Changing a company’s organizational structure is not an easy task. It requires proper understanding of the mission, goals and needs of an organization (Khan, 2011). The process of changing organizational structure also requires adherence to a specific procedure of organizational change (Khan, 2011). This is because; an organizational structure provides guidelines about how things are done in a given organization, for instance delegation of duties, flow of communication, and hierarchical order in the organization. These features are important for smooth running of routine organizational activities. Therefore, the idea of changing an organizational structure entails careful consideration of the possible effects on these features, in order to ensure that an organization maintains a positive direction after the change (Khan, 2011).
In the case study, it is apparent that Carol Bartz has a clear understanding of Yahoo’s mission, goals, and needs. Even though she is just six weeks old at Yahoo, it is clear that she has enough information about the current Yahoo’s management style, its weaknesses, and the possible solutions for its problems. For instance, on her February 26 announcement, she indicated that Yahoo’s management was embattled, and that, it required an overhaul (Gareth & Jennifer, 2011). By referring to the company’s management as being embattled, it is clear that, Bartz is aware of the shortcomings of the current management. Similarly, in her post at the company’s official blog, Bartz states that, the new management structure would assist the company to achieve its business goals faster (Gareth & Jennifer, 2011). This implies that, Bartz is already aware of some of the solutions to the problems that Yahoo is facing currently.
Carol Bartz introduced change in the company’s organizational structure in three different ways. The first change that Carol Bartz introduced to Yahoo’s organizational structure was to centralize the management, hence forming a centralized organizational structure. Over the years, Yahoo had been operating under decentralized management (decentralized organizational structure). However, Carol Bartz points out that, the decentralized style of management has been delaying the company’s decision-making process, as well as the decision implementation process. Therefore, she introduces centralized management system whereby, all executive officers (top management personnel) are to report directly to her. Centralization is the process of assigning decision-making powers to specific management levels in an organization (Braniac, 2011). Changing an organizational structure from decentralized structure to centralized structure entails assigning the decision-making power to higher-level management in an organization. This is exactly what Carol Bartz did once she took the management of Yahoo. She transferred all decision-making powers to herself (the top most executive at Yahoo).
The other way in which Carol Bartz introduced change in Yahoo’s organizational structure was by changing managerial roles of different executives. The Chief Technology Officer, Aristotle, was assigned new management role as the products’ head, the Chief of adverts, publications and audience groups in the United States, Hilary Schneider, was made the head of North American operations. Carol Bartz also created a new position for the head of international operations, to head what had been three separate global regions. Restructuring management positions and roles is a vital procedure that accompanies change in organizational structure. According to Braniac (2011), changing an organizational structure include reviewing the organizational chart, to find if the organization is top heavy (it has too many management personnel and less lay persons), or the organization has too many laypersons with less management personnel (Braniac, 2011). Changing management positions and/or their classifications is also important while introducing a new organizational structure, as a method of removing loopholes from the previous management position (Braniac, 2011).
Finally, in the new organizational structure, Carol Bartz jettisoned all the underperforming operations and their respective heads. Moreover, Carol anticipated introducing more changes in the Yahoo’s new organizational structure in the future. Her goal was to ensure that Yahoo had a centralized organizational structure, with a simpler organizational chart, that will allow all employees to focus on the company’s core businesses. Nevertheless, it important to note that, change in management positions and classifications, as well as removal of some positions, should be done after careful consideration and consultation with the HR department (Braniac, 2011). It would not be wise if, an individual is assigned a new managerial positions, in which he/she is not competent in.
From the case study, it is clear that Carol opted to change Yahoo’s organizational structure from decentralized form to centralized form because; she discovered that decentralized organizational structure was not contributing positively to the development of the company. Some of the disadvantages that Yahoo was experiencing while operating under decentralized organizational structure were slow decision-making process, and ineffective decision implementation. Decentralized organizational structure allows decision-making process to follow a detailed process (Matrix Management and Structure, 2011). This approach to decision-making is complex because; participants in decision-making come from diverse backgrounds within an organization. Where some may view the decision at hand to be of importance to the organization, others may view it as less important. Therefore, some participants may jeopardize the decision-making process (due to lack of interest in the decision at hand), while others may be unwilling to contribute to the process. All these elements make the decision-making process in an organization with decentralized organizational structure to be slow.
Conversely, since centralized organizational structure allows transfer of the decision- making power to the top-level management, it becomes easy for an organization to make decisions, and subsequently implement them (Matrix Management and Structure, 2011). This does not mean that centralized organizational structure does not allow democracy in decision-making process. All participants in the decision-making process are given equal chances to make their contributions. Moreover, all employees have a chance to participate in the decision-making process, through their division heads, who later present their opinions to the top-level management. Therefore, the final decision(s) made by the top-level management in a centralized organizational structure is/are usually strong, visionary, and authoritarian (Matrix Management and Structure, 2011). Likewise, implementation of decisions is fast. This is because; centralized organizational structure allows flexibility and quick response to changes and/or issues (Matrix Management and Structure, 2011).
Underperformance by some managers is yet another reason why Bartz changed Yahoo’s organizational structure. Usually, a decentralized organizational structure emphasizes on bottom-up learning dynamics (Matrix Management and Structure, 2011). Therefore, managers in such organizations lack close supervision by the top-level management. However, in an organization with a centralized organizational culture, the top-level management closely supervised the activities of all managers. This is because; organizational change and learning dynamics run from top to bottom. Every employee is assigned a superior employee, whom he/she reports to. This way, performance of every employee in a centralized organization is closely monitored, hence reducing underperformance.
Through the new organizational structure, Bartz makes it clear that she expects the company’s operations to start running faster than before. This is evident in her blog post, which states that, “the new streamlined structure is intended to make the company a lot faster on its feet” (Gareth & Jennifer, 20011) Bartz also expects the new organizational structure to increase the speed of the decision-making process, as well as improve the effectiveness of decision implementation in the company. In fact, the new organizational structure is already bringing-in positive outcomes to the company. Jeffrey Lindsay notes that the new organization structure is a vast improvement of the previous structure. The company’s decision-making process has began to improve and managers seem to be more accountable of their activities than before.