Chapter 4 Achieving Integration

1. Chapter 4Achieving Integration

2. 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

3. 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

4. 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

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

6. 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)

7. 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)

8. 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

9. 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

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

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

12. 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

13. Direct Integration Mechanisms for Mutual Adjustment

14. 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

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

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

17. 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)

18. 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

19. 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