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Home arrow Management arrow Performance Management for Agile Organizations: Overthrowing The Eight Management Myths That Hold Businesses Back

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Functional Model

The functional model is pretty much everywhere you care to look in the world of business. Work is mostly organized around units and departments, based on common job functions. For instance, in a company with a functional structure, all marketers are grouped together in one department; all salespeople are grouped together in a separate department; and all customer service people are grouped together in a third department, and so on. The pecking order is elongated and linear in large corporations, with several layers of seniority. The functional model has very few chiefs at the top and lots of soldiers at the bottom. So the functional model centralizes decision-making; decisions are escalated up the ranks. The archetypal organizational chart reflects these characteristics. Figure 7.1 is a simple illustration of the functional model.

The four functions in the model enable specialization. Employees work together in large organizing structures with a common understanding and similar job roles and responsibilities. As the company grows, the structure is easily scalable; additional vertical layers can be added without great difficulty. Its structure is simple to comprehend, administer, alter, and illustrate. Based on the scientific management principle of specialization, its appeal is long-lasting and universal.

But the main downside of the functional model is its inherent rigidity. Barriers and conflict are commonplace, particularly between functions (departments). Cross-functional communication is stifled. Typically, managers in this structure expect their employees to obey the chain-of-command; they place greater emphasis on vertical (functional)

Functional model communication ahead of horizontal

Fig. 7.1 Functional model communication ahead of horizontal (cross-functional) communication. So change across the organization is slower than needed in a fast-paced marketplace. But in a stable and predictable marketplace, the functional model works fine. But it’s not a suitable model for a business trying to adapt to myriad pressures and transformations in the VUCA environment we spoke of in the last chapter.

With its concentration on vertical lines of communication, the functional model’s capacity for adaptive performance is severely curtailed. Approval to make a reasonably simple decision, for instance, can pass through several hands and this can take unnecessary time.

Building understanding across and between various functions of the business is problematic too. As I said, cross-functional communication isn’t encouraged to the same degree as vertical communication. Ideas and collaboration are contained within silos and exposure to other functional areas—and the fresh perspective this may bring—is limited. Briefly, this structure narrows perspective and emboldens intractable rather than flexible behavior.

 
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