Chapter 4 Achieving Integration

Scope of Chapter 4 1. Integration: the concept 2. Integration: the need 3. Analyzing a need for better integration 4. Integration capability 5. Integration mechanisms 6. Cross-functional teams

Integration: The Concept A condition in which there is adequate coordination between the different, but complementary, activities that collectively create value Signifies cohesion and synergy between different roles or units The concept can apply to vertical relations (e.g. plans implemented as intended) It is more usually applied to lateral or horizontal organizational relations

The Need for Adequate Integration Co-ordination issues are becoming more pressing: internationalization of business: global activities cannot be managed solely by an international division shortening time-to-market requirements: concurrent rather than sequential development activities required growing R&D expenditures: wasteful to duplicate market segmentation: greater variety of products and services may require coordinated production and other support competitive importance of quality

Factors Creating a Need for More Cross-Functional Communication Diversity and variety Unanticipated changes Interdependence of tasks Total quality initiatives Time compression

Growing Use of Lateral Organization Flexibility is increased through bringing organizational units together directly rather than relying on communications up and down parallel hierarchies “Lateral organization is the decentralization of general management issues to be resolved by working across organizational units” Galbraith, Competing with Flexible Lateral Organizations (1994)

Lateral Organization Requires a High Level of Integration Galbraith identifies three general types of lateral integration: coordination across functions coordination across business units coordination across countries Galbraith, Competing with Flexible Lateral Organizations (1994)

But Integration may Cost! Goold & Campbell, Harvard Business Review, Sept-Oct 1998: need to evaluate potential for synergy (“working together”), not assume that it is always the holy grail, otherwise it can accumulate costs, waste energy, and generate cynicism Possible costs of integration: time taken in meetings, etc additional overhead costs of co-ordinators potential conflict and confusion with matrix arrangements compromising of specialist standards Therefore important to assess what is needed

Identifying a Need for Better Integration Signs of an integration problem Persistent conflict between departments or units Integration issues fudged Overloading of top management ‘Red tape’ becomes a ritual Empire building by coordinators Customer complaints

Analytical tools quality of relationships matrix customer surveys benchmarking: - comparison of product development lead-times - comparison of decision leadtimes

Integration Capability top management understanding supportive organizational culture willingness to make necessary system adjustments: reward systems HRM (especially selection & training) job and task definitions

Integration Mechanisms Three main categories: 1. Standardization: procedures and rules 2. Plans and schedules 3. Mutual adjustment: direct integration by the people concerned face-to-face: personal meetings, teams use of coordinators

Direct Integration Mechanisms for Mutual Adjustment

Requirements for Effective Coordination Choose people who are already influential and have respect of departments or groups they have to co-ordinate Choose people who can cope with the ambiguity inherent in their position Clarify rights attached to the role, such as the right to call meetings and set schedules for project work Provide necessary back-up resources and staff

Difficulties of the Coordinator Role Responsibility exceeds authority If remains outside an established unit for too long, future career line may be unclear

Types of Team Top management teams Cross-functional teams Project teams Quality circles Self-managed teams Affinity groups

Cross-Functional Teams Work designed around processes not functions Team responsible for a product, service, or process Multi-skilled/cross-trained Expanded responsibilities including leadership Support staff/skills incorporated into teams May assume wider organizational responsibilities (e.g. members may advise on customer service, HR policy)

Example: Hannaford Brothers Company Food warehouse supplying supermarkets Functions: inventory controllers, selectors, forklift operators, schedulers Teams created to take responsibility for all functional duties, focusing on specific customers (up to three) that they directly supplied, including maintaining regular contact with them via surveys, store visits Results: major productivity & cost savings and improved customer satisfaction

Back to the Issue of Cost Costs tend to increase with sophistication of the integration mechanism Time devoted to integration Difficulty experienced in implementation (e.g. strain on coordinators) Costs of training, including team building Possible side-effects on communication within units