Adwise: Behavior of Organizations

...

how the interpersonal relationships and influencing would impact the organizational structure

As the organizational structure as such is set by the company at top level, so interpersonal relationships cannot influence it directly. However, an indirect influence on the given structure is certainly possible. Even if the CFM’s authority is the CFO in the new structure, he can still decide to share his information respectively collaborate with the MD. Furthermore, the CFO could delegate the recruiting duties to the MD if they have a good relationship he trusts him – although the organization structure predefines something different.

In the case of AdWise e.g. the relationship of the CFM and the MD forced the company’s top level to change the structure, which is also a clear impact.

4. Consider if using matrix structure would be better a better solution and what would be the pros and cons of this model in this particular case?

In the matrix structure the the reporting relationships and authorities are set up as a matrix rather than in a traditional hierarchy. Therefore, employees end up having two bosses – a functional manager and a business unit manager (multi-line organization).

In the best-case scenario, it combines the advantages of business unit and functional organization.

In this particular case, it could be a good idea to have a matrix structure, because you could combine the operational point of view of the MD and the special financial knowledge of the CFO. Especially for the recruiting process and the control you need both sides to obtain the complete requirements and information. Besides that, in a matrix structure the communication paths for the CFM would remain short and both (MD, CFO) stay within reach for the CFM. Additionally, the CFO would be disburdened compared to the new structure and could focus on strategic rather than on operational tasks.

On the other hand, there could be conflicts between the parties, especially when it comes to final decisions. The coordination needs are huge which can lead to a lack of information instead of complete information. Also, the situation could lead to uncertainty of the CFM because he doesn’t know who has the final say or whom he should be loyal to. Furthermore, it is very demanding for the CFM to satisfy two parties.

But with regard to the risk of manipulation it must be stated, that the risk should decrease since there are always two parties in charge of control.

5. List any other observations or recommendations regarding the organizational structure of the company.

The major issue of the AdWise company was the chance of manipulation, which was from their point of view caused by the organizational structure. But instead of changing the structure to it could have been a better idea to simply involve a third (objective) party with no selfish interests to eliminate manipulation. It is of course difficult/impossible to outsource the recruiting process or the especially the evaluation of the CFM. But the monitoring of reports for example could certainly be done by an (internal/external) third party.

Furthermore, there are other possibilities to avoid the manipulation of results. Maybe a change of the structure was/is not the best idea, because it doesn’t tackle the problem at its source. So, the use of the right incentive systems could be another more efficient option. Ideally, assumed you use the right system, there is simply no need for manipulation as a result.