Implementation Levers of Structure & the Forms of Organizational Structure
According to the text, “implementation levers are mechanisms that a strategic leader has at his or her disposal to help execute a strategy” (Carpenter & Sanders, 2008, p. 242). Although there are many possibilities for what can be considered a lever, the chapter defines the following as the major lever categories: structure, systems and processes, and people and rewards.
The purpose of organizational structure, whether we are looking at org charts or decision rights, is to provide a “framework” that management uses to divide tasks, deploy resources, and coordinate departments. There are two functions of structure: ensures control and coordinates information, decisions, and the activities of employees at all levels (Carpenter & Sanders, 2008). The text alludes to the fact that as firms become more complex, the firm must modify or alter their structure accordingly. During my almost 4 years at Molina Healthcare, I have heard the word “restructuring” multiple times. It is usually a result of growth, employees leaving company, transitioning employees within the department, changes in company and/or department strategy, etc. The most common trend is updates to the ‘org chart.’ In terms of control and coordination, the priority and strategy varies depending on the firm’s level of diversification. In my previous department, Quality, the department was more diverse – containing various sub-departments, which required a greater emphasis on coordination to ensure that all the sub-departments worked efficiently to meet the goals of the department as a whole. Currently, the department I work for now, is more focused; therefore, the structural emphasis is on control of the single business. According to Carpenter and Sanders (2008), “at all times, a firm’s structure should seek a balance between the control needed to achieve efficiency and unity of direction and delegation of authority required to make timely decisions in a competitive environment” (p. 242).
There are four basic forms of organizational structure: functional, multidivisional, matrix, and network. A functional structure “organizes its activities according to the specific functions that a company performs” (Carpenter & Sanders, 2008, p. 243).
Functional Structure allows managers to instill a greater emphasis on professionalism towards specialized tasks. The challenge in a functional structure, however, is to ensure that each functional unit does not lose sight over the overall purpose and strategy of the larger company objectives – this can create functional silos. At Molina, I have seen this occur between various functional areas in the Quality department; each area begins to narrow their focus and forget the impacts on the bigger picture. I think this can be avoided by having constant communication between each functional areas managers to ensure that each area is collaborating effectively and contributing to the overall performance and goals of the department and organization.
The Multidivisional Structure is defined as a “form of organization in which divisions are organized around product or geographic markets and are often self-sufficient in terms of functional expertise” (Carpenter & Sanders, 2008, p. 244). An example of this is seen in Molina’s Health Plans. While I work for corporate, who has its own divisions, the health plans in turn have their own divisional structures based on geography– each state health plan has its own Member Services team, Finance team, Quality and Risk Adjustment teams, Marketing team, etc.
Next, the Matrix Structure is a “forms of organization in which specialists from functional departments are assigned to work for one or more product or geographic units” (Carpenter & Sanders, 2008, p. 245). An example of this is seen in Molina Healthcare’s Enterprise Project Management Operations (EPMO) Department. This department has Project Manager specialists, who are assigned different projects across the enterprise. PM’s can work in finance, quality, IT, etc. The PM simultaneously reports to the EPMO and the functional area (i.e. finance).
The Network Structure is the final form of organizational structure. This structure “consists of small, semi-autonomous, and potentially temporary groups that are brought together for specific purposes” (Carpenter & Sanders, 2008, p. 246). This structure is the most flexible of the four. According to Walton (2016), Network-based organizations also tend to use volunteer labor in an effort to keep costs down and make the organization as streamlined as possible (para 2).
Systems & Processes
According to Carpenter and Sanders (2008), “systems and processes make it possible to manage budgeting, quality control, planning, distribution, and resource allocation in complex contemporary organizations” (p. 247). In addition to these functions, systems and processes are also put in place as structures to measure and manage company performance, including short-term and long-term ROI. The best and most common term used for performance-management is the balanced scorecard. The balanced scorecard is a “strategic management support system for measuring vision and strategy against business- and operating-unit-level performance” (Carpenter & Sanders, 2008, p. 247). There are three fundamental lessons that come from using the balanced scorecard approach:
Translation of strategy into tangible and intangible performance metrics
Use of strategy map to align metrics with strategy
Makes strategy a continuous and dynamic process
Although financial metrics are the easiest to capture and report, they are not the only metric that firms should look at. Manager use of the balanced scorecard keeps them accountable for other tangible and intangible variables in addition to the short-term financial metrics. These metrics include financial, customer, internal business process, and learning and growth. The scorecard breaks down these metrics and assesses progress according to objectives, measures, targets, and initiatives unique to that metric. Historically, Molina Healthcare has utilized scorecards to track progress and monitor performance. However, I have not used scorecards in quite some time. I think the use of scorecards is only beneficial if managers are leveraging the information to improve upon, or rework current strategies. In the past, the scorecard has been more of a checklist item to complete rather than a useful tool that influences decisions. The text goes on to describe how these elements can be transposed to a strategy map, which is used to “link all performance metrics to the firm’s strategy” (Carpenter & Sanders, 2008, p. 248). The strategy map illustrated in Exhibit 8.7 shows the complexities of each perspective and how, on some level, their performance impacts the other areas. According to Carpenter and Sanders (2008), a manager must disseminate the key features of strategy and stipulate responsibilities for executing it throughout the organization; and, link the strategy with the financial budget to ensure that a strategy remains continuous and dynamic. In an article from Clear Point Strategy, they provide the following for benefits of ‘score carding:’
1.Further analyze your operational strategy
2.Grow your bottom line by looking at other metrics
3.Align your strategy and your tasks
4.Change what you do so it aligns with your mission (Jackson, 2015).