The Process-based Organization

A process-based organization is one in which the focus is on horizontal processes that cut across organizational boundaries. Traditional organization structures consist of a range of functions operating semi-independently and each with its own, usually extended, management hierarchy. Functions acted as vertical ‘chimneys’ with boundaries between what they did and what happened next door. Continuity of work between functions and the coordination of activities were prejudiced. Attention was focused on vertical relationships and authority-based management – the ‘command and control’ structure. Horizontal processes received relatively little attention. It was, for example, not recognized that meeting the needs of customers by systems of order processing could only be carried out satisfactorily if the flow of work from sales through manufacturing to distribution was treated as a continuous process and not as three distinct parcels of activity. Another horizontal process that drew attention to the need to reconsider how organizations should be structured was total quality. This is not a top-down system. It cuts across the boundaries separating organizational units to ensure that quality is built into the organization’s products and services. Business process re-engineering exercises have also demonstrated the need for businesses to integrate functionally separated tasks into unified horizontal work processes.

The result, as indicated by Ghoshal and Bartlett (1993), has been that:


Managers are beginning to deal with their organizations in different ways. Rather than seeing them as a hierarchy of static roles, they think of them as a portfolio of dynamic processes. They see core organizational processes that overlay and often dominate the vertical, authority-based processes of the hierarchical structure.


In a process-based organization there will still be designated functions for, say, manufacturing, sales and distribution. But the emphasis will be on how these areas work together on multi-functional projects to deal with new demands such as product/market development. Teams will jointly consider ways of responding to customer requirements. Quality and continuous improvement will be regarded as a common responsibility shared between managers and staff from each function. The overriding objective will be to maintain a smooth flow of work between functions and to achieve synergy by pooling resources from different functions in task forces or project teams.