Ghosh: Transformational And Hierarchical Structures

As the company was rapidly growing and there was a need for organizational structure change, Ghosh started implementing structure to the organisation. There were a series of problems and limitations which followed after each structural change in the organization. Hence Ghosh kept on implementing new structures to address the issues at each level. The structural changes can be broadly classified as Non-hierarchical and Hierarchical structures.

Non-hierarchical Structures:

I) Circular Structure – Concurrent circles with inner most circle containing the senior executives followed by the functional managers and employees respectively. The environment around the circle represented the Appex’s customers.

Importance: It was a non-hierarchical structure

The cost of resource allocation separately to the teams increased.

• Dominant role of personalities - Standards were set by individuals rather than the company policy

• No managerial expertise - The best engineer was the head of engineering. The source of authority had functional rather than managerial expertise

• Displeased Board of Directors - Horizontal reporting structure of the functions displeased the Board of Directors. The board wanted a traditional hierarchical structure.

Stage 2 – Ghosh hired external people experienced in management to head the teams

Importance: This was the first step towards external integration which focussed on role assignment based on expertise.

Problems Addressed:

• Now the persons with functional skills could focus on the product development and the managerial role was handled by hired experts

Problems Created:

• The hired external managers neither know about the product nor about the existing team

• It was difficult for new managers to gain respect of the teams

• Ghosh found it very difficult to measure the managerial

Problems Created:

• There was no system which specified who had the authority to make which decisions within the multi-functional product teams

• The conflicts between the product managers and the operations personnel became acute

• Product teams didn’t know the limits of their authority - decisions related to sales price, allocation of resources and prioritization of activities

V) Business Teams – Ghosh created business teams as intermediaries between product teams and corporate management team in Nov 1989

Importance: Business teams included representatives from senior management and had the authority to make decisions including those related to resource allocation and products.

Problems Addressed:

• The conflicts of authority and resource allocation was resolved

• The burden of final decision making at the corporate management level reduced

Problems Created:

• There were a lot of people planning, counting and greasing the wheel as compared to the revenue-producing people.

• There were a lot of managerial levels and the infrastructure, hiring and training costs increased