November 25, 2013
Organizational Analysis of Paychex
The organization I have chosen to review is Paychex, Inc. This firm has been in existence since 1971. They are a payroll company that specializes in services for small businesses. The structure of Paychex would be considered a functional organization. It is comprised of “jobs and departments that are specialized and grouped according to business functions and the skills they require: production, marketing, human resources, research and development, finance, accounting and so forth” (Bateman & Snell, 2011). As a large organization they “organize along several different functional groupings, including groupings unique to their businesses” (Bateman & Snell, 2011). This paper will review how Paychex compares to two other organization structures, how the organizational functions have influenced and determined this structure, and how organizational design assists in determining which structure is ideal for the firm’s existing conditions and what should be changed in the future.
At Paychex, the organization is primarily influenced by finance, operational and sales divisions. The finance is an influential division because the firm is very aware of their financial responsibility to their shareholders as well as their clients. It is vital that the company remain profitable due the reputation they must uphold within the marketplace. They are required to be responsible for the financial health of the company.
The operational division is influential because they are accountable for maintaining the customer base. This division is required to retain their compliance with various state and federal governments as they service the client’s tax needs. If they fail to do their jobs well and keep the customers satisfied, this could result in loss of the company’s public standing and effect long term potential customer acquisitions.
The sales division is another important influence on the company’s structural organization. It is vital that the sales division create a viable presence in the marketplace. With the services that are offered, it is important the sales staff is knowledgeable about the products that are sold. This knowledge will assist them in determining the needs of the prospective clients. Also understanding how these product offerings compare to other firms in the same industry will be necessary so that they can explain the value of the services to the customer.
Each of these departments provides valuable resources to the company as a whole. They are connected in various ways that give strength to the firm. Without each division the other could not exist. The financial department provides the money necessary to maintain the business on a day to day basis. The operations department would not exist without the sales department to seek out new clients to service. The sales department would not have the opportunity to build the customer base and grow the company financially without the operations department to do their jobs to keep the clients satisfied with the services they are receiving.
The organizational structure of Paychex would be considered a functional organization. When comparing them to other structural types, such as a divisional organization or a matrix organization, the functional organizational structure is the best one for the firm’s industry. A divisional organization would not be a good choice since it involves “each division having their own standalone purchasing unit, as well as each product group would have experts in marketing, design, production, and engineering” (Bateman & Snell, 2011). Since the product lines Paychex has are so inter-twined, it would not be feasible for them to be managed separately. This would also be true for the matrix organizational structure. In comparing the structures, this plan would involve decentralized decision making process.