Strengths
- Economies of scale within functions
- Internal efficiency, in-depth skill development, specialization, high quality
- Best for small organizations with only one or a few products
Weaknesses
- Slow response time to environmental changes
- Decisions may pile-up on top; hierarchy overload
- Poor inter-unit coordination
- Less innovation
- Restricted view of organization goals.
DIVISIONAL STRUCTURE (A structure in which functions are governed together according to the specific demands of product, markets or customers)
(Divisions based on product, service, geography, customer)
Strengths
- Is suited to rapid change in unstable environment
- Decentralizes decision making (Fast adaptation)
- Allows units to adapt to differences in products, (regions, clients)
- Leads to client satisfaction because product responsibility and contact points are clear
- Involves high coordination across functions
- Best in large organizations with several products
Weaknesses
- Eliminates economies of scale in functional departments
- Leads to poor coordination across product lines
- Eliminates in-depth competence and technical specialization
- Makes integration and standardization across product lines difficult.
HYBRID STRUCTURE
Strengths
1. Organization can achieve adaptability and coordination in some areas and efficiency in others
2. Better alignment between corporate-level and division-level goals
3. Achieves coordination both within and between product lines
Weaknesses
1. Potential for excessive administrative overhead
2. Conflict between division and corporate departments
MATRIX STRUCTURE (The matrix is a grid-like organizational structure that allows a company to address multiple business dimensions using various command structures.)
Strengths
1. Flexible sharing of human resources across products
2. Suited to complex decisions and frequent changes in unstable environment
3. Provides opportunity for functional and product skill development
4. Best in highly uncertain environments and organizations with multiple products and project based work.
Weaknesses
1. Causes participants to experience dual authority: frustrating and confusing
2. Means participants need good interpersonal skills and extensive training
3. Time-consuming: frequent meetings and conflict resolution sessions
4. Will not work unless participants understand it and adopt collegial rather than vertical-type relationships
NETWORK STRUCTURES (A cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy of authority)_
Strengths
- Cost benefits of outsourcing
- low cost due to flat organizational structure
- Organic way of organization.organisation responds quickly to the change in the environment.
- Access to the global expertise and low cost inputs required to remain competitive in global scenario.
Weaknesses
- Lack of close interaction as in cases where more physical presence is required.
- Lack of high level of trust among employees
- Difficulty in value creation in learning as different companies moves at different pace.
Comparison with respect to goals
GREATER ORGANIZATIONAL SIZE IS ASSOCIATED WITH:
- Smaller % of top administrators
- Greater % of technical and professional support staff
- Greater % of clerical and maintenance support staff
- Vertical and horizontal complexity
- Increased number of management levels (vertical complexity)
- Greater number of jobs and departments (horizontal complexity)
- Greater formalization
- Greater decentralization
- Increased specialization of skills and functions
- Greater amount of written communications and documentation.
Aspects Critical for Any Organizational Structure are:
Right people in the right jobs. Good job design, clear roles and responsibilities clear interdependencies business processes and infrastructure support tailored to the organizational design, performance measures and rewards are aligned with strategy and structures, the more of these we can have in place at the earliest the greater the probability that the structure change will be effective and functional.
ORGANISATIONL STRUCTURE RESTRUCTURING:
We should be very accurate in our decision before making any organizational changes. We should understand that no organization is perfect .Any organization structure will fail without the right people and management process. The more complex an organization is, the longer it takes to settle in. Transiting time from the organization to a future one can be shortened by the amount of time spent up from to achieve role clarity .Once the proffered organization is known, it is best to implement it as quickly as possible. Iterative structures might be required to teach the ideal organization structure if right people or processes are not available or in lace but this requires significant management resolve to hold the course.
There are few aspects to be considered before designing an organizational structure change:
They are
- defining the business drivers and we get it from the business strategy
- identifying what is working I t organization and what is not
- determining what has t be changed or fixed
- evaluating alternate structures and providing the rational for each
- determine the proffered structure and testing for viability
- Identifying the cost/benefit: structure change allays costs a lot more that are first thought.
- assessing potential people for key jobs-strength and weakness:
- handling the critical first stage of notification
- accenting for some of the not so obvious support actions
- Developing a contingency plan.
Virtual Organizations and missing Organizational Structure.
These are organizations which do not necessarily have any physical presence or permanence. E-commerce companies such as amazon.com are good examples: they have a 'reality' only on the worldwide web. They can be formed and re-formed to meet the needs of new projects. From a HR perspective, virtual teams may be composed of specialists working from home, 'telecottages' or small companies. They work together for the purposes of the project. Selecting, managing and assessing the performance of virtual team members is a whole new ball game.
"Teams dissolve on completion, to reappear in new combinations for other tasks. Departments, divisions and offices disappear leaving an amorphous mass of people connected electronically and meeting - perhaps through video-conferencing - only if and when required. Traditional hierarchical structures have no role in this kind of organizational structure.
"Truly virtual organizations create new problems for human resource management. A networked company does not require a personnel function but its core management must be adept in managing people at a distance, some of whom may not be 'employees' as such. They are true 'human resource managers' and a true organizational is missing in these organizations.Nerw questions arise in context to these organizations.How does performance management or HR development take place in such circumstances? How are they 'managed' on a day-to-day basis? Who resolves conflict and disagreement?
21st Century Organizational Trends
Globalization
- Increasingly globalize sales, manufacturing, research, management
- Movement from direct exports to having sales offices in different countries to having manufacturing to all functions spread across the globe
- Increasingly globalize labor market
- Due to:
- reduced cost and improved quality of international transportation and communication
- search for unsaturated markets
- exploit regional cost and expertise differences
Diversity
- Workforce getting more heterogeneous sexually, racially, culturally, individually, etc.
- Source of both innovation and conflict/communication problems
- Need to cope with different styles of interaction, dress, presentation, and physical appearance.
- Due to:
- changing demographics
- globalization of the labor market
Flexible
- Organizational systems and processes and people that can respond differently to different situations
- Fewer detailed rules and procedures
- Greater autonomy, encouragement for initiative
- Customizable employment relationships: telecommuting, job sharing, mommy tracks, pay for skills
- Lifetime employability, not lifetime employment
- Due to:
- differentiated customer needs -- filling them exactly is source of competitive advantage
- increasing diversity in workplace
- increased pace of change in technology and markets
Flat
- Fewer levels of management,
- Workers empowered to make decisions
- Fewer differences in responsibility (not in pay) across levels
- Due to:
- need for speed, which makes it helpful to empower employees to make decisions, which means fewer managers are needed
- changes in information technology mean less need for the communication and control functions of middle managers
- globalization means intensified competition, which increases the need to cut costs
Networked
- Direct communication across unit & firm boundaries, ignoring chain of command
- Cross-unit team structures
- Outsourcing & downsizing
- Strategic alliances with competitors and others
- Now have firms that are your competitors, customers and collaborators all at the same time
- Close coordination among firms (e.g., JIT systems) and information sharing (open computer systems)
- Across the board contact with customers, not just official boundary spanners
- Customization
- Decentralization
- Due to:
- new information technologies, especially groupware, client-server, distributed computing
- fast changing customer needs and competitor offerings
- more complicated products require better integration of manufacturing, design, and marketing functions
Organizational Structures in the 21st Century
Technological change breeds technological change. This is because technological change is a function of knowledge, and knowledge is increasing rapidly. This is a function many things, including:
- larger population (more minds working on problems)
- better tools for research (fast computers, ability to look up other people's work)
- more knowledge (it takes knowledge to make more knowledge)
How is it changing organizational structure? Well, for one thing, organizations are strongly affected by the available technology. Increased globalization has had a number of effects. In combination with changing demographics, globalization is causing a rapid increase in diversity in both the marketplace and the workplace. More than ever, people have to interact with and coordinate with people who are different from themselves on a number of different biological and cultural dimensions. This in turn has meant that employees need new relational skills to succeed. At the same time, organizations need new coordinating mechanisms to accommodate different kinds of people in the workplace. Some organizations allow different workers to have very different work and payment schedules, such as "fast tracks”, full-time and part-time. Many organizations (and workers) have found it convenient to treat some workers as independent consultants rather than employees. In certain occupations, advances in communication and information technologies have enabled "telecommuting" -- working at home via computer. Another effect of globalization is increased competition. With increased competition comes an even faster pace of change, as each competitor introduces innovations in order to outsell their competitors.This in turn creates a situation in which organizational response time is at a premium -- those organizations that can develop new technologies faster, or which can adapt to changes in the market faster, are the ones that will survive the competition. To maximize response time, organizations have been flattening downsizing, and networking. Flat organizations make decisions more quickly because each person is closer to the ultimate decision-makers. Smaller organizations are faster because there are simply fewer different things going on -- fewer competing goals, fewer people to coordinate, etc.
Organizations that flatten tend to simultaneously encourage horizontal communication among workers. Rather than work through the hierarchy, it is often faster for workers that need to coordinate with each other to simply communicate directly. (It can also lead to chaos -- there is a downside.) Such organizations are said to be highly networked.
Another meaning of network organizations refers to their relations to other organizations. Organizations that have downsized to just their core competencies must then outsource all the functions that used to be done in-house. To avoid losing time and effort managing contracts with suppliers, organizations have learned to develop very close ties to their suppliers, so that social mechanisms of coordination replace legal mechanisms, which are slow and costly summary, the end of the 20th century is seeing a sea change in the way business does business. This contrasts hugely with the relative lack of change that we saw in the first few million years of human history.
Characteristics of New Nature of Organizations
New forms of organizations are geared to make organizations more receptive, adaptive and generative -- always focused on meeting the needs of stakeholders. New forms of organizations often exhibit the following characteristics:
1. Strong employee involvement - input to the system starts from those closest to the outcome preferred by the system, from those most in-the-know about whether the organization is achieving its preferred outcomes with its stakeholders or not. This way, the organization stays highly attuned and adaptive to the needs of stakeholders.
2. Organic in nature - less rules and regulations, sometimes no clear boundaries and always-changing forms
3. Authority based on capability - ensures the organization remains a means to an end and not an end in itself
4. Alliances - takes advantage of economies of scale, e.g., collaborations, networks, strategic alliances/mergers, etc.
5. Teams - shares activities to take advantage of economies of scale at the lowest levels of activities and ensures full involvement of employees at the lowest levels
6. Flatter, decentralized organizations - less middle management, resulting in top management exchanging more feedback with those providing products and services; also results in less overhead costs
7. Mindfulness of environments, changes, patterns and themes - priority on reflection and inquiry to learn from experience; develop "learning organizations"
New Organizational Structures
Network Structure
This modern structure includes the linking of numerous, separate organizations to optimize their interaction in order to accomplish a common, overall goal. An example is a joint venture to build a complex, technical systems such as the space shuttle. Another example is a network of construction companies to build a large structure. . Network organizations are particularly important in industries with complex products where technologies and customer needs change rapidly, such as in high tech. Close ties among a set of companies enables them to work with each other in ways that are faster than arms-length contracts would permit, and yet retains the flexibility of being able to drop the relationship if needed (as opposed to performing the function in-house).
Virtual Organization
This emerging form is based on organization members interacting with each other completely, or almost completely, via telecommunications. Members may never actually meet each other.
Self-Managed Teams
These teams usually include from 5-15 people and are geared to produce a product or service. Members provide a range of the skills needed to produce the product. The team is granted sufficient authority and access to resources to produce their product in a timely fashion. The hallmark of a self-managed team is that members indeed manage their own group, i.e., they manage access to resources, scheduling, supervision, etc. Team members develop their own process for identifying and rotating members in managerial roles. Often, authority at any given time rests with whoever has the most expertise about the current activity or task in the overall project. Often members are trained in various problem-solving techniques and team-building techniques. These teams work best in environments where the technologies to deliver the product or service are highly complex and the marketplace and organization environments are continually changing. Self-managed teams pose a unique challenge for the traditional manager. It can be extremely difficult for him or her to support empowerment of the self-managed team, taking the risk of letting go of his or her own control.
Learning Organizations
In an environment where environments are continually changing, it's critical that organizations detect and quickly correct its own errors. This requires continuous feedback to, and within, the organization. Continual feedback allows the organization to `unlearn' old beliefs and remain open to new feedback, uncolored by long-held beliefs.
In a learning organization, managers don't direct as much as they facilitate the workers' applying new information and learning from that experience. Managers ensure time to exchange feedback, to inquire and reflect about the feedback, and then to gain consensus on direction.
Self-Organizing Systems
Self-organizing systems have the ability to continually change their structure and internal processes to conform to feedback with the environment. Some writers use the analogy of biological systems as self-organizing systems. Their ultimate purpose is to stay alive and duplicate. They exist in increasing complexity and adapt their structures and forms to accommodate this complexity. Ultimately, they change structure dramatically to adjust to the outer environment.
A self-organizing system requires a strong current goal or purpose. It requires continual feedback with its surrounding environment. It requires continual reference to a common set of values and dialoguing around these values. It requires continued and shared reflection around the system's current processes. The manager of this type of organization requires high value on communication and a great deal of patience -- and the ability to focus on outcomes rather than outputs. Focus is more on learning than on method.
Organizational structure of Hughes Software System
Type of organization Organic
Organization structure Matrix
Environment Dynamic, Uncertain
Formalization Informal
Skills Innovation
Culture Mission
Use of Information Technology Business Resource
Bibliography:
- Organizational Theory(Gareth R.Jones)
- Structure Power and result…How to organise your company for optimum performance(Mahler)
- Designing a work Organisation (Ishwar Dayal)
- Article: Thinking about Organisation structure(Roger T.Sobkowiek)
- Designing Organizations: An Executive Guide to Strategy, Structure, and Process Revised by Jay R. Galbraith
- Waging war on Complexity:How to Master the Matrix Organisational structure(Report By ATKearney)