When It Comes To Organizational Structures, Form Must Fit Function


As former General Electric CEO Jack Welch has said, "An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage." The statement is sagacious enough on its own, but its implications to the corporate communications function are tenfold: Transforming learning into action is a pillar of effective communications, but that proverbial "competitive advantage" is impossible to achieve if the function's organizational structure allows messages to get lost in translation. Communications executives have been known to complain about the difficulty in becoming an integral part of the organization's overall mission, but that excuse has become jaded with the passage of time. The most successful corporations have already given key roles to communications and PR managers, and their business has thrived accordingly. But, in order to do so, organizations must be structured in a way that best facilitates movement across business units and takes into consideration the company's size and resources. Current environmental factors also beg for corporations to place a greater emphasis on their organizational structures, especially where the corpcomm function fits into the big picture. The following business trends necessitate full participation of communicators' in the execution of corporate goals: Increased public scrutiny due to widespread corporation scandals in the "Enron age." Technological advances that exponentially increased the number of global communications channels, prompting a 24/7 news cycle. An increase in multinational corporations and global mergers. With the impact of these business considerations in full effect, executives have every reason to reconsider their organizational structures. Does the communications function have horizontal access across business units and vertical access to corporate governors? Are messages consistent, or is the organization speaking in too many different voices? To whom does the communications staff report? In the case of FedEx, the key to an effective organizational structure is alignment with business needs, and it is reflected in the company's strong reputation and brand identity. The management team uses a combination of centralized, decentralized and matrixed approaches (see sidebar) to integrate communication throughout the organization - not an insignificant challenge, considering FedEx's number of employees and contractors worldwide (260,000) and its collection of eight businesses. But FedEx juggles this substantial weight with grace - and organization. Eric Jackson, the company's VP of corporate communications, points to the company's use of the three structural templates to meet various specific needs. In one sense, communications is centralized through the position of Mike Glenn, EVP, market development and corporate communications, who sits on the senior management committee with other C-level executives. His direct lieutenant, William Margaritis, acts as SVP for worldwide communications and investor relations. Eric Jackson, then, oversees communications, and his eight reporting directors are imbedded in each business unit. It sounds like a mouthful, but the outcome speaks for itself. FedEx is known for its brand health and consistent messaging, which Jackson credits to the structure's ability to facilitate communication across all units and regions. But, he warns, that doesn't mean one approach will work for everyone. "The structure of the communications function really must be put in the context of the company and its strategy. There isn't a 'one size fits all' solution," he says. "In order to make this work, a significant amount of time must be spent on a strategic plan that is aligned against the priorities of the business. Everyone should have skin in the game associated with business outcomes." For Southwest Airlines, that statement is very applicable. The corporation enjoys a very good standing in an industry that has seen its fair share of turbulence in recent years, and Ginger Hardage, Southwest's SVP of corporate communications, tips her hat to the organization's integrated structure. "Southwest is a company that does not believe in silos because there are so many moving parts," she says. "In fact, silos are not tolerated." Southwest falls into the category of a centralized company, especially thanks to Hardage's direct reporting relationship with company president, Colleen Barrett. Thus, the corporate message starts at the top and works its way down throughout the structure, to both internal and external clients. And when it comes to keeping internal clients - employees - on the same page, Hardage credits the airline's Intranet for getting the job done. In the 2005 fourth edition of his book Corporate Communication, Professor Paul A. Argenti of the Tuck School of Business writes: "[Structural challenges] persist today, and the answer to the centralization/decentralization debate often depends on a company's size, the geographic dispersion of its offices, and the diversity of its products and services." So, then, the lesson is simple: The organizational structure must be aligned with business needs, and communications is an integral piece of the puzzle. "At the end of the day, regardless of structure, our profession boils down to individuals implementing the art and science of communications effectively," Jackson says. "You can have the greatest structure in the world, but if your people don't deliver, you will still fall down." Contact: Eric Jackson, 901.818.7087, eric.jackson@fedex.com; Ginger Hardage, 214.792.4847; Paul A. Argenti, paul.a.argenti@dartmouth.edu In the fourth edition of his book Corporate Communication, Professor Paul A. Argenti of the Tuck School of Business lays out the ideal structure for the corporate communication function. Centralize, Decentralize Or Matrix: That Is The Question In his book Corporate Communication, Fourth Edition, Professor Paul A. Argenti of the Tuck School of Business defines various organizational structures through which communications functions can operate most effectively: Centralized: Communications activities are focused under one senior officer at headquarters. *Pros: Easier to achieve consistency in messaging *Cons: Potential disconnect between communications executive and comms activities within individual business units *Example: Southwest Airlines Matrixed: A centralized functional area is supplemented by a network of "operatives" imbedded in individual business units, all of whom report back to a chief executive at headquarters. *Pros: An effective blend between centralized and decentralized structures that can accommodate many organizations *Cons: Difficult to organize *Example: Dell Decentralized: Communications activities are handled by individual business units. *Pros: More flexibility for business units to adapt the communications function to their own needs; good for global corporations; flexibility in tough economic times *Cons: Challenges in maintaining consistent messaging across the organization *Examples: Johnson & Johnson, General Electric

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