Posts Tagged Term Life Insurance

MATRIX ORGANIZATION

Matrix organization structure originated with the United states Aero Space Programme of the 1960s and the Aero space agency’s extraordinary and conflicting needs for system (for innovation) and order (for regulation and control). A matrix organization employs a multiple command system that includes not only a multiple command structure, but also related support mechanisms and associated organization culture and behaviour pattern. A matrix organization is not desirable unless (i) the organization must cope with two or more critical sectors (functions, products, services, areas); manufacturing of blinds and selling of roller shades, woven wood shades and paperless office management makes it complicated.

 

(ii) Organizational tasks are uncertain, complex and highly interdependent; industries like term life insurance, hotel and motels.

 

The structure involves the dual chains of command. The system must also operate along two dimensions simultaneously: planning, controlling, appraising and rewarding, etc., along both functional and product lines at the same time. Moreover, every organization has a culture of its own and, for the matrix to succeed the ethos or spirit of the organization must be consonant with the new form. Finally, people’s behaviour, especially those with two bosses and those who share subordinates, must reflect and understanding and an ability to work within such overlapping boundaries.

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Product versus Functional Forms-4

The discussion in the preceding section and an overview of literature on function vs product choice, permits us to observe that both forms of organization design have their own set advantages and disadvantages. The functional structure facilitates the acquisition of specialized inputs. In permits pooling of resources and sharing them across products or projects.

 

The organization can hire, utilize and retain specialists. However the problem lies in coordinating the varying nature and amount of skills required at different times. The product or project organization, on the other hand, facilitates coordination among specialists; but may result in duplicating costs and reduction in the degree of specialization. For example, a blinds manufacturing company who manufacture roller shades and woven wood shades, need to adopt product forms not functional. It depend on the type of business company is doing. A term life insurance company can go with functional while a motels industry need to select product. Thus, if functional structure is adopted, projects may fall behind; if product/project organization is chosen technology and specialization may not develop optimally. Therefore, the need for a compromise between the two becomes imperative.

 

The possible compromises between product and functional bases include, in ascending order of structural complexity:

 

  1. The use of cross-functional teams to facilitate integration. These teams provide some opportunity for communication and conflict resolution and also a degree of common identification with product goals that characterizes the product organization. At the same time, they retain the differentiation provided by the functional organization.

We will discuss on two other structural complexity in next post.

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