September 19, 1996 5:30 PM PDT

Novell plans flatter management

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Novell (NOVL), which has lost its CEO and the general manager of its products group, today announced a flatter management structure.

The announcement comes as Steve Markman, vice president and general manager of Novell products group, said he's resigning to join General Magic (GMGC) as CEO. Meanwhile, Novell is still searching for CEO to replace Robert Frankenberg, who resigned in late August as president, CEO, and chairman. (See also today's story about Novell's newly announced roadmap for IntranetWare.)

Joseph Marengi, replaced Frankenberg as president, and John Young took over as chairman.

"What I wanted to do was flatten the management structure, open the lines of communication up and down the company and eliminate some of the bureaucray that has built up over the past couple of years. We're doing this in order to make the company execute much more effectively and reach the speeds that we need to execute in the markets we're in today."

Under the new arrangement, the company will have an executive team of about 12 members who will manage the company.

Novell maintained three business units before Frankenberg resigned--distributed networks business unit, Internet and intranet services business unit, and the small networks business unit. All three divisions, which previously reported to Markman, continue to operate, but now the division heads of network business and Internet and intranets will report to Marengi. It has not been determined who the oversee the head of the small networks division.

Other divisions hierarchy will remain intact.

But one management consultant views the changes simply as window dressing, if Novell does not eliminate all its divisions.

"Under a pure flat organization, there are fewer layers. And to accomplish this, the typical way is to get rid of division heads and the concept of divisions. You would have all vice presidents in a particular area report to the president, rather than a division head that will then report to a president," said John Holman with the Holman Group in San Francisco.

Jonathan Cohen, a Novell spokesman, said running a company without a CEO or products group head had no bearing on the decision to shift to a flatter reporting structure.

He noted that company did not announce its plans sooner because things were not yet resolved on what role Markman would fill in a new structure. Cohen added, however, that Markman was given an opportunity to stay.

The changes to the reporting structure will remain in place, unless a new CEO would prefer a different arrangement, Cohen said.

Marengi said he doubts the new structure would hurt the company's ability to attract a CEO.

Novell, however, has lost momentum in the client-server groupware business. The company failed to follow its main competitors, Lotus and Microsoft, to market in the first quarter with new versions of the GroupWise email engine. However, its launch last week of the next generation of GroupWise 5 may put Novell back in the game, analysts said.

 

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