Ford Organizational Structure Report (Assessment)

Introduction

In any organization regardless of the size and/or complexity, responsibilities of employees are usually defined by their work, immediate supervisors and for managers, their subjects. These definitions are often assigned to positions in the organization but not to specific individual(s).

The best organization structure, therefore, depends on a number of factors including the job, size in terms of the required workforce, revenue, geographic expansiveness and the range of its businesses. In fact, this form of organizational structure is suited for firms that are project-driven such as construction, engineering, and technological companies.

The U.S. based Ford Motors Company is one such organization whose organizational structure takes the form of a matrix structure (Moynihan & Titley 2000, p. 66). The paper attempts to discuss how the matrix structure helps Ford Motors to achieve it strategic objectives.

Ford Motor Company: Organizational Structure

Matrix organizational structure is a combination of two or more different structures. In this structure, functional departmentalization is usually combined with products groups on a project basis. If a product group, for instance intends to develop a new product, it will get workforce from functional departments such as research, engineering, production, and marketing.

However, these personnel only work under the manager of the product group as long the project lasts. The project manager usually reports directly to the vice president and the general manager. Given that each project is potentially beneficial to the organization, the project manager draws his authority from the general manager.

The structure of the Ford Motors Company has the Chairman at the apex (Bill Ford) followed by the President-cum-CEO-cum-Director (Alan Mulally), then followed by the Executive Vice President (Lewis Booth). A host of functional heads (all titled Vice Presidents) report directly to the executive vice president. They include, VP, Product Development, VP, Purchasing, VP, Communication, among others (Ford Motorsn 2011, p.4).

As a rule in matrix structured organizations, sharing of information in Ford Motors is mandatory given that a number of people may be required to perform a given task. The company adopts the third model of matrix management, secondment, as espoused by Kenneth Knight (Knight 1977, p. 142).

In this model, employees move from functional departments into project department and back again, thus effectively belonging to either department at different times. The project manager, who is ranked equal to vice presidents, has the total responsibility and accountability for the success of the project.

On the other hand, the functional department heads are responsible for the maintenance of the technical success of the project. It is therefore, imperative that information sharing is a critical aspect of matrix structure if synergy is to be realized.

The matrix organizational structure as practiced by Ford Motors has a lot of complexity emanating from clear role definition. Due to the perennial shifting of workforce, role definition is often unclear, leaving subordinates without a clear manager. At Ford Motors, the command is usually formal and relatively centralized as one move above the hierarchy.

However, the company’s reliance on new inventions in the motor industry makes the top management organ to cede some power to the project manager in order to make critical decisions. The formal aspect of the structure, nevertheless, is exercised by keeping the project manager under the executive vice president (Knight, 1977, p. 143).

Being an engineering firm, Ford Motors is compatible with matrix organizational structure since professionals and semi-skilled employees with diverse expertise run it.

Mintzberg’s Theorem and Ford Organizational Structure

Henry Mintzberg, a management guru, argued that “Every organized human activity – from making of pottery to the placing of man on the moon – gives rise to two fundamental and opposing requirements: the division of labour into various tasks to be performed and the coordination of those tasks to accomplish the activity” (Mintzberg, 1980, p. 68).

Organizations, accordingly, have a few basic structures, which are identified by the primary organizational attributes, for example, the component parts of the organization, mechanism used for work coordination elements of organizational structure, systems of power, and the external environment.

He therefore enumerated seven basic organizational configurations as the machine, the entrepreneurial, the diversified, the professional, the missionary, the political, and the innovative. He further remarked that configuration is important for organizations to achieve stability in their internal environment by creating synergy in the work process, thus establishing a fit with the external environment (Mintzberg 1980, p.50).

Applying Mintzberg’s theorem to Ford Motors, it is evident that the machine organization and the professional organization structures are pertinent. In Ford Motors Company, the products (automobiles) manufacturing is highly standardized, the work so formalized with many routines and procedures.

Such are the characteristic of machine bureaucracy that makes relevant Mintzberg’s theorem in the company. Moreover, decision-making is centralized, albeit, little autonomy given to the project manager; and tasks often grouped by functional heads in collaboration with the project manager.

Ford’s organizational structure is vertical for the top three offices: Chairman, President, and Executive Vice President. Functional heads wield equal authority and are directly under the supervision of the executive vice president. To this extent, the company practices machine bureaucracy hence its efficiency and reliance on economies of scale for success.

Ford Motors is also a professional bureaucracy given that the larger percentage of its workforce is professional, engineers and technicians to be precise. The degree of specialization is high due to the high professionalism, and decision-making is relatively decentralized as far as the project management is concerned.

According to Mintzberg, professional bureaucracy is complex and there are a number of rules and procedures, which allows for efficiency (Mintzberg 1980, p.44). By integrating machine and professional bureaucracies in its organizational structure, Ford Motors enjoys the benefits of the two configurations brings. The structure is indeed matrix, though it has various aspects of the latter two that make it very efficient in its management.

Ford’s Structure and the Achievement of Its Goals

Ford Motors’ matrix organizational system has successfully helped the company to achieve its strategic objectives. Given that the matrix structure is useful both in the external and internal environments, the company’s customer Service Division has achieved a global operation by recruiting 12,000 personnel to serve in it 15,000 dealers.

The company had launched the “Ford 2,000” initiative at the onset of the year 1995 in order to become the world’s number one automobile company in the 21^st century. To this effect, top management became concerned with customers’ complaints on product and service delivery.

Consequently, it was decided that the horizontal alignment of the functional heads (vice presidents) could offer the best opportunity to achieve a faster, efficient, and integrated approach to customer service (Moynihan & Titley 2000, p. 66). Multi-skilled teams with focus on core processes, therefore, constituted the horizontally aligned departments.

These core processes included parts and supply logistics (where parts are obtained and shipped to dealers promptly and efficiently) technical support (technical department and updated on technical information on regular basis); vehicle service and program (gathering and cascading information about repair problems); among other processes.

Moreover, each group has its process owner whose responsibility is to ensure that teams achieve the overall objectives. Not surprisingly, the company’s Customer Service Division retains a functional structure for strategy and communication, finance, and human resources departments.

The matrix model of Ford Motors has enabled it to align its strategic objectives such as expansion in the global market, by establishing efficient management as means focus. The horizontal model used enhances flexibility and rapid response to satisfy customers’ changing needs.

It further makes every employee aware of the production and value delivery to customers. By focusing on teamwork, the structure offers employees to share responsibility, to make decisions and accountable for the results. The sum total of these activities are, therefore, end focus.

The Merits of the Four Approaches to Organizational Effectiveness

There are four approaches used to measure organizational effectiveness. They include the following: the goal attainment approach, the internal process (balance scorecard) approach, the systems resource approach and the strategic constituencies approach (Slack & Parent 2005, p. 42). In goal attainment approach, effectiveness is usually based on a company’s achievement of ends, but not means.

The primary focus when using this approach should be operational goals. The Ford Motors Company’s concern has been meeting the needs of its customers. The goals of the company’s core processes have been geared at satisfying customers’ needs and giving them value for their money. Ford has managed to attain these goals by religiously following the “Ford 200” Initiative.

The goal attainment approach enhances teamwork since for it to be used there must be consensus on the goals. It also facilitates management by objective (MBO) which is an effective way of managing departments of Ford Motors (Slack & Parent 2005, p. 42).

The systems resource output as used in measuring organizational effectiveness, focuses mainly on a company’s input, thus using open systems theory. It holds that firms do not operate in isolation; rather they develop exchange and sometimes-mutual relationship with the environment within which they operate.

The effectiveness of a firm, therefore, is determined by its ability to exploit the resources in the environment and use it for its own good and the good of the environment. In fact, the more effective companies are those that are able to extract more resource from their environments.

Ford Motors is one such organization that has gone global with its operations and has been exploiting its environment for skilled and semi-skilled labor-force, raw materials for its products, among other resources. The expansion of its environment to a global scale is an indication of proper exploitation of the resources that translate in effectiveness.

This approach has three major strengths that include treating the organization as its frame of reference, considering the company’s relationship to its environment and the approach can be used to compare organizations with different goals (Slack & Parent 2005, p. 43).

The internal process approach measures effectiveness of organizations by assessing the absence of internal strains, the integration of members into the system, the fluidity of internal functioning as characterized by trust and benevolence towards individual employees, and the flow of information, et cetera. The approach thus focuses on the throughputs found in a firm.

Balance scorecard is often used synonymously with this approach given that it also provides feedback on the internal organizational processes as well as the external repercussions with a view of improving the strategic performance. It further provides a clear direction that a firm should measure to balance its finances.

Ford Motors is utilizing this approach in the assessment of its effectiveness since the approach is holistic and is prove to give objective results. Balanced scorecard approach, in fact, assesses a company from four perspectives: learning and growth, customer, business process, and financial. It develops metrics, gather data, and analyze it based on the mentioned perspectives (Slack & Parent 2005, p. 44).

The strategic constituencies approach is akin to the systems resource approach, though it emphasizes on the actions of the stakeholders in the acquisition of the resources from the environment. It considers the fact that managers have to work toward achieving several goals concurrently. They strive to meet the interest of several constituents who sway the company’s capacity to accomplish its goals.

As such, the selected goal(s) is valuable, where each goal endeavors to favor one constituent over another. Thus, organizations are political and must respond to the various stakes of their constituents (Slack & Parent 2005, p. 48).

The merits of this approach are that it views effectiveness as a multidimensional construct that takes into account internal and external factors of an organization. Ford Motors engages in social corporate activities in all its branches, which is another merit of the approach. The company, in so doing, expresses its moral and ethical obligation to the community in which it trades.

Limitations of Matrix Organizational Structure in Ford Motors

The limitation of matrix structure is always it costs, which is expansive given the complex nature of reporting requirement. Ford Motors Company has stuck with the structure for a long time since the days of Henry Ford, the founder of the company, though many modifications have been made to address the problem of high maintenance cost.

Workers, who did not have a clear picture of the chain of command in the structure, thus making information flow sometimes difficult, incurred these costs. For example, a functional head could tell an employee below him/her to undertake a certain task then the project manager tells him/her a different thing. The company managed to address, but not fully, the problem of employees’ dissatisfaction.

Currently, the company still faces the same problem, though in lower scale due to decentralization of authority that was given to the project manager. Moreover, the horizontal model that the company adopted at departmental levels has enabled employees to work in teams and create the necessity of information sharing.

To further address the issue of ambiguity of roles and unclear chain of command, Ford Motors often integrates the management structure in the company as one face of its larger plan. When a new product is to be developed, for example, the project management department is given the mandate to pick workers from other departments who are instructed to report to the project boss until the project is completed.

Conclusion

Ford Motors Company uses matrix organizational structure that enables it to easily coordinate and operationalize its vast activities. The company has a vertical management structure from the chairperson, the president, to the executive vice president then followed by a horizontal model consisting of departmental heads known as vice presidents.

The project manager who is crucial for the development of new products is given a considerable authority by the executive vice president over the workers from other departments. In Ford Motors, the application of Mintzberg’s theorem takes the form of professional bureaucracy given that it is engineers and technicians run the company.

Similarly, the machine bureaucracy is also incorporated into the structure owing to the product that the company produces. Finally, measuring effectiveness of the company is done using different approaches, namely: goal attainment, balanced scorecard, systems resources, and strategic constituencies.

List of References

Ford Motors, (2011). The official board. Web.

Knight, K. (1977) Matrix management. New York, PBI.

Mintzberg, H. (1980) The nature of managerial work, Sacramento, Prentice-Hall.

Moynihan, D. & Titley, B. (2000) Intermediate business, New York, Oxford University Press.

Slack, T. & Parent, M. (2005) Understanding Sport Organizations: The application of organization theory. New York, NY: Human Kinetics.