, where the implementation of projects is entrusted to functional managers. For example, an industrial safety system is being introduced and the head of the industrial safety department becomes.
Pros:
– is responsible for the implementation of a manager with high professional competence;
– the project manager can influence the situation at his own discretion, without unnecessary control (but this is rare).
Disadvantages:
– complexity in the implementation of projects and allocation of responsibilities, conflicts of interest, requires a high level of competence at the manager;
– low performance;
– duplicate functions.
I will give an example of the implementation of this approach.
Integrated corporation with central apparatus in Moscow and a large number of regional units with linear-functional structure.
The central office initiates the implementation of a complex IT system that covers a large number of business processes and requires the inclusion of both technical and financial and HR. In each regional division a responsible manager is appointed and fun starts… The manager is responsible for the whole project, but the resources and authority to manage other people’s (financial, HR) blocks are not, and the desire of others to change at will is even more so. The curator in the central apparatus is not all-powerful and is also located within the functional subdivision. In general, to implement such a project – a hell of a quest.
Matrix structures can also be divided into weak, strong and balanced.
The weak
Weak matrix structures are used when there are many projects, but they are small and not routine, not critical for the company.
In a weak matrix, the members of the project team are managed by functional managers (Chief of Industrial Safety, Repair Planning, Procurement) whose authority is limited: each is responsible for his or her direction.
There has to be a project manager who reports to management or, in this case, central office, gets his tasks. Tasks are then decomposed into smaller tasks and assigned to functional staff. But in fact, it has no powers and no resources. It is fertile ground for conflict.
It is also possible to have «forwarders». These are people in functional areas who disseminate information but have no authority – informal leaders of opinion.
As we can see, this approach is not applicable to our large-scale project. Unless we have very charismatic and strong project managers on the ground.
The strong
Differ in that the implementation of such a project may not be one, but several managers, or the manager and team, and they have much more authority. They can now not simply hand over tasks, but also give orders, require tasks and project reporting from functional managers. In addition, the project team may not be a permanent part of the functions, that is, it is possible that they will deal only with the project, plus they can search for contractors or order raw materials.
For our conditional IT system implementation project, this approach may be redundant. Although, perhaps, it will increase the chances of success, but such implementation comes out very expensive.
Balanced
In this case, the project manager is appointed from among the staff and, better, from the functional managers. Here he can set tasks and monitor their performance. However, it is likely not to be exempt from its operational tasks and to be unable to manage its own resources.
It is worth noting that this is the most difficult option to implement, as it involves the largest number of assigned roles, moreover, there may also be issues with subordination and, consequently, matrix conflicts.
Summary
We have dismantled the main types of org. structures. It would seem, choose the right, suitable for your company, and everything will be fine. Alas, it is not so. It is important to distribute functions and powers correctly, to identify a key product of the activity, to choose the people for whom this work is suitable psychologically, and also to build communication between them. That is why I always speak of a systems approach: it is impossible to implement any one tool – integration is needed.
Besides, as we can see, already at org level. The structure is related to the number and size of the projects implemented, that is, there is a close interweaving of work with the organization. structures and project management, they become inseparable.
To consolidate all practice, I propose to look at one real example with two structures of the same type, but with a completely different substance. Since the organizational structure in the book is almost impossible to display, everything will be available via QR and the link below.
Organizational Structures (https://www.chelidze.group/en/post/organizational-structures)
Additionally, it should be remembered that with the development and organization. structure, and distribution of functions should change.
In addition, there is a trend in the world to avoid large bureaucratic structures. Why? In addition to economic factors and long transmission chains, this is a breeding ground of irresponsibility. As a result, there are a lot of people in charge, but all are formally covered up, and Ivan’s locksmith is to blame.
Here is a practical example: the repair of industrial equipment has been exceeded due to a chain of events: could not form a brigade because one of its members failed the exam because the head of the service could not form a commission for the exam, because two people on the commission were on vacation… Additionally, nobody seems to blame, but in the end, the object is worth… Until the Chief Engineer, in a terrible curse, corrects the situation in the simplest but not the most obvious way for all listed.
This case isn’t really just about an organizational structure where, under the guise of collective responsibility, the mess is going on. It is also about the corporate culture, which is based on the direct execution of rules (the culture of rules), and formed it the same chief engineer and his predecessors.
Could even in this structure avoid these problems? Of course! With proper work of managers, building of control points, informal communication, leadership qualities of this situation would not be. Additionally, here the main thesis that will go through the book – it is impossible to build an effective business system with one tool.
Main approaches to modelling and description of business processes
Introduction
In addition to organizational structures, there is another key area – business processes.
A complete list of almost all approaches to description with illustrations, display examples and videos available IT-solutions is provided by QR-code and link below.
Business processes: notification and modeling, what to choose? (https://www.chelidze.group/en/post/business-processes-1)
Here I will consider the most common ones, answer who they are, show what I observe in life, use it myself, and summarize – what is more important: structure or business processes?
I understand that all this may seem boring, but in practice I have learned one simple rule – there is nothing worse than arguments «it is so clear», «it is too simple». Always, when I have met such arguments, this has not boded well. These theses are harbingers of chaos and disorderly problems. So, I chose this structure: first a little bit of general theory, then practice and working principles.
Basic approaches to the description of business processes
A business process is a certain algorithm of interrelated actions of people and IT systems, which is aimed at transformation of «raw materials» into «product» or result.
For example, the business procurement process involves the following stages: requisition, sourcing, solicitation, delivery of materials, delivery to the requisitioner. But each stage is also broken down into separate business processes. Therefore, you need to understand that the description of business processes is almost infinite task, and you will need to choose the level of detail, at which you say «all, enough». The lower the level of command competence, the more detailed should be made the description. Or you need to train the team, but then you have to grow as a leader. Smart personnel will not tolerate treatment as fools.
Conventionally there are several approaches to the description of business processes:
– Value Chain Diagrams (value added chain diagram, VAD);
– SIPOC;
– Event-driven process chain (EPC);
– BPMN 2.0 (Business Process Model and Notation 2.0);
– Flow Charting (Process and Procedure notations);
– IDEF (Integrated Definition Language);
– UML (Unified Modeling Languages);
– VSM (Value Stream Mapping);
– ARIS;
– DFD.
Value Chain Diagrams (VAD)
An approach that allows you to describe at the highest level the key activities of the company and departments, show the relationships between them. Here the focus is on graphical display of business processes that create value for the client.
That is, it is a kind of «master model», which gives the whole team an understanding of how its work affects the company as a whole.
Rules of construction of VAD-model of the value-added process:
– To begin with, it is necessary to identify the key tasks of the company or division that characterize its activities.
– Their logical relationship is then constructed.
– The owner and the unit responsible for the process shall be identified and specified.
– The main documents regulating the business process are indicated.
– Additional information and resources required to complete the business process are indicated.
– Links to lower-level diagrams (VAD or EPC) are attached to each upper-level business process.
An example of a VAD scheme
SIPOC
Approach to the description of business processes, which is a tool in lean production. The title reflects the whole essence of the approach, which focuses on five components:
– Supplier (supplier) – person or company that supply resources for the execution of the business process (production, money, materials, data);
– Input (input) – resources for business process: materials, money, production capacity, data);
– Process (process) – all those tasks that allow the result of the work to convert the raw material into the final product;
– Output (output) – products of business process activity;
– Customer (customer) – recipients of services, those who use the product of the business process.
The SIPOC business process is described from the end:
– Identify the customer of the business process;
– Describe the final product (output) that the customer needs;
– Highlight 5—7 key business process operations;
– Identify the necessary resources (input) for the business process;
– Identify the providers of these resources
The key advantage is the speed of description, the ability to identify unnecessary steps that do not create value. This approach is somewhat similar to VAD and is a top-level description. Allows to identify the most obvious losses.
