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The need for Corporate America to survive in the maturing domestic market and be competitive in the global market place has brought about myriad strategies for changing operations. Whether the buzz words are "total quality management" or "process reengineering," the focus is on improving efficiency and eliminating wasteful tasks in each phase of the production process.
Process thinking is needed to aid a smooth business process that cuts across functional boundaries. It is important for functional departments to become internal business partners. As a result, management experts find it necessary to look at the corporate structure from a horizontal perspective and to redraw the traditional hierarchical organization chart.
THE VERTICAL ORGANIZATION
The traditional approach to corporate management views the organization as a collection of vertical departments or business units. (See Figure One.)(Figure One omitted) The vertical approach to corporate management poses two main problems to smooth operations. First, it creates invisible departmental boundaries that discourage employees in different departments from interacting with each other. Second, departmental goals are typically set in a way that can cause conflicts among departments and can exist at higher levels in the vertical organization. For instance, goals for sales are typically set to maximize sales with little attention paid to credit and collection or transportation (delivery). If the customer is one that does not have the ability to pay for the sales, or if the correct quantity is not delivered on time to the right location, that is not a problem for sales; from its perspective, sales did its job and met its goals. Meanwhile, there is a disputed item in the company's accounts receivable. Is credit or transportation the culprit in the company? Are they the only losers in this situation? Can such an organization achieve or sustain superior performance?
As can be seen in Figure One, significant gaps exist between employees from different departments with no channel facilitating interaction and communication. The lower the level, the larger the gap between departmental employees. These gaps are further expanded as a result of corporate growth. Problems can result when a need arises for two departments to communicate at the lower level. Typically, resolving an issue which has occurred at a lower level requires communication with a higher authority where...