Organizational structure and control in Smith and Falmouth's online division

S&F Online

This paper examines issues of organizational culture, structure and control for Smith and Falmouth. As part of its growth strategy, Smith and Falmouth started an online division, S&F Online, which consisted of a web development team, a logistics team, and a marketing manager to coordinate the two teams with the parent company.

The Project Manager, along with his six-member web development team, was responsible for the website and online payment gateway which made up the Online Sales Channel. The Logistics Manager and his three-member team was responsible for order handling, customer support and delivery operations. The logistics team then reported order fulfillment status to the Marketing Manager, who coordinated product lines, marketing budgets, and promotional activities.

The two teams worked in close coordination, and had the first version of the website operational within three months. The S&F Online CEO then brought in a new COO, who was tasked with streamlining operations, expanding the Online Sales Channel, and making S&F Online profitable within nine months. The change in leaders had significant implications for S&F Online, according to Nix, Dressel, and Bates (1977).

Current Methods of Control

S&F Online used a system of feedback controls to manage its organizational structure. The feedback controls process consisted of reviewing information to ascertain whether an organization's performance met organizational standards. The Marketing Manager used status reports from the Logistics Manager to make decisions about the performance of S&F Online. Because the newly created teams functioned with a minimum of management and established rules, they would be considered self-controlled.

Current Departmentalization

S&F Online was organized according to the six basic parts described by Mintzberg (2003). The CEO occupied the strategic apex, and as the organization grew, additional managers were required. The CEO brought in the COO, to whom the Project Manager, Marketing Manager and Logistics manager reported. The operating core consisted of the logistics and the web development teams, and the middle line distinguished the operating core and strategic apex. Smith and Falmouth provided the technostructure and support staff, as well as the ideology to this newly formed department.

Because S&F Online was so new, its division of labor was primarily achieved by mutual adjustment and direct supervision. As the organization matured, it would move toward standardization of work processes, outputs, skills and norms to varying degrees. Again, because the department was recently formed, S&F Online was still evolving the parameters of its design. There was some amount of job specialization, but little or no behavior formalization, training, or indoctrination. Unit grouping and unit size were limited, while planning and control systems were developing. Liaison devices were fairly well established between the two teams and the marketing manager. S&F Online enjoyed limited vertical decentralization, with managers controlling many of the decisions concerning their line units (Mintzberg, 2003).

Given that'd&F Online was both new and small, its behavior was less formalized and its structure less elaborate. Technical systems were also less developed. The environment was fairly dynamic, so S&F Online's structure was organic. With respect to power, S&F Online was externally controlled by the parent company, which held the S&F Online CEO responsible for the department's success (Mintzberg, 2003).

The configuration that best described S&F Online was innovative. As Mintzberg described, certain organizations "need above all to innovate in very complex ways" (2003, p. 223). The S&F Online adhocracy depended on mutual adjustment by the organization's highly trained and specialized experts, and relied heavily on the use of liaison devices. Innovative organizations occur in complex, dynamic environments that call for the cooperative efforts of various different kinds of experts, as happened with S&F Online.

Current Organizational Cultures

S&F Online displayed significant tendencies of the seven primary characteristics of organizational culture: innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness and stability. Because S&F Online was a new division of Smith and Falmouth, its culture was still being formed. Typically an organization derives it culture from its founder, so the CEO would be expected to have a significant impact (Robbins and Judge, 2011).

Robbins and Judge (2011) also argued that an organization's culture was largely determined by what it had done before and how successful the organization was in doing it. They also noted that selection decisions were among the most important that an organization makes. As S&F Online continued to grow, this characteristic would become more important. Likewise, proper socialization was important because it affected employee performance.

Effects of the New Size and Structure

The new structure required that, in order to maximize employee performance as well as satisfaction, managers must factor individual differences into their decisions about organizational structure. These individual differences include employees' culture, personalities, experiences and the task itself.

According to Robbins and Judge, S&F Online's structure impacted employee attitudes and behavior. Their limited specialization, along with less formalization and wider spans of control allowed employees to have more freedom, which in turn resulted in greater diversity in behavior (Robbins and Judge, 2011).

Conclusion

As part of their strategy, S&F Online began its operations with two teams reporting to the Marketing Manager. When the CEO brought in a new COO, that change highlighted the fact that'd&F Online was in the process of defining its structure, its culture, and its methods of control.

The organization's age, size, and structure meant that the organization was less formal and less specialized, lending itself to more efficient operation and more employee freedom.