ORG 716 Week 3 Organizational Structure and Design Example

Who Decides What, and Where: Redesigning the Structure of a Four-Site Medical Device Manufacturer

[Student Name]

University of Phoenix

ORG/716: Organizational Theory and Design

Week 3 Assignment

[Instructor Name]

[Date]

Lakehead Medical Components, its sites, functions and figures are composites written for a model paper.

Earlier weeks introduced Lakehead Medical Components, a composite medical device contract manufacturer with plants in St. Paul and Plymouth, Minnesota, Tijuana, Mexico and Penang, Malaysia. Week 1 identified slow decisions as a central puzzle; Week 2 suggested that the sites face different environments that a single structure may not fit. This paper analyzes the company's structure and recommends a design.

The Current Structure

The chief executive leads a headquarters in St. Paul with five functional vice presidents: operations, quality and regulatory, engineering, supply chain and finance. Four plant managers report to the vice president of operations. At each site, quality engineers and process engineers report to the corporate quality and engineering vice presidents, not to the plant manager, a choice made after an FDA warning letter in 2015 to keep quality independent. Buyers at each site report to corporate supply chain.

The result is a structure in which plant managers are responsible for output, cost and delivery but control few of the people needed to achieve them. A recent internal study traced 40 engineering change requests: the median took 31 days from request to approval and passed through six to seven people, against nine days before the acquisitions.

Structural Dimensions

On standard dimensions, the company is highly specialized by function, highly formalized through regulated procedures and centralized for most decisions above routine production. Spans of control at headquarters are narrow, with each vice president managing four to six direct reports, while plant managers have broad responsibility and little authority.

Mintzberg's Configurations

Mintzberg (1979) identified five ways organizations coordinate work, from informal communication among workers and orders from a boss to rules that fix the process, the result or the training people bring, and showed that these mechanisms combine with other design parameters into a small number of configurations. Lakehead before its acquisitions was close to a machine bureaucracy: standardized processes, a strong technostructure of engineers and quality staff and centralized control. That fit a single plant with stable products. After growth, it is a machine bureaucracy stretched across four sites with different products, which pushes it toward a divisionalized form without having adopted one. The technostructure at headquarters now tries to standardize work it cannot see directly.

The company kept the structure of a single plant and added three more plants to it.

The Information Processing View

Galbraith (1974) argued that uncertain work forces an organization to handle more information while the work is under way. Firms cope in two ways. They can lower the load, by building in slack or creating units that hold everything they need. Or they can raise their capacity, by investing in reporting systems up the hierarchy or in sideways links such as liaisons, task forces and integrator roles. Lakehead's uncertainty has risen with more products, customers and sites, but its main response has been to send more decisions up the hierarchy. The hierarchy is overloaded, which explains the 31-day approvals.

Strategic Choice

Contingency theory suggests that design should fit environment and technology, but Child (1972) argued that leaders exercise strategic choice: they interpret their environment, choose strategies and shape structure within constraints, sometimes accepting less than optimal fit for other reasons. Lakehead's leaders chose to centralize quality after the 2015 warning letter, a choice made for regulatory legitimacy more than efficiency. Any redesign must respect that history; customers and auditors expect independent quality.

Three Options

Option A, centralize further: add approval staff and a corporate project office to speed decisions. This keeps control but adds cost and does not address local knowledge.

Option B, divide by site: make each plant a self-contained division with its own quality, engineering and buyers. This speeds decisions and fits local environments but risks inconsistent quality systems, duplication and loss of shared learning, and raises regulatory concerns about quality independence.

Option C, a hybrid: plant managers gain authority over process engineering and buyers for day-to-day work; quality remains independent through a dotted line to the plant and a solid line to corporate quality; and global networks for quality, engineering and supply chain set standards and share practices across sites. Decision rights are mapped by type of decision.

Evidence From the Approval Study

The 40 engineering change requests traced last year show where time is lost. On average, a request waited 11 days for corporate engineering review, 9 days for corporate quality and 6 days for finance sign-off on cost impact, with most of the remaining time spent on rework when reviewers asked for information the site already had. Only five of the forty changes affected validated processes or customer specifications; the rest were routine adjustments within validated limits. In other words, the hierarchy spends most of its time on decisions it does not need to make. That finding is the strongest argument for mapping decision rights by type of decision rather than sending every change upward.

Comparing Options

Against criteria of decision speed, regulatory confidence, local fit, cost and learning across sites, Option A scores high on regulatory confidence but low on speed and local fit. Option B scores high on speed and local fit but low on regulatory confidence and learning. Option C scores moderately to high on all, at the cost of greater complexity and the need for clear decision rights.

Decision Rights in the Hybrid

Routine engineering changes within validated limits: decided at the site by the process engineer, approved by the site quality lead.

Changes affecting validated processes or customer specifications: recommended by the site, approved by corporate quality, decided within ten days.

Supplier selection for site-specific parts: decided by site buyers within global category rules.

Capital under $250,000: decided by the plant manager.

Lateral mechanisms include a monthly quality network meeting, a shared change database and an integrating role for each major customer spanning sites.

Risks of the Hybrid

Hybrid designs create their own problems. Dual reporting for quality staff can leave them caught between a plant manager pushing output and a corporate quality head pushing caution. Networks can become talking shops if no one owns decisions. Sites may interpret their new authority differently, recreating inconsistency. The design addresses these through written decision rights, a named leader for each network with authority over shared standards and a quarterly review of how sites use their authority.

Transition

The change will be piloted at Penang and Plymouth for six months, tracking approval times, audit findings and customer complaints, before extending to the other sites. Leaders will communicate why quality independence remains intact, a concern employees and customers will raise.

Conclusion

Lakehead's structure was designed for one plant and has been stretched over four. Mintzberg's framework and the information processing view explain why decisions slowed: a centralized technostructure cannot process the information that diverse sites generate. A hybrid design, with site authority for routine work, independent quality and lateral networks, offers a better balance of speed, regulatory confidence and learning, provided decision rights are explicit.

References

Child, J. (1972). Organizational structure, environment and performance: The role of strategic choice. Sociology, 6(1), 1-22. https://doi.org/10.1177/003803857200600101

Galbraith, J. R. (1974). Organization design: An information processing view. Interfaces, 4(3), 28-36. https://doi.org/10.1287/inte.4.3.28

Mintzberg, H. (1979). The structuring of organizations: A synthesis of the research. Prentice-Hall.