8/7/2019 Design of Org

1/2

Most chemical companies do business in many countries, have extensiveproduct ranges andserve either multiple market segments or multiple applications. Thiscomplexity translatesinto one pivotal issue: how should the company be organised to bestaccommodate andbalance all the demands upon it?Organisational design is far more than creating a diagram of themanagement hierarchyin the company (an organogram). It addresses the whole set of issuesthat commence withthe debate of whether the company should be structured primarily on ageographicoperating unit basis or a global business unit basis. In the vast majority ofcases there is noclear-cut answer, and some form of matrix structure is required whichdrives the necessity

to address a number of complex questions - including: Precisely which activities should be managed and controlled centrallyand whichregionally or nationally? What should be the balance of power between the differentmanagement groups toensure that all core activities are executive effectively? How can the matrix structure be stabilised, so that ongoing internalsquabbles betweeninternal groups are eliminated and continuous power shifts (which arevery disruptive)are minimised?Organisational design then means creating and installing structures,reporting lines,metrics, reward systems and processes (etc) to ensure that the companyas a whole is set upin the best way to execute its chosen strategy and business modeleffectively.

Our ServicesWe assist chemicals and materials companies by:1.Thoroughly reviewing the effectiveness of their current organisationalstructure andidentifying areas for improvement

2. Defining and designing the optimum organisational structure, given therequirements ofcustomers and the strategic positioning of company3. Gaining internal acceptance and support for whatever changes will beinvolved inmoving to this4. Planning and implementing the necessary changes5. Utilising all of the available levers and mechanisms to lock the changesin place

The Basic IssueAt the extremes, a company can adopt a completely decentralised

structure (with a

8/7/2019 Design of Org

2/2

dominant geographic hierarchy regional and national managers totallyresponsible foreverything that happens in their territories) or a completely centralisedstructure (withdominant business unit managers, who are responsible globally for aparticular part of thebusiness). Both have very distinct advantages and disadvantages:Most companies recognise the trade-offs, so endeavour to find a mid-waysolution.Unfortunately, even in sophisticated matrix organisations, almost everyemployee still worksfor either the central structure or geographic operations, and theyinevitably try to gainmore independence and/or power for themselves and their part of theorganisation. In manycompanies, power vacillates between regions and the centre (thependulum effect), and

with this a great deal of time and energy are taken up firstly in internalpolitics, andsecondly in adjusting processes and reporting lines to reflect the shiftingpower split.