Behavioral implications of distinct organizational designs

Organizational Structures / Organizational Structures and Its Behavioral Implication

Behavorial Implications of Distinct Organisational Designs

Structure Better Than Others

The organizational design process helps in managing and altering the official system of power and task relationships which governs the way people in the organization must make use of organizational resources and cooperate with one another for accomplishing company goals.

Simple Structure Design

A simple structural design refers to a corporate design characterized by minimal departmentalization, broad control range, little formalization and centralization of authority. Such a design is seen most commonly at the time of startup of small firms. For instance, a company having a small number of personnel often has its founder/owner as the manager, who is in control of all organizational functions. In such companies, staff members do not have any fixed job, but usually carry out tasks in different fields of company operations; hence, departmentalization is minimal, if not entirely absent. Often, in such a structure, no standardized procedures and policies exist. When the organization starts growing, its structure gradually starts getting more complex; it eventually outgrows the simple design.

Mechanistic Structure Design

Mechanistic structures are usually suitable for companies when the environment is stable; it works well for standard activities and basic technologies. In a way, this structure resembles bureaucratic organizational structure -- companies with mechanistic design have sharp, distinct, centralized, and vertical control, authority and command hierarchies. They give importance to predictability and effectiveness, by means of formalization, specialization, and standardization. This leads to strictly defined systems, tasks, and technologies. The name, 'mechanistic' indicates that company roles, arrangement, and processes resemble a machine, wherein all components of the company carry out only those tasks assigned to them, and hardly anything else. Basically, the lower levels of the company (both workers and managers) merely adhere to established procedures mechanically; though this design ends up suppressing creativity, it does enhance the established processes' efficacy. However, when there is environmental stability, efficiency gains hold more value than creativity. For example, hardly any customer would appreciate it if an employee of McDonald's decided to be creative in his/her preparation of their hamburger. Rather, the constancy and uniformity of processes in making the hamburger will have greater efficiency when established procedures are followed, and customers have faith that the taste doesn't vary with each purchase (Hofler & Droege, 2015).

Divisional Structure Design

This kind of company structure segregates individual functions of the organization into divisions. Divisions may be on the basis of geographies or products. Individual divisions comprise all essential functions and resources (finance, manpower, infrastructure and supplies) within them for supporting a geographic region or product line (e.g. its own divisional marketing, finance, and IT departments). One popular legal structure called M-form or multidivisional form also adopts divisional design. In M-form, the parent organization owns subsidiary organizations, with each subsidiary using its name and brand. Central management assumes ultimate control; nevertheless, a majority of decision-making is left to the independent divisions. Such a design is normally seen in international companies, operating across the globe; e.g., Virgin Group, which is the parent organization, under which Virgin Records and Virgin Mobile are subsidiaries (Boundless, 2015a).

Contemporary Designs

Team Structure Design

Team design gives rise to a large amount of autonomy in the workplace. Such a structure is adaptive in nature, and adjusts itself as and when required through the use of flexible employee units, which undertake organizational projects and work towards corporate aims. There is decentralization of authority, with empowerment of employees, who then respond by displaying inventiveness, originality and interest. In view of that, number of managers is low -- owner may be the only executive, who directs all company units. There is absence of job standardization, which influences employee morale: reduction in job specialization leads to an increase in workforce satisfaction. This, of course, lowers efficiency, which can be considered this structure's drawback. Team structure works best for creative industries (Johnson, 2015).

Matrix Structure Design

This organizational structure type groups employees simultaneously via two distinct operational perspectives. These designs are essentially intricate, but versatile, and therefore, more suited to larger firms that operate across a range of industries and geographic territories. Advocates of matrix structure put forward the notion that this design promotes greater dynamism, since it facilitates easy information-sharing among team members across work-related boundaries; further, matrix structure enables specialization, which may enhance organizations' and employees' knowledge base (Boundless, 2015b). Matrix organizations, rather than opting for staff lineup along any one out of geographic, product, or functional lines, makes use of all. Both functional manager and product-line manager have company employees reporting to them; while the former assists them with skills, task review and prioritization, the latter directs the firm's product offerings. For instance, Dutch multinational corporation, Philips, which manufactures electronics, established a matrix corporate structure, wherein managers reported to a product division manager, as well as geographical manager. Several other large-scale companies such as Texas Instruments, Caterpillar Tractor, and Hughes Aircraft, at nearly the same time, also instituted matrix structure of reporting along project and functional lines (Woods, 2015).

Flat Structure Design

Flat companies are those whose structural design is characterized by no, or hardly any, management levels between the top level of the company and all other staff members. There is lesser supervision of employees in flat organizations; employees are encouraged to take part in decision-making. This uplifts the responsibility level of individual employees in the company. Unnecessary management layers are done away with, leading to improvement in communication speed and coordination among the workforce. Decrease in management layers facilitates more convenient decision-making among employees, while also decreasing budget expenses because of elimination of middle-level managers' salaries (Meechan, 2015). One example of a flat company that is successful in today's market is Quicken Loans; the secret behind the organization's success is workforce recognition and a cultural focus. Flatness in company design motivates innovation and appreciates performance; the structure does away with the shackles of bureaucracy that are responsible for curbing innovation. Quicken Loans' vibrant and open work environment stimulates solidarity, innovation and connectivity among its workforce of over 8,000 individuals (Quicken Loans, 2013).

Structure Better Than Others

The most superior structure among all the above-listed designs is the Divisional Structure, as divisions work effectively, enabling company units to concentrate all their efforts exclusively on one product/service; the leadership structure in this design supports key strategic objectives, which is a great advantage, when compared with other designs. Separate divisional presidents or vice presidents for individual divisions will likely help in procuring resources required from the parent company. Furthermore, the division's emphasis enables it to develop a shared feeling of loyalty and pride, and a common divisional culture, contributing to greater employee morale as well as greater knowledge of portfolio. This is more preferable to dispersing a product/service among several company departments (Gillikin, 2011). Most large, diversified corporations organize themselves based on product. All activities involved in manufacturing and selling a product/product line are clustered in one group. This arrangement typically grants the group's top manager significant autonomy over operations. This structure has the following advantage: group members can concentrate on the product line's specific needs and acquire specialization in their development, manufacturing, and distribution (Elsaid et al., 2013).