14.7 Organizational structure and human resource management  (Page 4/6)

Advantages : The matrix allows functional efficiencies to be achieved while also allowing for the management of discrete product lines. Product managers remain focused on specific customer and product issues, yet can tap into the specialized support systems offered by strong functions. Where a geographic dimension is included in the structure, country managers or other local personnel can devote their attention to the development of location specific strategies. Communication and information sharing may be facilitated through the multiple dimensions.

Disadvantages : The matrix is complex and often involves additional coordination costs. Confusion and ambiguity may result from multiple reporting relationships as a single individual may receive conflicting direction from their various supervisors.

Beyond the matrix:

Each of the above organizational choices clearly offers advantages and disadvantages.

While some type of hierarchy exists at the heart of most organization designs, many organizations are finding that the typical pyramid shaped organization no longer meets their needs. They are looking for options that allow greater flexibility and responsiveness. Such organizations may legitimize informal relationships between various organizational parts and levels. They may rely more on teams as coordinating mechanisms and they may actively encourage collaboration and sharing across business units. Successful global organizations in the 21st century will balance hierarchical control (which remains critical in most organizations) on one hand, with less rigidity, more flexibility and emphasis on individual empowerment on the other.

Staffing choices in a globally far-flung company

Staffing choices in a far-flung global company are more complex as well. Issues of cost, cultural savvy, familiarity with local conditions, language skill, family issues, and more must all be considered carefully as staffing decisions are made. In addition to many of the standard human resources challenges that inevitably arise, determining where employees will be sourced from represents one of the most important decisions facing companies as they set up operations abroad. In general, employees may come from any of the following sources: the headquarters (home) country, the host (local) country, or a third country (neither home, nor host). These choices are outlined briefly below.

Ethnocentric staffing involves staffing overseas positions with home country personnel. These “expatriates” are usually assigned to fairly senior or technical positions in the overseas organization. An example of this staffing choice would be when a Japanese company sets up an office in the United States and sends a Japanese executive from their headquarters in Tokyo to staff the new office in Chicago.

Advantages: Home country staff, when sent overseas, are familiar with the home country operations and culture. Because of this, they may be able to better communicate with headquarters, access needed resources, and tap into a home-country network. In addition, the home country may know these people well from past collaboration that can lead to high levels of trust and confidence between the parties. Familiarity with the company often means that these individuals bring special company-specific expertise along with them, as well as technical skills and knowledge related to the company’s product offering. They may also bring general technical, or managerial skills that may be in short supply in the host country. Ethnocentric staffing offers the additional benefit of building a global mindset among the home country workforce. Those individuals who are sent overseas as expatriates will often return home with a more globalized perspective.