Hierarchy and Centralization of the Company; Ann Mulcahy as CEO of Xerox
Gersi MUCA
Columbia Southern University

Because of an aggressive competitor, a company may face with huge losses and go near bankruptcy. Immediate changes in direction and structure are needed for reducing costs and finding ways to revitalize the business. According to Max Weber (1900) are six principle of Bureaucracy in which people can be held accountable for their action because they are required to act in agreement with well-specified and agreed-upon rules and SOP.
“The first principle of the bureaucracy is founded on the concept of rational legal authority. This principle indicates that choices affecting the design of an organization’s hierarchy should be based on the needs of the task, not on the needs of the person performing the task. Based on this principle, Xerox searched for a new CEO, who had the management skills to revitalize the Company’s product line. The second principle means that the organizational roles are held on the basis of technical competence. In a well-designed hierarchy, people occupy roles because they can do the job, not because of who they are or who they know. In the case study, we saw that persons chosen to direct company have begun in the company from low levels and arrived at the top level from their work. Anne has a vast experience in the company; she began her career as copier salesperson and climbs the scale of career through the use of leadership and communication skills. Also, Ursula with over 20 years experience in this company, begun as a mechanical engineer and now is holding a position as top manager. Principle three means that a role’s task responsibility and decision-making authority and its relationship to other roles should be clearly specified. When the limits of authority and control are specified for the various roles in an organization, the people in those roles know how much power they have to influence the behavior of others. With these aspects of a person’s role in an organization clearly defined a stable system emerges in which each person has a clear expectation and understanding of the rights and responsibilities attached to other organizational roles. Anna made clear to employees that tough time are coming for the company, and they knew that only their motivation to work hard and find ways to reduce costs and development of a new product could save the company and their workplace. Principle four means that the organization of roles in a bureaucracy is such that each lower office in the hierarchy is under the control and supervision of a higher office. The organization should be arranged hierarchically so people can recognize the chain of command. The organization should delegate to each person holding a role the authority needed to make certain decisions and to use certain organizational resources. Principle five, rules, standard operating procedures, and norms should be used to control the behavior and the relationship between roles in an organization. Over time, these guidelines should change as improved ways of doing things are discovered. Based on this Anne decided to replicate Xerox’s sales and customer services operation around the globe and customize them to the need of customer in each country. The principle six; Administrative acts decisions, and rules should be formulated and put in writing. The primary advantage of a bureaucracy is that it lays out the ground rules for designing an organizational hierarchy that efficiently controls interactions between organizational levels. Individuals can be held accountable for what they do, and such accountability reduces the transaction cost that arises when people must continually negotiate and define their organizational roles. The initiative to acquire Affiliated Computer Services by Xerox, increase its push to provide highly customized customer service Jones (2013, p.134-137, 145).”
After defining the person who will direct the company, it has to find out which factors are creating these problems. One reason is the size and the height of the hierarchy. According to Jones, Gareth R. (2013), the number of managers and hierarchical level can increase or reduce communication, motivation, and bottom line profitability. The organization focus is reducing cost and recovering, so it has to adapt a flat structure. Anne Mulcahy minimizes the number of hierarchical by cutting 26% of corporate overhead. Also, the span of control which a manager directly manages should be kept to a minimum. By reducing the number of employees from 95,000 to 55,000, the number of units is reduced, also is reduced the operating cost of each unit. Another reason is decision making. At an organization that pursues flat structure, the authority is decentralized, and they can respond fast to customer request. By motivating and empowering employees, they can display their skills and abilities, have freedom to make their own decision, be flexible, integrate with other units and exchange their knowledge, get a better understanding of the situation, be responsible for their outcomes; as a result, their performance can be increased.
An organization that competes in the market with a broad range of product has to choose its divisional structure through product, geographical or market structure. The divisional structure that is following from Xerox is the market structure. “The market structure focuses the activities of the whole organization on the needs of the customer, the organization can quickly sense changes in its market and transfer skills and resources to satisfy the changing needs of this vital stakeholder group (Jones, 2013, p.164-165).”
By making the customer its top priority, Anne Mulcahy insisted that top 200 managers should visit its 500 customers, and to uncover what they most wanted from new digital copiers offered by Xerox. All attention was focus to R&D division, where all employees and managers had to collaborate with each other, had to find ways to reduce cost, and to develop a new product by the need of customer group. As a result, two new lines of digital copier came out, a line of state-of-the-art digital color copying machines for use by business, and a line of low-end copier offering print quality, speed, and unmatched prices from competitors. So by working close with costumers, Mulcahy developed new strategies for Xerox based on improved products and service.

References

Jones, G. R. (2013). Organizational theory, design, and change [VitalSource Bookshelf version] (7th ed.). Retrieved fromhttps://online.vitalsource.com/#/books/9780133468014