Case Study: HERALD ADVERTISING COMPANY
The Herald Advertising company is a medium sized firm that offered two basic services to its clients: customized plans for the content of an advertising campaign ( for example, slogans and layouts) and complete plans for media ( such as radio, TV, Newspapers, billboards and internet). Additional services included aid in marketing and distribution of products and marketing research to test advertising effectiveness.
Its activities were organized in a traditional manner where each department included similar functions.
Each client account was coordinated by an account executive who acted as a liaison between the client and the various specialists on the professional staff of the operations and marketing divisions. The number of direct communications and contacts between clients and Herald specialists and account executives were identified. These sociometric data were gathered by a consultant who conducted a study of the patterns of formal and informal communication. Each intersecting cell of Herald personnel and the clients contains an index of the direct contacts between them.
Although an account executive was designated to be the liaison between the client and specialists within the company; communications frequently occurred directly between clients and specialists and bypassed the account executive. These direct contacts involve a wide range of interactions such as meetings, telephone calls, and email messages and so on. A large number of direct communications occurred between company specialists and their counterparts in the client organization. For example, an art specialist working as one member of a team on a particular client’s account would often be contacted directly by the client’s in house art specialist, and company research personnel had direct communication with research personal of the client firm. Also, some of the unstructured contacts often led to more formal meetings with clients in which company personnel made presentations, interpreted and defended company policy, and committed the company to certain courses of action.
Both hierarchical and professional systems operated within the departments of the operations and marketing divisions. Each department was organized hierarchically with a director, an assistant director, and several levels of authority. Professional communications were widespread and mainly concerned with sharing knowledge and techniques, technical evaluation of work, and development of professional interests. Control in each department was exercised mainly through control of promotions and supervision of work done by subordinates. Many account executives, however, felt the need for more influence and one commented:
‘Creativity and art ’ That’s all I hear around here. It is hard as hell to effectively manage six or seven hotshots who claim they have to do their own thing. Each of them tries to sell his or her idea to the client, and most of the time I don’t know what has happened until a week later. If I were a despot, I would make all of them check with me first to get approval. Things would sure change around here.
The need for reorganization was made more acute by changes in the environment. Within a short period of time, there was a rapid turnover in the major accounts handled by the company. It was typical for advertising agencies to gain or lose clients quickly, often with no advance warning as a consumer behavior and lifestyle changes emerged and product innovations occurred.
Company reorganization was one solution proposed by top management to increase flexibility in this unpredictable environment. The reorganization would be aimed at reducing the company response time to environmental changes and at increasing the cooperation and communication among specialists from different departments. The top managers are not sure what type of reorganization is appropriate. They would like your help analyzing their context and current structure and welcome your advice on proposing a new structure.
(Modified from the Source: Daft .R. L, (2013) Organization Theory & Design, 11th Edition Cengage Learning US)
a) To investigate the issues in the case study and apply key concepts and theories to recommend solutions
b) Prepare a Presentation on the case analysis of the given organization and use the questions given below to do your analysis.
1. Analyze herald advertising company with respect to the five contextual variables. Describe the environment, goals, culture, size, and technology aspects for herald advertising company?
ANSWER: Herald is a middle-sized firm operating in a relatively unstable environment, particularly because in the industry it was common to lose or gain clients quickly because of consumer behavior changes or product innovation, sometimes with no advance warning. The technology is predominantly nonroutine because of the emphasis on creativity and art. The structure is functional with full-time integrators who provide horizontal linkage. The goals of the firm are to be creative and to satisfy customers.
2. Design a new organization structure that takes into consideration the
contextual variables in the case and the information flows within herald advertising company.
ANSWER: You may give students a hint of the general approaches that could be taken: One approach would be to treat account managers as project managers; another general approach would be to design a product structure with departments reporting to each account executive. Ask students to draw their specific alternatives on the board. A hybrid form of structure would be one specific possibility, with account executives reporting to client group vice-presidents (comparable to the "product" form), and most functional departments such as research, media, merchandising, copy department and art department reporting to each of the account executives. The functional heads who would still report directly to the president would probably be legal counsel, finance, and personnel. The structure matches the uncertainty of the environment, and would enable the organization to allow for unit or customer-driven adaptation to changes. There is high coordination across functions relative to any given customer's account, necessary for the projects being designed. The emphasis is on client satisfaction with vertical and horizontal information flows possible by grouping together the individuals who communicate with one another.
3. Which structure would be feasible in terms of the strategic focus of Herald Advertising COMPANY? Give Reasons for it.