Audrey
Lecturer in Gilmore
Marketing, University of Ulster at
Jordanstown, Newtownabbey, Co, Antrim
BT37 OQB, UK
Introduction
Management decision making occurs within
complex and often rapidly changing organi-
zational situations. Factors that will have an
impact upon the quality of such decision
making include the type of organizational
structure in which managers operate; and
the nature of organizational development
and change in relation to both internal and
external environments. Initially, a summary
The impact of
organizational
factors on
management
decision making
0 m e article focuses on the dev-
elopmental nature of management
decision making over a 3yearperi-
od.
0 Initially some general organiza-
tional structures and their influence
onfunctional management decision
making are considered.
0 m e enect of dirkrent organiza-
tional structures and their influence
onfunctional management decision
making is discussed.
0 m e Pt’ between organizational
structure, management decision
making and the development of ‘key’
individual managers is considered.
0 A case example describing the e#ect
of organizational changes in a
UK-based consumer services com-
of the literature surrounding organizational
structures is given, followed by consideration
of organizational development and change.
The impact of these organizational factors
on management decision making is then
illustmted by the use of a case description of
a large consumer services company operating
in the UK.
The major influences on management
decision making are shown in Figure 1 and
described here.
344
Organizational Structure
Management
Decision
Making
Organizational
Change & Development:
- Internal situation
- External environment
Figure 1. Organizational influences on management
decision making.
Organizational structures
Organizational theorists are f.ar from agreeing
on what the term ‘organizationstructure’ fully
entails (Ford et al., 1988). Structure may
comprise horizontal and vertical differentia-
tion, division of labour, span of control and
spatial dispersion. In addition, the major
variables that characterize organizational struc-
tures are formalization, centralization and
structural differentiation (Hall, 1977; John
and Martin, 1984) which some argue are more
philosophically oriented processes than struc-
tures (Ford et al., 1988). In the widest
definition the term organizational structure
will include all of these issues.
The majority of organizations begin their
lives with non<hborated, organic structures.
Mintzberg (1979) writes that most lifecycle
models of organizations include the same
stages: craft, entrepreneurial, bureaucratic,
divisionalized and matrix. As organizations in
the envepreneurial stage age and grow they
begin to formalize their structure and even-
tually make the transition to a stage of
bureaucratic structure. Continued growth
often drives bureaucracies to superimpose
market-based grouping on their functional
structure, thus bringing them into the new
stage: divisionalized structure. Mintzberg
(1979) contends that there is a ‘finalstage’,
that of a matrix structure, which transcends
divisionalization and causes a reversion to
organic structure. Some of the more recent
literature suggests that some companies are
A. Gilmore
moving ‘beyond matrix management’ in using
temporary project management teams to deal
with complex tasks facing organizations in fast
changing and competitive environments (Bel-
bin, 1981; Goffee and Scase, 1984; Obeng,
1990; Sahlman and Stevenson, 1991; Bucha-
non and Boddy, 1992). Not all organizations
will pass through all these stages, but many
seem to pass through a number of them in this
lifeqcle sequence.
James and Jones (1976) argue that organiza-
tional structure may be defined as
‘the enduring characteristics of an organisa-
tion reflected by the distribution of units
and positions within an organisation and
their systematic relationships to each other.’
Central to this definition is the division of
labour, which creates task positions and the
interrelationships or interdependence among
positions. The degree and level of managerial
decision making and responsibility therefore
depends to a large extent on the organizational
structures within which managers operate. In
particular, the degree and level of manage-
ment decision making will depend upon
whether the orgmization smcture is centra-
lized or decentralized.
Centtalizedanddecentralized
management structutes
On a general level, management structures can
vary between the extremes of being either
centralized and formalized or decentralized
with a more informal structure. Traditionally,
centralized organizations have hierarchical
structures with many lines of command and
consequently have many middle managers
controlling operations. In contrast, an organi-
zation that is more decentralized, with respon-
sibility for decision making pushed further
down the structure to the managers closest to
the functional activity, traditionally encourage
and favour flatter organizational structures.
Organizations that can be described as
predominantly decentralized but which be-
come more centralized in particular situations
are described as ‘quaziaganhtions’ in some
Strategic Change, December 1336
B e impact of organizationalfactors on managemrent decision making
management literature. For example, Goffee
and Scase (1984) describe the phenomenon
of ‘quazi-organic’ structure which can be
manipulated to promote a ‘democratic’atmos-
phere while at the same time, strengthening
central control. The effectiveness and effi-
ciency of such an organization depend on a
looser structurewhere managers are ‘trusted’to
do the job.
Organizational structure can evolve around
the major decision makers in the organization.
In some cases quazi-organizational structures
have evolved around the key decision makers
in an organization, in particular those man-
agers who have proved to be competent in a
specitic functional area or role.
Although the traditional view of organiza-
tions emphasizes such variables as central-
ization, formalization and size, Weick (1996)
argues that organizations consist of patterned,
repeated interactions among social actors.
Consequently, the skill, ability and knowledge
of the individual will play a central part in the
interactions and interrelations within an
organization structure (Brass, 1984). Even-
tually, the building, development and refine-
ment of these interactions will lead to further
organizational restructuring which may occur
either incrementally or in a ‘quantum leap’
(Millar and Friesen, 1984).
Furthermore, although originally research-
ers considered organizational structure at the
level of the overall organization (for exam-
ple, Pugh et aZ., 1968), more recent work
suggests that instead of a monolithic struc-
ture, different organizational structutes are
present within individual organizations at any
given time (Duncan, 1976 Buchanan and
Boddy, 1992). For example, Duncan (1976)
has shown that different structures are
present at different stages of the innovation
process within an organization. In times of
either internal or external change organiza-
tional structures can be described as being in
a state of flux,with issues such as the nature
of the decision-making roles of managers and
levels of responsibility constantly changing,
thus having implications for the competence
requirements of individual managers. These
issues are discussed further in the context of
Strategic Change, December 1996
345
internal and external influences upon organ-
izational development and change.
Organizational deuelopment
and change
Organizational structures gradually change as a
result of circumstances which occur both
internally and externally to the organization;
internally as the organization develops, manage-
ment decision making evolves and managers
change; and externally as the organization
adapts to the changing envitonment.
Organizational structures
change as a result of
circumstances
Internal influences on
o ~ t i o n achange
l
An organization is in a continual state of
change however slowly this may appear to
happen. There have been a variety of studies
to suggest that organizational structure is
affected by such internal variables as size
(Child, 1972), innovation (Moch and Morse,
1977) and satisfaction (Aiken and Hage, 1966).
Griener (1972) argues that organizations often
overlook the internal variables and fail to ask
such critical developmental questions as:
‘Where has our organization been?’ ‘Where is
it now?’ ‘What do the answers to these
questions mean for where we are going?’He
writes that many clues to their future success
lie within their own organizations and their
evolving states of development.
The inability of management to understand
its organizational development problems can
result in a company becoming frozen in its
present stage of evolution regardless of
potential marketing opportunities.The current
relationships, interactions and interdependen-
cies within an organization at any given time
have an impact on the organizational decision-
346
making processes and these in turn will
depend on the structure of that organization.
Changes in the organizational direction and
purpose will also have an impact on the
management structure. Indeed, various studies
have illustrated that structural change often
follows strategic change (Chandler, 1962;
Stopford and Wells, 1972; Rumelt, 1974;
hfintzberg, 1979).
In a similar vein, Brass (1984) contends
that organizational structure may result &om
informal or emergent patterns of behaviour,
as well as from formally prescribed positions,
for example, where employees may infor-
mally modify the prescribed work flow or
engage in information exchanges that do not
follow the formal communications channels.
These emerging interactions may become
recurring patterns of behaviour and even-
tually further structure is added to the
organization. Therefore an employee’s struc-
tural position within the organization is the
result of the particular combination or
interaction of both formal and emergent
interdependencies. Thus an organization
can be conceptualized as networks of
interrelated structural positions, with indivi-
dual employees occupying these relational
positions, within the context of a more
formalized structure (Brass, 1984).
In addition, the characteristics of the
overall manager are important in organiza-
tions (Brass, 1984; Goffee and Scase, 1984;
Williams and Huber,1986; Heller et al., 1988;
Sahlman and Stevenson, 1991). In decentra-
lized, informal organizations authority can be
passed to each manager and subsequently
taken away again when the overall manager
wishes to make the final decision. This is
more likely to occur in organizations headed
by ‘entrepreneurial’-typemanagers who like
to maintain a ‘paternalistic’ (Sahlman and
Stevenson, 1991) overview and control of the
organization. Although the pressure on
managers to become entrepreneurial may
come from the outside in the form of
increasing competition, pressure to limit
entrepreneurial behaviour may come from
the inside as a result of high-level decisions
and exigencies of hierarchy.
A. Gilmore
External influences on
organizational change
There have been a variety of studies to suggest
that structure is related to and affected by
external variables. Factors that are widely
cited as affecting organizational structures
and decision-making activity are changes in
the external environment flaylor, 1975;
Mintzberg, 1979; h4illar and Friesen, 1984;
Ford et al., 1988), such as environmental
uncertainty (Lawrence and Lorsch, 1967), and
technological changes (Marsh and Mannari,
1981).
Thus changes in the external and internal
environment which have an impact upon
organizational structure and changes in organ-
izational structures will affect decision making.
General effea of Organizational
cbange on rnanugement &cision
making
Organizational structure clearly has a power-
ful effect on decision-making activity (Simon,
1965; Wilensky, 1967; Weinshall, 1975;
Deshpande, 1982; John and Martin, 1984;
Heller et al., 1988). What is the overall
Organizational structure
clearly has a powerful efSect
on decision making activity
nature of this effect? In times of change
organizations may function in a different
way. Taylor (1975) writes that when the
external environment changes dramatidy
large companies put long-term plans on hold
and regress to ad-hoc decision making.
Mintzberg (1973) also describes ‘muddling
through’ decision making where decisions
are made incrementally on the best available
information while trying not to preempt any
long-term strategies. A continued circum-
stance of change where such decision making
occurs wiU eventually have an impact upon
the organizational structure.
Strategic Change, December I996
The impact of organizational factors on management decision making
Weinshall (1975) describes organizational
changes that occur as a company grows in size
and geographical space. He argues that during
the life of such an organization it gradually
moves from a situation of balance to imbal-
ance between the nature of decision makmg,
the managerial structure and the leadership
characteristics of managers. Weinshall’s
(1975) argument revolves around the idea that
there are times in an organization’s evolution
and growth when the managerial structure no
longer ‘fits’the nature of the decision-making
requirement and managers in particular posi-
tions may not be competent for the new level
of decision making in which they are involved.
Therefore changes in managerial structure
necessitate a change in the nature of decision
making or conversely, changes in the nature of
decision making necessitate a change in the
organizational structure as an organization
evolves through its life cycle or adapts to a
dramatically changing environment. Further-
more, such changes in decision making may
require different management characteristics
and abilities; thus illustrating the importance of
management performance and having man-
agers with relevant competencies for the
specific decision-making processes and activ-
ities at each particular stage of organizational
evolution.
Changes in management decision
making: a case description
These issues are illustrated and discussed in the
context of a company that changed its organiza-
tional structure in an attempt to improve the
level of responsibility and authority of manage-
rial decision making twice over a 3-year period.
This occurred against the background of an
increasingly competitive situation.
The company used as a case example for
this study is a large UK-based company
offering a consumer service. At the beginning
of this study (1991) this company was not
structured around management responsibility;
instead the traditionally centralized structure
was built on a hierarchical system with
Strategic Change, December 1996
347
directives being given from headquarters. An
outline of the company structure is illustrated
in Figure 2. The figure highlights the pre-
dominance of headquarters involvement and
input into any decisions or activity. All
decision making either emanated from head-
quarters or had to be approved by managers
there before any action could take place. The
organization was built around different levels
of hierarchical management which meant that
operational managers working at divisional
level had three or four middle managers to
approach in order to have action taken or
consideration given to any problem area. The
company’sUK operation was divided into four
divisions each with responsibility for a
particular geographical area. These divisions
are illustrated within the context of the overall
company structure in Figure 2.
Each division had an overall manager, the
divisional manager, who had control over the
division’s management, with considerable in-
put from headquarters in relation to corporate
policy and decision making. Most long-term
corporate decisions were made at headquar-
ters. Decisions in relation to the core product,
the corporate advertising campaign, choice of
products and services offered, and the pricing
of these products were made centrally and
dictated to each divisional manager.
Most long-term corporate
decisions were made at
headquarters
~~~~ ~
Top management at headquarters managed
by issuing directives to their middle manage-
ment in each division thus controlling the
organization’s activities. Their plans revolved
around setting budgets for each year in relation
to the operational activities which would be
carried out. Each division had a cost centre
which set limits to the amount of money that
could be spent each year on each aspect of
operational activity such as promotions, spon-
sorships and refurbishments.
Some marketing decisions were made at
divisional level. For example, decisions
348 A. Gilmore

I 1 - I I I - . I I I
I
Divisional I
Managers I
L
I
(4) I
I
I ____ ----L-J--I
L
I
1 .
I
1
I I

I
I
I
I
I
I DIVISION DIVISION DIVISION
I
I B C D
I
I
I
I
I
I
I
I
I
I
I
I
I
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I
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_ -I
Figure 2. Corporate company structure: 1991.

relating to which advertisii agency to use for making at this time are summarized in Table 1
leaflet and brochure design, poster and news- and described here.
paper campaigns; which PR agency to use
Organizational structure. Figures 2 and 3
locally; promotion to the local travel trade and
illustrate the overall hierarchical nature of the
handling customer complaints.
organizational structure at stage 1 where
In order to illustrate the impact of organiza-
although the divisional manager had overall
tional factors on management decision making
responsibility for the route, various managers
the following case description focuses upon
from headquarters had joint authority with the
one of the four UK divisions of this company
divisional manager over specific aspects of the
(hereafter referred to as division A) over a
3-year period. ~~ ~ ~~ ~

Various managers from

The organizational structure and its effect headquarters had joint
on management decision making at stage authority with the divisional
1: 1991 manager
The organizational structure of division A at
stage 1 is illustrated in Figure 3. The effect of
this organizational structure and the key service. All line managers either directly or
characteristics of the management decision indirectly reported to and were accountable to

Strategic Change, December 1996

The impact of organizationalfactors on management decision making 349

DIVISIONAL
MANAGER

I I I I

min

Figure 3. Divsion A's structure: 1991.

headquarters. A summary of division A's
organizational structure in 1991 is given here.
The structure of management created a
'control' type of management rather than a
decisive and action-otiented management.
Overall, the management structure tended to
restrict the decision-making process and hold
up activity until everything had been checked
by each level of management. The structure
also meant that there were at least two levels
of managers between the divisional manager
and the functional teams with responsibility
for the various marketing tasks, creating two
reporting levels before the divisional manager
Table 1. Characteristics of management decision
making at stage 1: 1991.
~ ~
received information from the front line. The
position of the operational managers and
supervisors meant that both headquarters
and the divisional manager had authority for
their management and this led to many
conflicting decisions.
Furthermore, the structure resulted in a
remoteness of decision making and inability to
respond quickly to market changes. This dual
level of both headquarters and divisional
management created a system which encour-
aged control rather than active decision
making.
Decision-makingmethod. As a result of the
organizational structure all decision making
was influenced by headquarters. Decisions
were reached in relation to suitability for all
~~

divisions and therefore the overall nature of

organizationalstructure centralized: formal HQ
functional departments;
divisional managers
responsible to HQ
functiOnS
Decision-making method HQ management directives
Management focus operational issues
Management style Directive
Communication and Formal: budget led
P-g
Control system Standards and cost centres
Service quality and Maintaining traditional
customer care standards and emphasis
on tangible aspects
decision making focused on very general
policies and the setting of standards and rules
which could be widely applied.
The decision-making process at divisional
level focused on issues with which the
managers felt more comfortable, such as deal-
ing with familiaraspects of operational activity
and planning repetitive annual events. Most
decision making was preceded by the collec-
tion of some convenient information (informa-
tion within the office or easily found within the

Strategic Change, December 1996

350
company), with no real indepth search for
information; consideration of the information
and a convenient choice made that would not
involve much change. Division As decision
making also involved following directives from
headquarters and taking advice from their
current advertising and PR agencies, with little
new thought about the future requirements of
the industry. Their decision making took
account of the bureaucratic priorities and
considerations such as individual managers
and functional teams’ current work load.
Management focus. The focus of managers
at headquarters was on the overall control
of divisions, standardization of activities
across divisions, maintaining market share in
each geographical location and stability of
operations.
Management style. Strategic decision mak-
ing was carried out by top management at
headquarters. Directives were given to each
route for their operational activity and these
were expected to be carried out according
to the rules and procedures accompanying
them. For example, pricing structures and
levels, the corporate message for advertising
and promotional activity and the choice and
range of service products were standard for
all divisions.
Decisions relating to specific tactical issues
were carried out at divisional level. These
included decisions about which PR and
advertising agency to use, any newspaper
and poster campaigns to be used in tandem
with corporate advertising, and how to deal
with customer complaints.
Communication and planning. Organiza-
tional communication occurred through for-
mal meetings and memos from headquarters,
planning was fixed around the allocated
budget for each traditional annual activity
such as physical facility refurbishment, trade
functions and promotional activities.
Control system. There were cost centres
for each division for each service area, that
is: refurbishment, advertising activity, and
each aspect of service.
A. Gilmore
Outcomes-implementation of plans.
Marketing activity at this time focused on the
maintenance of traditional standards and
offering the same level of activity as compe-
titors. In particular, marketing activity con-
centrated on the tacticaVoperational aspects
of maintaining the physical features of the
during-purchase service delivery area, with
little consideration of marketing activity
specifically targeted at customers pre- and
postexperience of the company.
At this time the majority of customer
complaints were about:
staff unhelpfulness and rudeness in
relation to giving information and help
ing customers with problems;
the prices of service and products in
relation to the quality, presentation and
choice of items;
the difficulty in getting information in
terms of getting through on the telephone
lines, and getting answers to queries, and
availability of services.
Therefore at this time front-line customer
service staff were often inaccessible when
required, reactive to customer requests, and
often unhelpful and rude.
Towards the end of stage one (1991), the
divisional manager urged his managers to
become more involved in the division’s
operations, have more direct contact with
the local markets, and develop more specific
knowledge of the operational aspects of the
business. Consequently, they were sometimes
torn between following head office proce-
dures and ignoring them when they felt they
were inappropriate. However, these managers
were not accustomed to making decisions for
themselves and often were unsure when
confronted with a different situation. At the
end of 1991 the corporate management
designed a more streamlined organization.
The divisional manager in division A used this
as an opportunity to change the structure at
divisional level with the long-term aim of
creating promotional opportunities for some
younger, more enthusiastic managers. This led
Strategic Change, December 199G
The impact of organizationalfactors on management decision making 351

to the organizational restructuring of 1992, increase the level of accountability and

described in stage 2: 1992. responsibility from the management team,
with managers taking direct control of their
spec& functional areas.
The o q p n h t i o n a l structure and its effkct The divisional manager reduced the number
on managememt decision making at stage of hierarchical levels in division A’s organiza-
2: 1992 tion (in line with the corporate structural
Decentralization was introduced as a result of change) and made each functional manager
corporate rationalization and because corpo responsible directly to himself with all other
rate management had recognized the diversity members of their teams directly responsible to
of the different divisions, requiring manage- them. This simplified the organization struc-
ment from the people closest to the market ture by reducing the number of reporting
and those who understood the local variations levels and numbers of managers responsible
in demand for the service product. Head- for each functional activity. Each management
quarters was restructured and some of the function was given direct responsibility for its
headquarters functions were moved out to specific areas in terms of both planning their
each division to increase divisional responsi- marketing tasb and ensuring that marketing
bility for managerial decision making and activities were performed.
marketing activity; some longer serving head- The organizational chart for division A in
quarters managers accepted voluntary redun- 1992 is shown in Figure 4. The structure was
dancy packages. It was intended that this decentralized with each functional area becom-
would ensure the organization could respond ing a management unit, with specific responsi-
quickly to local conditions, and improve the bility for its own area. Functions that had been
responsibility and accountability of the middle managed or jointly managed by managers in the
and senior managers in each division. head office structure were now completely and
Consequently, the overall influence of the directly managed at divisional level.
UK head office was reduced. This gave the In this structure the five management
local divisions autonomy; with the main functional areas relevant to the organization’s
decision-making responsibilities and tasks business were formed into five management
pushed down to each division so that each ‘teams’: product management, pricing man-
divisional manager had complete responsibil- agement, advertising and promotional manage-
ity and authority for his own division. ment, customer/staff interface management
and administratioWinternaI communication
management. Each management team was
me overall influence of the responsible for its particular management
UK head oflce was reduced function’s overall planning and the implemen-
tation of operational activities. Much greater
responsibility was given to the managers
To benefit most from the corporate re- in each functional team, they now had
structuring, division A’s divisional manager complete power to make decisions and
devised a new divisional level structure. This implement new ideas. This was expected to
was designed to improve local management stimulate and motivate their interest in
responsibility and accountability for functional functional responsibilities.
decision making and activity and to create The effects of this organizational structure
some motivation and enthusiasm for role and the key Characteristics of management
responsibilities. Functional management teams decision making at this stage are summarized
now had complete authority and responsibility in Table 2 and described here.
for planning, managing and implementing
new ideas in their own functional areas. In Organhation structure. The decentralized
particular the divisional manager wanted to structure is illustrated in Figure 4. Within this

Strategic Change, December 1396

352 A. Gilmore

MANAGER

Figure 4. Division A's structure: 1992.

structure some managers were involved in they reported directly to the divisional man-
more than one function. For example, the ager, with no intermediate or middle managers
financial manager and the information analysis to slow down or impede communication and
manager were both involved in pricing decision-making efforts.
decisions and in the preparation of better The changed organizational situation and
management systems and information. the increase in competitive behaviour in
AU division As managers were now posi- 1992 now required responsibility and ac-
tioned within one or more teams in the new countability of all managers. Consequently,
structure and worked together in the same management needed to take responsibility
location. Therefore there was more opportu- for decision making and were heavily
nity for the discussion of all management issues encouraged by their divisional manager to
and management liaison. In addition, as a team do so during this time.
Decision-making method. With this re-
Table 2. Characteristics of management decision structuring the divisional manager had com-
making at stage 2: 1992. plete control over all aspects of the
organizational structure Decentralited: autonomous
marketing and operational activity of division
power to each A. All the key functional management
geographical division. activities of product, pricing, customer-staff
Each division: functional interaction, advertising and promotion, and
departments
Decision-making method Delegation to functional administration/intemal communication man-
managers agement were now directly responsible to
Management focus Expansion of market and the divisional manager and all managers
taking business from
competition were at an equal managerial level in the
Management style Delegative company. This eliminated the need for
Communication and Formal, 6 month-1 year reporting to middle managers and was
P-g plans; semi-formal intended to improve collaboration and com-
planning meetings
Conwl systems Reports and profit centre munication within the organization. All
Service quaiity and Inconsistent decision-making responsibility for each func-
customer care tional area was given to a group of

Strategic Change, December 1996

The impact of organizational factors on management decision making
managers, each having responsibility for a
particular aspect of that functional activity
and all managers were responsible for
delegating the activities relating to their
decision making to operational staff.
Management focus. The management focus
was on encouraging management responsi-
bility and accountability. As the market was
becoming more competitive and the whole
internal organization needed to operate more
efficiently, the focus of management was on
improving management responsibility and
accountability for functional activity.
While implementing the restructuring it
became clear that the new managers who
were responsible for functional activity had
little experience in decision making and
needed some encouragement and develop
ment in order to have the ability to meet the
challenges of their new roles. Therefore the
divisional manager adopted a management
style to allow managers to become more
actively involved in decision making.
Management style. The divisional manager
initiated a delegative style of management
whereby all the key managers could adapt and
learn to manage effectively in the current
organizational situation. With thispurpose the
divisional manager organized a week of plan-
ning and development for all the managers in
the division in order to strengthen and
emphasize the circumstance of the new
structure and to improve their decision-making
performance. The overall aim was to create a
formal pattern of communication between all
managerial functions and to increase the
momentum for change and improvement.
Meetings during subsequent weeks took the
form of discussions about future directions,
marketing activity, the competitors’activity,
possible future developments, consideration of
how competitor activity could change over the
short term, and how they could continually
improve their marketing activity.In this way the
management style became more delegative
where each management team had responsi-
bility for specific decision making and activity.
The managementteams met regularly to discuss
Strategic Change, December 1996
353
options and agree priorities for decision
making.
Communication and planning. Formal divi-
sion communication occurred through
monthly meetings away from the office and
were used to plan the foUowing month’s
prioritiesand activitiesas previously described.
Informal communication occurred through
regular contact between each management
team, and the circulation of memos and reports.
Overall communication from head office
was infrequent at this time, and was usually
by correspondence, telephone or brief visits.
Control systems.Weekly reports of activities
and monthly figures from each management
team were used to illusmte each monthly
improvement. However, this activity was
fragmented and sometimes nonexistent and
many of the functional managers needed
prompting by the divisional manager in order
to carry out their responsibilities for decision
making. He instigated monthly meetings to
ensure progress and resorted to interference
when they were not progressing their func-
tional activity. Some managers became actively
involved in decision making and some did not.
By the end of thisstage it was clear that while
some managers were accepting responsibility
for their functional area, there was a tendency
for other managers to fail to coordinate plans,
money, technology and manpower with the
rest of the functional teams.
Outcome-implementation of plans. Dur-
ing this stage marketing activity was incon-
sistent, and unbalanced in terms of the
delivery of all aspects of the service offering.
While some aspects of the service delivery
were improving other aspects were often
neglected and poorly executed. Customers
often complained about the inconsistencies in
the service delivery.
After a period of 11 months of trying to
improve the quality of decision making and
marketing activity through the encouragement
of staff and management to improve their
performance, the divisional manager for this
division decided that some further organiza-
354 A. Gilmore

tional restructuring was necessary. This is and those who had demonstrated the ability to
described in stage 3: 1993. implement those decisions and instigate action
orientation. In particular, the divisional man-
The organizational structure and its ager wanted managers who could improve all
the intangible dimensions of the service
impact upon management decision
making at stage 3: 1993 (involving proactive communication and inter-
action between customers and staff> which
Following a period of lack of consistent would therefore result in the delivery of a
progress in marketing management decision more balanced marketing mix.
making and implementing marketing activ- Thus the organizational structure was more
ities, the divisional manager was now closely matched with the past experience,
concerned about the integration and coordi- skills and competencies of managers. The
nation of company functional activity and organizational structure was designed around
tried to promote and encourage the impor- the grouping of managers ‘and staff by their
tance of careful coordination and planning of level of knowledge and skill and suitability
marketing activity to all the functional for specific functional management tasks.
managers.
The restructuring at this time was de-
signed by the divisional manager to incorpo- Organizational structure
rate a smaller and more informal was designed around the
management team of the key managers grouping of managers and
who had proved themselves able to make
and carry out decisions; with each manager
staff by their level of
having more responsibility for overseeing a knowledge and skill
variety of areas and operations. These
managers were also chosen to have a more This contributed to a situation of each team
directive role with some members of the having a balance of the relevant and different
functional teams who had not performed competencies for their functional activity.
well on their own and who had explicitly Figure 5 illustrates the management structure
stated that they were not comfortable with at this time with four ‘key’ functional
having responsibility for decision making. At managers who had responsibility for a team
this time the divisional manager wanted to of ‘secondary‘managers.
strengthen the organizational structure by
making sure that his best performing
managers were the overall managers of their The effect of the organizational structure
specific functional areas. Some managers on management decision making at stage
who had not performed proactively to date 3: 1993
in relation to planning and executing their
tasks were now placed in subordinate The effect of this organizational structure and
the key characteristics of management deci-
positions to the managers who had devel-
sion making at this stage are summarized in
oped and improved over the past year.
Table 3 and described here.
These key managers and staff who had had
a more subordinate role but had shown Organhationalstructure. The organizational
initiative and drive and outperformed their structure at this time is illustrated in Figure 5.
‘superiors’were now promoted to take over Each functional team worked together in
the management of the relevant functional managing all decision making and operational
area. activity. The functional management teams
The organizational restructuring was ar- planned their activities at regular meetings
ranged around the managers who had proved and communicated with each other on a daily
themselves to be proactive decision makers basis. This participative management decision
~~ ~

Strategic Change, December 1996

l;be impact of organizational factors on management decision making 355

Figure 5. Division As structure: 1993.

making resulted in the improved marketing but always leaving meetings with a clear and
performance of the whole team. specific task to carry out before a given time
period. These management and supervisor
Decision-making method. The decision-
tasks were agreed at regular meetings and
making process now became more immediate
consensus was achieved by the overall
and effective. The key functional managers
management team.
were proactively aiming to improve their own
The second level of managers was respon-
performance and subsequently that of the
sible to the functional managers with overall
company. Initially, these managers were
responsibility for each aspect of marketing
extremely busy as they needed to spend
management and they were involved in most
considerable time ensuring that their staff
deasions particularly in relation to their own
were well informed, taking part in the
activities and in plans relating to the delivery
decision-making process as far as possible,
of their activity. They were well instructed
and directed in order to ensure results.
However, these managers were not involved
Table 3. Characteristics of management decision
making at stage 3: 1993.
in the strategic level of decision making,
~ ~
some of which was highly confidential at
Organization structure Decentralized functional this time (for example, the long-term plans
with semi-tiered
structure;management about new products and markets).
teams of collaborative
groups; semi-tiered Management focus. Coordination and colla-
Decision-making method Team agreement and boration were the key goals of management at
concensus led by this time. The new structure had been created
manager with the emphasis on solving problems
Management focus Problem solving and
innovation quickly through team action. The four func-
Management style Participative tional managers were chosen because of the
Communication and Formal: plans Informal:face proven ability to take responsibility for
p1-g to face, meetings,
discussions decision making and these managers were
Control system Mutual goal setting deemed to have the ability to become a
Service sualtty and Comprehensive management team that would combine across
customer care
functions for task-group activity. Thus meet-

Strategic Change, December 1996

356 A. Gilmore

ings of the functional managers were held materials such as posters, signage, electronic
frequently in order to focus on major problem displays and providing verbal information at
issues. various interaction points.
In addition, any customer complaints were
Management style. At this time the manage- dealt with immediately, whereby customers
ment style was participative and aimed at were given an apology combined with some
dealing with problems or issues as they arose compensation (such as, a voucher) to en-
whilst planning ahead for the longer terrn. In courage repeat purchase.
particular, this division was proactively seek-
ing new ideas for innovative products and
lobbying for investment in new innovative
technology departments.
Communication and planning. Informal
communication between the functional man-
Sumntav
agers was used on a daily/weekly basis to
At the beginning of this study division A
achieve better team work and conflict resolu-
operated within a centralized structure with
tion. Such communication allowed these
the major managerial decisions relating to
managers to grow accustomed to each other’s
marketing and operations being made at
methods of decision making and styles of
headquarters. The divisional structure was
management without resulting in conflict or
built around control rather than responsibility
lack of action. Experiments in new practices and allowed for directives from headquarters
were encouraged throughout the organiza-
management in relation to each specific
tion.
operational activity. However, in 1992 the
In particular, the development of improved
organization was decentralized. During the
information systems, development of im-
time between the beginning of 1992 and the
proved internal communication systems and
end of 1993 decentralization gradually led to
speedier decision making were considered to
increased management responsibility and
be the priority of all managers.
accountability with some managers becoming
Control systems. By giving the four more proactive than others. In addition, the
functional managers overall responsibility four ‘key’ managers who responded to the
for specific areas of management the additional managerial responsibility in a posi-
structure created a simplification of the tive way became more effective and efficient
previous fonnavinfonnal systems and com- in their decision making over the time period.
bined them into a single multi-purpose The overall effect of structural changes on
system. In addition, at this stage the management decision making was that all
information systems, which were in the marketing decisions specific to the local
process of development, were becoming division were made at divisional level rather
much more effective for division-specific than headquarters level. There was a gradual
information and were being integrated into move from headquarters control to divisional
daily decision making. level managerial responsibility and account-
ability. The four key managers progressed and
Outcomes-implementation of plans. At adapted to meet new challenges in comparison
this stage all marketing activity was planned to with the remaining managers who did not take
take account of both the tangible and intangible full responsibility for planning or decision
aspects of service delivery and customer care making and preferred to be directed by higher
and could be described as comprehensive. The management. Thus the ‘fit’ between the
intangible dimensions of service delivery now organizational structure, management decision
included proactive interaction between custo- m a k q and the development of functional
mers and s w and the use of promotional managers changed over time.

Strategic Change, December 1996

The impact of organizational factors on management decision making
Autobiographical note
Dr Audrey GiZmore is a lecturer in marketing at the
University of Ulsur, Northern Ireland. Her teaching and
mearch interests are in quality in marketing
management, and marketing in Service industries with
particular interest in developing an holistic approach to
quality in services marketing within specific contexts.
Her doctoral study was in this area.
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0 1996 by JohnWiley & Sons Ltd.