A study on critical success factors on building IT based flat organization: A case study of Mellat Bank

Article history: Received January 14, 2014 Accepted 10 June 2014 Available online June 12 2014 A flat organization is a firm that has an organizational structure with few or no levels of middle management between employee and executives. The idea is to take advantage of well-trained workers when they are more directly involved in the decision making process, rather than closely supervised by various layers of management. This paper presents an empirical investigation to determine critical success factors on building information technology (IT) based flat organization in a case study of banking industry. Using principal component analysis, the study applies factor analysis for two internal and external factors. In terms of internal factors, there are three factors including Processes and the electronic decision making, Teaching and Electronic Learning and Work in IT. In addition, the study has detected four factors including Electronic Supply, IT structure, Appropriate IT usage and Electronic Communication. © 2014 Growing Science Ltd. All rights reserved.


Introduction
Strategy planning plays an important role on development of business organizations and it is important to apply reliable long-term plans to reach organizational objectives.There are literally different strategies where people could simply switch from one to another one.One of the key strategies to have successful firm is to make necessary changes on firm to have flat organization (Porter & Siegel, 1965;Garzo Jr. & Yanouzas, 1969;Goh, 1998).According to Ghiselli and Siegel (1972), the structure of a firm is associated with the nature of the distribution of the units and positions within it, and to the nature of the relationships among those units and positions.A flat organization is a firm that has an organizational structure with few or no levels of middle management between employee and executives.The idea is to take advantage of well-trained workers when they are more directly involved in the decision making process, rather than closely supervised by various layers of management.A flat firm model promotes employee involvement through a decentralized decision-making process.By assessing the level of responsibility of baseline employees and removing layers of middle management, comments and feedback reach all personnel involved in decisions very quickly.There are literally many studies associated with flat organizations.Seppälä (2004), for instance, investigated the roles and job characteristics of supervisors and other white-collar staff connected with production in eight manufacturing and printing firms that had applied the principles of a lean organization and advanced IT in the 1990s.In their study, they interviewed 212 employees including production managers and employees from various organizational levels and phases of the production process.They reported that the number of first line supervisors had decreased in all the studied firms, and in some manufacturing firms, there were no first line supervisors in the production departments at all.In some firms, the title of the previous supervisors had been changed to manufacturing manager, their responsibility area became larger and they were in charge of a broader manufacturing area or a product shop.It appeared that the supervisors' careers in the firms taking part in this study had developed mostly in a positive direction.However, at the same time, the amount of work had increased, more specifically in production in the manufacturing industry.
In early eighties, the management team of the organization of the Management Systems Laboratories (MSL) of the Virginia Polytechnic Institute and State University, USA, changed its structure from a standard matrix unit to a flat organization.The flat organization created more negative impacts on the organization and its objectives than positive effects.One year later, the flat organization was changed to a standard hierarchy, and most of the negative effects were overcome.Kurstedt Jr et al. (1991) is believed to be the first experience with a type of flat organization, why that organization was converted to, what worked and what did not, why the organization was converted away from, what was learned from the experience, and what the authors recommend for research organizations considering flat firms.Ghiselli and Siegel (1972) presented a comprehensive survey on leadership and managerial success in tall and flat organization structures.

The proposed study
The proposed study of this paper applies factor analysis to detect critical success factors associated with internal, external components influencing on having flat IT based organization, and the study has accomplished in bank Mellat.The sample size is calculated as follows, where N is the population size, represents the yes/no categories, 2 /  z is CDF of normal distribution and finally  is the error term.Since we have and N=1500, the number of sample size is calculated as n=306.The study designed a questionnaire and distributes it among 320 people and managed to collect 308 properly filled ones.There are two questionnaires, one for internal and the other for external factors.In terms of internal factors, the questionnaire contains 20 questions.Kaiser-Meyer-Olkin (KMO) and Bartlet tests are 0.915 and 2630, respectively, which confirm the overal questionnaire.In terms of external factors, the questionnaire contains 20 questions.Kaiser-Meyer-Olkin (KMO) and Bartlet tests are 0.900 and 23260, respectively, which confirm the overal questionnaire.

The results
In this section, we present details of our findigns in terms of internal/external factors.

Internal factors
The study has applied factor analaysis through principle component analysis to extract impoartant internal factors and the results are summarized in Table 1 as follows, Based on the results of Table 2, there are four factors influencing the success of having flat IT based organization including Electronic Supply, IT structure, Appropriate IT usage and Electronic Communication.

Conclusion
In this paper, we have presented empirical investigation to detect important internal and external factors influencing critical success factors on having IT based flat organization.Using principal component analysis, the study has detected three internal as well as four external factors influencing on reaching successful IT based organization.