As large corporations like Du Pont and General Motors grew, they found it necessary to divide their activities among product divisions. The dilemma of product versus function is by no means new managers have been facing the same basic question for decades. We hope to provide a way of thinking about these problems that will lead to the most sensible decisions for the accomplishment of organizational goals. In this article we shall explore-from the viewpoint of the behavioral scientist-some of the criteria that have been used in the past to make these choices, and present ideas from recent studies that suggest more relevant criteria for making the decision. The issues involved are so complex that many managements oscillate between these two choices or try to effect some compromise between them. Each group will be responsible for art, television, and copy in their accounts.”īut our experience is that such reorganizations often are only temporary. “The new department will be broken into five groups reporting to the senior vice president and creative director, each under the direction of an associate creative director. Behind this move is the realization that for best results all creative people, regardless of their particular specialty, must work together under the most intimate relationship as total advertising people, trying to solve creative problems together from start to finish. “Formation of the ‘total creative’ department completely tears down the walls between art, copy, and television people. In a memo to employees the company explained the move: Consider the case of a large advertising agency that consolidated its copy, art, and television personnel into a “total creative department.” Previously they had reported to group heads in their areas of specialization. What criteria should I use? How can we predict what the outcomes will be if we change?”Ĭompanies that have made a choice often feel confident that they have resolved this dilemma. Either way I can see advantages and disadvantages, trade-offs. Now I’m wondering if we wouldn’t be better off to divide our operations again into product units. Then we consolidated our organization into specialized functional departments, each dealing with all of our products. “We were organized by product up until a few years ago. Should the research, engineering, marketing, and production people be grouped separately in departments for each function? Or would it be better to have them grouped together in product departments, each department dealing with a particular product group? “We still don’t know which choice will be the best one. After long study, he made this revealing observation to his subordinate managers: corporation was contemplating a major organizational change. For example, recently a divisional vice president of a major U.S. In talks with managers we have repeatedly heard them anguishing over this choice. Should all specialists in a given function be grouped under a common boss, regardless of differences in products they are involved in, or should the various functional specialists working on a single product be grouped together under the same superior? Of all the issues facing a manager as he thinks about the form of his organization, one of the thorniest is the question of whether to group activities primarily by product or by function. They focus on two plants (of two of the largest consumer products companies), one organized by product, the other by function. Here, two behavioral scientists look at the question in light of recent studies. One perplexing issue has been whether to organize around functions or products. Corporations, especially manufacturers, long have wrestled with the problem of how to structure their organizations to enable employees, particularly the specialists, to do their jobs with maximum efficiency and productivity.
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