Organizational structures have existed for a long time and it is not a new phenomenon in management. An organizational structure is the hierarchical organization of authority and duties of organizations and it comprises of activities like allocation of duties, supervision and coordination that is intended to make an organization realize its goals.
The structure of organizations can be in many forms considering the different goals and objectives to be achieved. It is through organizational structure that power, roles and organizations way of operations and performance are determined.
Organizational structures offer the platform on which the basic operating processes and events rest. It also decides on the specific personnel who may take part in the processes of decision-making and to the limit their ideas decides the actions of the organization.
In an organization where there exists centralization, decision making capabilities are bestowed on the top managers and the departments are under strict control. Organizations should develop structures because they provide the specific guidelines for operation and brings members together. When an organization adopts the required organizational structure, the management process becomes more effective.
The way an organizations structure develops will depend on which organizational structure category it will fall. When referring to tall structures, we see the top most managers being the CEO and different management levels.
As growth in the organization sets in, the management levels increase too but the slim span of control enables strict employee supervision. On the other hand, flat organizational structures are characterized by fewer management levels, quick decision making processes, faster communication and a wide span of control (Ellis, 2003).
Southwest Gas Corporation is an American company that provides energy supplies. It buys transports and distributes natural gas. Southwest Gas Corporation has transformed a great deal, from the usage of traditional structures to contemporary designs and this has seen it adopt a flat organizational structure. This organization focuses mainly on customer satisfaction considering the fact that its employees work with freedom.
The department in this company comprises of accounting and finance, human resource, marketing and distribution departmrnts.The departmental heads are the team leaders who are responsible for coordinating and supervising their departments. A trick to business growth in todays ever changing global economy is controlled by innovation and creativity (Southwest Gas, 2007).
An organization like Southwest Gas that has constant contact with its customer base gets to know better their market and respond to its needs. Innovativeness results to potential re entry into the market with better products and services hence making organizations with flat structures remain relevant in the market. A flat structure offers employees with the opportunity to grow and succeed (Southwest Gas, 2007).
Organizational design may refer to a formal way of binding together technology, human resource and information in an organization. The design process starts with strategy creation. Matrix involves the process of allocating duties to professionals from different departments to develop or oversee a single or more projects. Personnel from marketing and finance departments may be required to design marketing strategies and determine budgets when introducing a new product or service in the market (Ellis, 2003).
A functional structure is based on the basic organizational functions like accounting, human resource, marketing and finance. An executive in a small company may hire managers for these areas, managers may employ coordinators. When the organization expands in the future, managers may assume the roles of directors.
Customer design ensures that the organization positions its employees in a manner that they are able to understand its customers. Offering products and services to different customers may require that departments come up with structures and design that meet the diverse needs of different customers. There are many managerial levels in tall organizational structures.
In a bureaucratic structure, there exist specific extents of standardization that is good for larger and complex organizations to adopt a tall structure. Max Webber characterized bureaucratic structures as being hierarchical, having well defined organizational roles and responsibilities, and recognition of performance (Ellis, 2003).
Large organizations are mostly characterized by tall organizational structures. British Gas Company a good example of a tall organizational structure. British Gas is a British-owned organization that deals with energy supplies and its deals stretch from the United Kingdom to North America. Activities at the British Gas are divided into business units by products, services, and functions focusing on customer needs.
The active departments in the British Gas company are the finance and marketing departments, headed by departmental heads who assume the roles of team players. Team structure is applied in the British Gas company as every member of this organization works as a team member.
The team leaders are also known as service managers. There is span of control at British Gas as each team has a manager or a leader. Employees who start their career as apprentice may later be service managers and/or operational managers as they progress in their careers (British Gas, 2012).
Qualcomm Incorporated is an American organization that deals with next-generation technologies and 3G networks. Qualcomm Incorporated is another tall structured organization that applies traditional organizational designs namely divisional and functional structures.
However, contemporary design is evident when team structure is employed. This organization is divided into two units based on functional and product departmentalization. The administrative or the functional units comprises of Human resource, marketing, financial and global development departments. These departments are responsible for worldwide coordination of the organizations operations (May, 2005).
At Qualcomm, there is work specialization where various tasks are given to different individuals depending on their specialization. Qualcomms departmentalization consists of functional and product departmentalization that includes the business and administrative units. The business Unit is further divided into subunits considering product departmentalization. The finance department is headed by a manager who oversees budget allocation.
Product marketing is done by the marketing department headed by a sales manager. The head of the Human resource department is responsible for employees welfare and well being. Many employees have teamed up hence the unity of command is minimal. Qualcomm is quite decentralized because teams are their own decision makers (May, 2005).
Organizational structure highlights hierarchical authority and the roles of different individuals in the organization. Organizational structures offer the platform on which the basic operating processes and events rest. The way an organizations structure develops will depend on which organizational structure category it will fall.
Organizational design process starts with strategy creation. Offering products and services to different customers may require that departments come up with structures and design that meet the diverse needs of different customers. Large organizations are mostly characterized by tall organizational structures. A trick to business growth in todays ever changing global economy that is controlled by innovation and creativity requires that centralization be discarded.
References
British Gas. (2012).British Gas. Retrieved from www.britishgas.co.uk
Ellis, C. (2003). The flattening Corporation. MIT Sloan management Review, 4(4), 5.
May, L. (2005). Organizational structure and designs. Retrieved from www.emaytrix.com/mgmt307/section 7.php
Southwest Gas Corporation. (2007). Pro of the Southwest gas Retrieved from http/www.swgas.com/about/aboutus/index.php?val N&
As defined by Daft (2009), organizations are bodies with goals, structured and coordinated activities, and are linked to the external environment (p.11). Organizational theory depends on how a company operates and how the environment affects the running of the organization. In simple terms, organizational theory, also referred to organizational behavior, is defined as the study of how individuals or groups of persons act in an organization.
The organizational research and design are essential during restructuring or effecting changes in organizations; however, it is essential to apply the correct organizational changes to increase effectiveness and efficiency (Bollingtoft, Hakonsson and Niesen, 2009, p.79).
Organization theory is a tool used by managers to understand, diagnose, and respond to organizational needs (Daft, 2009, p.10). This theory can be applied to all industries, for-profit and non-profit organizations. Since organizations are not static, there is need for constant changes to adapt to new environment in the market. Some of the causes of the constant change include globalization, competition, diversity, technology, ethics, and social responsibility.
On the other hand, organization designs are means of evaluating which/and why certain methods are chosen to effect and manage structure and culture, and to control activities in order to achieve goals. Moreover, the benefits of proper organizational design are; the company is able to handle contingences, gains competitive edge, facilitate management of diversity, and promote efficiency, speed, and innovation.
Introduction to Organizational Theory
Code of ethics provides a framework of operation and code of conduct for persons and stakeholders in an organization (Berbeito, 2004, p.122).
Code of Ethics
The intent of this code is to guide all stakeholders and employees on lawful and ethical behavior. This code applies to all people including the directors. Various codes of ethics are discussed below.
Compliance with laws, regulations, rules, and policies: The employees and the directors should learn and comply with the rules, regulations, and policies of the company and the government, while any contravention will result to disciplinary measures.
Conflict of interest: Employees should not engage in activities that will result in conflict of interest; they should engage in acts that promote the interest of the company.
Employees relations: Employees should promote harmony and avoid discrimination at the work place. In addition, they should embrace diversity, inclusiveness, and understanding.
Confidential company information: Confidential company information is defined in three ways: information that is not known to the public, information that confers the company economic advantage and any information that reasonable measures are taken to keep it secret. All employees have the obligation of protecting classified information from the public domain or other competitors. The employees have a clear understanding of what information is confidential or not.
Violation: Violation of the code of ethic will result to disciplinary measure to the parties involved, and this may be in form of dismissal, legal recourse, or compensation for losses incurred by the firm as a result of employees failure to comply with the code of ethics.
The relationship between organizational theory, design, and change on one hand and organizational structure and culture on the other hand is that, they both depend on each other and influence one another to an extent that neither will be effective without the presence of the other.
Organization culture refers to the common values and norms that control how individuals in an organization interact. It includes interaction between members in the organization, with customers and suppliers and other persons outside the organization. On the other hand, the organizational designs are routes picked by managers to manage the structure and culture, while change is the process of current position to a desired one.
Organizational structure involves formal or informal frameworks and policies that define reporting relationships, procedures, controls, and authority and decision-making processes. Moreover, organizational structures are indicators of type of culture in an organization. Managers can use these structures to shape the culture, values and strengthen or introduce the desired culture (Daft, 2009, p.381).
Organizational Design within the Global Environment
There are several types of organizational structures used in organization, each having its advantages and disadvantages. Centralization is a structural policy where the decision-making organ of the organization is concentrated at the top of the organizational hierarchy while decentralization is structure where decisions are made in consideration of all levels of the hierarchy (Griffins and Moorhead, 2009, p.418).
Employees at the lower end of hierarchy are involved in decision-making in decentralization, while in centralization, they are not involved. The importance of decentralizing is that decisions are made by the persons who are involved in the implementation lower rank staff.
The factors that affect the balance between centralization and decentralization are purpose and goals of an organization, knowledge, and experience of the executives, size of the organization, geographical dispersion, technical complexity of tasks, and the period of the decision. Further, others include the importance of the decision, views of subordinates, planning and control procedures, and environmental factors (Rao & Rao, 1999, p.105).
Mutual adjustments and standardization are important in a business organization; however, their application varies from firm to firm. Primarily, mutual adjustment is informal communication between employees about process of their work. On the other hand, standardization refers to planning and implementing of standards and procedures that regulate the performance of duties in an organization (Wagner and Hollenbeck, 2009, p.241).
The tasks are specified and programmed by rules and procedures to obtain the required results. Factors that influence striking a balance between mutual adjustment and standardization are size of an organization, level of skill and knowledge of the staff, types of tasks involved and technicality of the tasks.
Dependency theories indicate that organizations are interlinked in inter-organizational and societal networks that influence inputs and outputs, beliefs and norms (House & GLOBE, 2004, p. 81). The Resource dependency theory is the most well developed theory of inter-organizational partnership.
The basic assumption of resource dependency theory is that individual organizations do not have all the resources they need to achieve their goals, thus they must acquire resources such as money, people, support services, and technological knowledge from other sources in order to survive.
The motivation of inter-organizational linkages is that it provides stability in organization. These networks help organizations to deal with the uncertainty of lack of resources in the future and to achieve similar, compatible, or congruous goals. In addition, similarity in values and attitudes make the formation of inter-organizational linkages more probable and make these linkages more stable over time.
A firm may at times engage in strategic alliances, which are links that firms form in a specific area with other firms; the nature could be arms-length contracts to joint ventures (Yoshina and Rangan, 1995, p.4). Primarily, alliances aid firms to learn new techniques and technology of production from other firms. On the other hand, resource sharing facilitates use of expensive technology, which smaller firms cannot afford. These alliances can sponsor and fund research programs that aid in availability of information and technical advancement, they provide a quicker means of growing ones organization (Hitt, Ireland and Hoskisson, 2008, p.187).
Designing Organizational Structure
Organization structures are essential parts of an organization as they determine how efficiently and effectively an organization accomplishes its goals and objectives. This will involve empowerment, which is a motivation concept that enables employees to achieve desired levels of performance; it occurs when employees are trained and equipped with tools, and information and are fairly rewarded for their contribution (Jain, 2005, p.173).
An organization will as well require manage cross-functional teams and self-managed teams, whereby the former involves works teams with members of the same hierarchy level but from different fields of work who come together to accomplish a task, and the latter involves a group of employees who are endowed with authority to make decisions on how its members perform their duties (Boone & Kurtz, 2010, p.395).
In tall organizational structure, the management should provide empowerment, which is associated to enabling rather than delegating duties, hence employees have capacity to engage and participate in attainment of organizational objectives. By use of self-managed teams, the organization benefits from sound decisions, as decision are made by the persons who are tasked with implementing, hence there is more owning of the decisions.
According to DuBrin (2008, p.256), most organizations find it important to address the issue of bureaucracy, which is a systematic mode of organization where regulations and techniques of control are laid. As an organization becomes bureaucratic, it crushes individualism; the people at the top of the hierarchy become further removed from the dynamics of human relations at the problem-solving level, while organization becomes inflexible, which decreases the ability of an organization to respond to changes in the market.
Moreover, over-bureaucratization causes inefficiencies in organizations as there is confusing titles and overlapping roles and duties of employees. Nevertheless, bureaucracy characteristics assist managers to formulate hierarchies of authority and specific regulations, which brings order, and prevent abuse of power in organization. By decentralizing, managers can lower the cost of bureaucracy as lower-level managers can make decision (Hill & Jones, 2009, p.386).
Organizational Specialization, Coordination, and Management of Culture
Organizations should participate in CSR activities; indeed, the participation in CSR by companies does directly reflect or promote growth in a company. The promotion of the well-being of its staff influences their productivity. In addition, an organization benefits from increased financial performances and improved relationship between the customers, employees and the community.
Corporate organizations are involved in CSR to recognize the significance of its stakeholder with the aim of bringing sustainable results to benefit both the community and the company. Customers are drawn to consume products from organizations that are corporate friendly even if they are sold at a premium rate. In terms of environmental conservation, organizations have to maintain and protect the environment in which they operate, and preserve the natural resources.
Functional structure is a structure that splits its organization into different departments depending on their roles and functions namely accounting and human resources. These departments are headed by line mangers, with the overall head of the organization being a chief executive officer who is in charge of the whole organization (Hitt, Ireland and Hoskisson, 2009, p.314).
One advantage of functional structure is that it allows specialization and active sharing of information among the various functions in the organization, as well as supporting the use of business level and corporate level strategies. This structure is mainly used in simple organizations that have little diversification.
An organization may also organize itself around a multidivisional structure, which separates various departments or divisions in an organization led by divisional managers. This is a contrast to functional structure, which has all the branches of the organization under one key leader. Another distinction between the two is that multidivisional structure groups divisions of an organization based on products, services or the market, while functional structure has departments that are based on the functions they play.
Therefore, multi-divisional structure can be adopted by organizations when they grow and develop, and there is need for diversifying the products or market. Organizations that produce several types of products or services or conduct their business in different countries or regions also adapt multi-divisional structure. Finally, organizations that cater and produce goods to different customers also favour this organization structure.
Organizations move to multidivisional structure as they grow and diversify their businesses; indeed, this structure enables the managers to compare the performance of each division in terms of profitability (Hill & Jones, 2009, p.427). In addition, organizations shift to multidivisional structure when entering new markets and/ or start to produce different products and services to a variety of markets (product diversification).
Organizational Design in Changing Global Environment
Due to the ever-changing global business environment, organizations have to embrace designs that address the issue of technical complexity, which refers to the level that machinery is used in production at the expense of human resources. Continuous-process technology involves productions, which are entirely mechanized, and complex technology is involved.
Technical complexity is higher in continuous process technology since the level of human involvement is very limited; the process also runs continuously from the start to the end (Daft & Marcic, 2008, p.277).
The level of technical complexity of an organization influences the complexity of its structure. Primarily, massive technological changes are apparent in areas including manufacturing processes, computer-assisted design, data transmission, advanced communication links, and sophisticated information systems (Hill & Jones, 2009).
However, the complexity of an organization structure does not always because of the level of technical complexity. Technical complexity sometimes may result to greater complexity of the employees; this can be dealt with by hiring more qualified and experienced workers, thus raising the cost of operation.
Corporate level strategies are strategies that a firm uses to acquire competitive advantage by choosing and managing different groups of businesses competing in different products market (Hill & Jones, 2009, p.154). Organizations choose to engage in corporate level strategy to expand their core domain as it facilitates resource allocation process. This is a crucial element in organizations that have multi-business allocation of limited resources.
In addition, organizations use corporate-level strategies to expand their business, as the strategy defines the market and helps to evaluate the viability introducing new product lines on top of the existing ones (Hill & Jones, 2009, p.285). Similarly, it directs whether to compete directly with other firms or to establish cooperative relationships i.e. strategic alliances are influenced by corporate-level strategy.
Corporate strategies determine the type of structure an organization would adapt when they expand from their core domain. In addition, it evaluates the viability of setting up strategic alliances, to what level an organization can diversify and how to enter or leave businesses to maximize the long-run profitability of an organization.
When organizations enter new domains, their culture, and structure are likely to be affected or altered. Moreover, some cultures can shift from individualism to collectivism or vice versa.
Organizational Change and Stages of Transformation
When implementing organizational change, firms have to choose between two main forms of changes, which include evolutionary and revolutionary change. Evolutionary change occurs over a long spell of growth and does not cause any major disturbance to the organizational structure, while revolutionary change is more dramatic or shifts organizational structure (Henry, 2008, p.320).
Change is referred to as revolutionary when quantum change radically transforms many elements of a structure of an organization. An example of revolutionary change is sudden closure or merger of some functions or business in organization that result to cut down of staff. An illustration of evolutionary change is improvements or incremental steps to fix a problem or a large part of a system.
Organizations are constantly experiencing change caused by various factors in the environment. In this case, planned changes are effected to bring operational efficiency or generate new market, or introduction of new technology while unplanned changes i.e. loss of market or loss of employees can affect organizations negatively.
Organization change is any change in the work environment i.e. methods of organizing and running of organizations (Kondalkar, 2009, 159). In addition, organization change can involve major corporate restructuring or minor changes in basic operation procedures. Organization change is also viewed as evolution changes, which result to revolutionary change.
Organizations exist in environment that involves constant interaction; there are external forces that contribute to organizational change including technology, socio-cultural changes, political, legal and economics (Kondalkar, 2009, 161).
Resistance to change is attributed to both contextual and individual factors. The status quo is the main hindrance of change among individuals, as individuals are accustomed to habits and routines that are difficult to alter. Similarly, the fear of unknown plays a big role in hindrance of organizational change. Contextual factors like roles, attitudes, behaviors, and norms offer resistance to organization change. Therefore, managers should develop and introduce incentive programs that assist employees to accept change.
Other factors that cause resistance to change include uncertainty of job security, lack of information, and loss of power or control that may result from the change. Rapidity and the extent of change may also result to resistance; gradual change is easily adapted compared to one that is effected with speed.
These types of changes are resisted as they bring about loss of power, downsizing of departments or transfer of managers to sections that are presumed less influential. Moreover, employees in an organization resist technological change if it will result to downsizing or reduce their power and control (Kondalkar, 2009, p.172).
Organizational Decision Making, Technology, and Innovation
The rational approach to decision making is the systematic analysis of a problem and choice of a solution; it consists of two stages, problem identification, and problem solution. It also involves analyzing quantitative data obtained through observations, mathematical analysis or modeling to make long-term decision.
There are three main theories that explain the process of decision making in organization Carnegie decision theory, Garbage Can theory and Incremental theory. Carnegie decision theory illustrates that decisions are not made from a single entity but collection of subunits that comprise an organization. Moreover, Carnegie allows diversity, unlike rational approach (Slack and Parent, 2005, p.263).
Garbage Can model/theory factors in, the social and economic structure when making a decision on whom to participate in decision-making and discusses how the cultural values limit the choice outcomes. Garbage Can theory of decision-making indicates that the identification of solution policy does not necessarily arise from problem identification and its analysis.
It is important to distinguish Garbage Can model from Incremental model, with the main difference being based on the number and systematic of decisions made; for instance, in Garbage can model, there is flow of multiple decision-making while incremental considers how a single decision is made (Daft, 2009, p.470). Incremental model places less emphasis on the political and social factors that may affect decision-making. Moreover, the incremental decision-making happens over duration of time and not on one spontaneous decision.
Innovation is the leading cause of technological change, new and improved methods of operations are being discovered. Technology change enables organizations to produce products and services more effectively. In quantum change, the process is dynamic and continuous; there is constant change in quantum and incremental technology change.
This change causes emergence of new range of products, services, industries and affects the economy directly or indirectly. Technological change has resulted to shift of new type of labor, which is cheaper and effective. These changes produce economic growth and increased productivity in the end. They also help to alleviate adverse environmental impact and overcome resource constrains and scarcity (Daft, 2009, p.417).
Managing Power, Conflict, and Politics
Power, conflict, and politics in an organization seem to be interrelated and interdependent. Power is the capacity to influence the attitudes or behavior of others (Griffins and Moorhead, 2009, p.357); however, politics and influence depend on the power relationship between the parties involved. There is constant competition between different subunits in organization, mainly for resource allocation. This can bring about rivalry among the managers of each subunit with the more influential units influencing decision to their favor.
Dominating of a subunit over the others results to conflict whenever a subunit influences decisions without considering the goals of other parties or subunits. Moreover, the subunit in a firm that has the capability of obtaining and controlling most of the resources attain more power over the other subunits. Subunits that are capable of dealing and coping with uncertainty caused by the constantly changing task environment acquire more power over other units.
Primarily, prevention, absorption, and acquiring information are methods that organizations can use to cope with uncertainty. The problem of uncertainty can be dealt with by attaining information of likely trends in the future i.e. the information of possible change of prices of raw material in the future help an organization to prepare how to deal with the problem. Another way is absorption, which helps organizations to deal with uncertainties as they affect a subunit.
Subunits central to work flow, which the other subunits depend on in order to perform their duties, tend to gain power and may influence decision making to their favor. Similarly, subunits that are less centralized from workflow have less power.
In addition, subunits that are irreplaceable or non-substitutable exercise power in decision-making, while subunits that are headed by employees who are influential or irreplaceable can use their power and influence to increase the power of their subunits and hence decision-making. Lastly, organization structure can aid a subunit to gain power by allocating roles of decision-making on important issues; subunits, which are actively involved in decision-making, became the most powerful in an organization (Jain, 2005, p.171).
Conclusion
The organizational research and design are essential during restructuring or effecting changes in organizations. A code of ethics outlines the mode of behavior that is expected from employees of an organization. Organization structures like centralization and decentralization determine how organizations make decisions.
Additionally, strategic alliances enable organizations to access technology and resources that they cannot afford hence promoting their growth. Empowerment of employees through training and provision of tools and information ensure high productivity of employees, while self-managed teams and cross-functional teams facilitate productivity through cooperation and teamwork.
Organizational structure, which may be functional or multidivisional, is important in enhancing the flow of communication and running operations in an organization. Organizations use corporate level strategy to identify the types of product or service they should produce, which markets to venture in or leave and what geographic regions to operate. Subunits can acquire more power through centralization, being capable of handling uncertainties, and ability of subunits to acquire resources.
Bollingtoft, A., Hakonsson, D. & Niesen, J. (2009). New Approaches to Organization Design: Theory and practice of adaptive Enterprises. NY: Springer publishing. Web.
Modern enterprises risk facing cash flow issues at different stages of their development. Such a situation is frequent in the contemporary environment, especially for small businesses. A single coffee shop represents such an enterprise category, meaning that the likelihood of cash flow problems is to be considered. First of all, such a business may experience a lack of cash reserve for emergencies. Coffee shops are highly dependent on a stable supply of resources, such as coffee beans, sugar, cream, and syrups. Accordingly, it is required to purchase them in a continuous manner in order to ensure the uninterrupted functioning of the enterprise. Under these circumstances, it becomes difficult to form a cash safety net that would become necessary if unplanned expenditures arise. Thorough budget analysis, discipline, and planning will allow the management to create at least a small reserve that will help the enterprise through its financial issues.
Second, an increase in overhead expenses may also entail cash flow problems for a coffee shop. More specifically, rent payments present the highest risks in this regard. It is normal for an enterprise to seek the best value in terms of location. It should be well-visited, convenient, attractive at a reasonable price. Nevertheless, some owner may overrate their projected revenues, determining the acceptable rent by the highest income threshold.
As a result, increased overhead expenses apply additional pressure on the enterprise. Evidently, such a situation should be prevented, as resolving this crisis might require the coffee shop to relocate. Finally, in small businesses, employee theft is a rather common occurrence. This matter is highly delicate, and its resolution requires either enhanced control that may disturb workers or the establishment of positive, trusting relationships with them.
Organizational Design
The flaws in organizational design pose serious long-term risks for young enterprises. Small organizations are especially susceptible to the delayed impact of improper organization and imprecise distribution of duties. In this situation, the involvement of each member of the leadership is rather sporadic, responding more to immediate necessities than long-term requirements. As a result, once the enterprise grows and becomes more important, these organizational flaws are revealed, entailing a crisis of leadership. Evidently, as the new project is launched, its founders are eager to proceed to actual operations. They dedicate a lot of time and effort to the creation of the enterprise, and their involvement can often be conditioned by convenience rather than purpose. As in many other cases, the prevention of the crisis of management is better than cure.
Prior to the actual launch of a business, it is necessary to outline the primary areas of responsibility. In other words, each manager needs to understand their duties and span of control since day one. For example, if one of the founders is to be responsible for financial matters, he or she should concentrate on them exclusively without interfering with other affairs. This way, each aspect of the enterprise will remain consistent.
On the other hand, the reality of the discussed situation rarely presents a chance to reimaging prior decisions. In most cases, the crisis of leadership emerges when an enterprise has already gained considerable pace and complexity of the organization.
Under these circumstances, it may be useful to benefit from external expertise. A seasoned manager who was not involved with the foundation of the enterprise can provide valid, fresh insight into the current issues. Having obtained an objective evaluation, the founding entrepreneurs will be able to make the necessary adjustments. It is vital to optimize the distribution of duties, aligning the policies and rules in accordance with the uniform perspective. In the end, external expertise may become the best solution by counteracting the inevitable biases of the founders in regards to their enterprise.
Etisalat is an international telecommunications firm based in the UAE. Many recognize it as a formidable force in data and voice services across the Middle East, Africa and Asia. The organizations net revenue illustrates this; on this basis, the company lies among the top 150 most profitable organizations in the world.
Structural arrangement of the organization
The company has a combination of the area-division structure and the product structure. Under the area division model, the organization divides its entities on the basis of their geographical regions. Through such an approach, the firm can analyze the profitability of each area and thus curve-out a strategy to correct cases of non-delivery. The firm also has a product structure that splits resources on the basis of service portfolios.
Some of them include data services, telephones, mobile network services, internet, sim-card manufacture, training services, financial management and many more (Etisalat, 2011). The company chose this approach owing to the need for greater standardization and specialization. It can also identify the non core or unproductive business services that it can eliminate. Shown below is an organizational chart for the firm.
Forces for change and the obstacles to change in the organization
Currently, the telecommunications sector in the UAE suffers from an oversupply. It is quite difficult for the firm to increase its penetration levels because of this fact. The degree of competition is a force for change because the company needs to innovate in order to ensure its survival. Etisalat faces a lot of competition in its international tariffs.
The companys competitors and other VoIP providers are causing the company to revisit its international tariffs. The prevalence of rigorous regulations in the international calls sector created these changes. Therefore, the organization needed to respond to these alterations in country regulations. Competition was not just limited to international tariffs; it also grew rapidly in the mobile data sector.
Many rivals dwelt on smart phones, and this meant that the companys voice revenue reduced dramatically. The need to increase its voice revenue was also a force for change.
Increased competition also emanated from the fact that Etisalat was no longer a monopoly in the UAE telecommunications market. Five years ago, a key service provider entered the market, and nothing has remained the same. This company now needs to guard it market share as it has been losing it to the new entrant (George-Cosh, 2010).
Customers also required greater flexibility in connectivity arrangements. These needs applied to almost all product segments; television services, broadband services and fixed voice services. The organization needed to meet these needs promptly. However, it had to increase flexibility in a way that would not strain the consumers telecommunications budgets.
The UAE is a high-growth state; it works on developing its economy through different sectors and channels. However, in order to achieve these benefits, the country must have a strong infrastructural base. The communications sector is imperative because it can facilitate greater transmission of oral and written information in voice and data services.
Businesses now require greater convergence between data and voice, and since the Telecommunications Regulatory Authority in the UAE allowed this convergence, then Etisalat needed to respond by giving clients an integrated network.
Some clients did not have access to Etisalats services. In other words, the companys reach was not one hundred percent in the UAE. This meant that it needed to target a new client base with its products and service; this was also another force for change.
Many businesses are facing a lot of pressure to produce or offer their services and products in environmentally friendly conditions (Durant, 1999). Carrying out activities in a green building has become a common requirement for many companies. Furthermore, business practices now address carbon footprints and energy efficiency. Environmental concerns are, therefore, a key driver for change.
Etisalat is a profit making venture, like any other business; therefore, it needs to look for cost cutting measures at all levels. This need is even more pressing now that the UAE telecommunications market has matured. It is imperative for the company to strengthen its position in the market by increasing efficiency in its operations.
Forces for change in Etisalat
Resistance to Change
Customers need for greater technology
Staff hesitance, slow company response
Dealing with greater competition
Imitation, slow adoption
Maximizing technology infrastructure for development
Increased costs
Environmentally friendly business practices
Business disruptions
Greater international expansion
Unfavorable business climate
Cost cutting
Dwindling quality in services
One of the main obstacles to change in this company includes reduced service offerings that may result for cost cutting measures. Employees may fear all these new changes or may be ill prepared for new technologies. Alternatively, if customers needs are always changing, the company may not respond promptly.
With regard to greater competition, the rivals could imitate Etisalats new product innovations, and this may minimize company profitability. The need to practice business in an environmentally manner and the need to offer better technology infrastructure may cause increases in costs.
They may also disrupt company flows. All these factors can minimize the incentive to change in the firm. Lastly, the company should consider international expansion, but it may find unfavorable business conditions in a new target market.
Innovations that the organization has introduced
It can be stated that this company has attained a perfect balance between incremental and quantum changes. Its innovations fall in the incremental category because it often improves its products and services (Morgan, 2006).
The organization has achieved this by offering faster speeds for internet connectivity, better connectivity, greater reach and heightened value. It has done this by investing in fiber optic cables or by building its network infrastructures to a satisfactory level. In this regard, the firm has used existing technologies or methods that are not new to the country to alter service and product offerings.
Conversely, the company has also implemented quantum changes. In this regard, the firm has introduced new technologies that did not exist before using breakthrough innovations. One such instance was the 3D TV; another was 4G technology. These emanated from the need to respond to greater pressures in the competitive landscape.
Shown below is a summary of the two types of innovation prevalent in Etisalat
How the firm sought to manage innovation through structure, culture and organization
This company responded to the difficulties in penetration levels by developing broadband services and other value added services. Technological introduction of a new generation of handset services and tools ensured that the organization could deal with the shift in company revenue from the voice sector to the data sector. Therefore, innovation was at the heart of this companys changes.
One of the new services offered by the organization was an initiative called My Plan. Another scheme was Business Edge. In both these arrangements, the company sought to give its post paid consumers minutes on their international calls.
Since there was a serious problem with revenue generation in the international calls department, then the organization felt that it was necessary to deal directly with this problem. Additionally, the plans also entailed provision of data bundles to clients (Etisalat, 2011). Since the UAE had a lot of competition in the data sector, then it was only natural to respond to these pressures through such an offering.
On top of these two service packages, Etisalat also created something that addressed the need for greater flexibility in connectivity and that was eLife. This package allowed consumers to utilize optical fibers in order to access television services, fixed voice services and broadband services at enormous speeds. It also launched that plan at a reasonable price for the market.
Furthermore, the company was the first to initiate 3D television. In fact, technology experts rank the UAE as one of the top five countries in the world that have achieved this fit. The firm also enhanced this need for greater flexibility by launching Business One Super which is a high-speed broadband service that reaches the mass market. This has radically changed the broadband landscape in the UAE.
The organization expanded its service and product reach through a new partnership with JAFZA. It did this in order to offer customers in the Dubai free Zone some of its telecom services. Since some customers did not have access to high quality networks from Etisalat, the firm launched a Fiber to the home network. It hopes to have achieved 100% coverage by the end of 2012 (Etisalat, 2011).
As a response to energy need pressures and green production business practices, the company has launched a brand of 4G technology called Long Term Evolution. In this plan, the firm has combined technology advancement with environmental friendliness.
It has selected fiber optic cables that are exceptionally energy efficient. They also have a smaller carbon footprint. The plan is still on a trial basis, but it can alter the manner in which the company does business.
All the latter responses have dealt with the companys innovative endeavors. The forces of change also necessitated a need to alter the culture and structure in the organization too. The company changed these elements through a cost optimization program. In the plan, the firm started outsourcing some of its non core services.
Therefore, previous components covered by the international departments were no longer part of the company. Besides this, the organization implemented a cost-cutting measure to improve efficiency.
The company had to change its culture from technology leadership alone to cost efficiency and technology leadership, as well. Value creation is now a prime issue in the company. Furthermore, the business now focuses on sharing its services and infrastructure with different partners in the communications sector. It is likely that the cost optimization program will yield full results at the end of 2012.
The organization has worked on international expansion, as well. It realizes that this is the lifeblood of the company. It intends on dominating the Middle Eastern market through aggressive acquisitions. One such case was in Kuwait through partnerships with Zain.
The company has also worked hand in hand with other kinds of organizations in its existing regional branches in order to meet the needs of the local market. Etisalat is becoming a force to reckon with in the Nigerian telecommunications sector, and this is through a reorganization of the corporate culture within that country (George Cosh, 2010).
Since this organization has a product-based and regional-based structure, then any creation of new services and products also alters its structure.
When the company introduces a new service, it often places a new body of personnel to be in charge of the product. However, most personnel come from the existing body of staff members in the institution. Most senior level staff emanate from the host countries when the firm engages in expansion strategies.
Conclusion
Etisalat is a leading telecommunications provider in the UAE. It has attained this position through continual investments in technology. Etisalat has also used new-generation products (quantum change) and systematic process-oriented changes (Incremental change) to achieve the same.
The major drivers for change are competition and a changing technological landscape. However, the company must contend with slow employee adoption and ineffective cost efficiencies. If it can tackle these resistors to change, then it will maintain its position as a market leader.
References
Durant, M. (1999). Managing organizational change. Web.
In the provided dissertation “A Quantitative Approach To The Organizational Design Problem”, the student Jesús A. Mena did quite well in the literature review chapter. The chapter discussed the problem under study as well as both the empirical and quantitative approaches used. However, based on Dr. June Schmieder-Ramirez’s guidelines, some of the issues were not exhaustively accomplished. Some of the components not properly included historical background of the subject and clear discussion of the broader perspective on the organizational design.
Descriptions of shortcomings and flaws with the chapter
The major shortcoming noticeable in this chapter is the exclusion of the historical perspectives of the problem. Historical perspective could clearly show the origin of the problem as well as the development and advancements of the approaches used. In addition, this could have created a better and broader perspective of the problem. This is a critical provision while evaluating the provided literature review.
Suggestions
To improve this chapter, there is need to include the omitted sections as discussed above. The review should be structured in such a way that the broader perspective of the problem under study is evident. This will narrow down the n narrowing on the particular issue to be addressed by the research. A section, with tables and charts, could have also been included that touches on the trends on the solution of the problem as well as why the method suggested in this study would be appropriate. It is preferable to use qualitative method in a small-scale research study where the concerned research endeavours to unveil specific reasons behind the existence or occurrence of a given variable. It requires the exact answer on a given study. This relates to the aspects of “why” with regard to an issue. This is a method of inquiry with the intent of attaining an in-depth understanding of a given issue.
Discussion of the overall observation of the literature review
Generally, this chapter has been tackled appropriately since various academic sources have been reviewed. However, there are omissions that need to be included. In regard to quantitative research, the concerned literature review has been based on the collected numerical data analyzed to emerge with a general inference about the concerned issue. Collecting data on a given matter or surveying people’s is an important provision in this context. The method usually converts the data collected into numbers that can be subjected to a statistical evaluation. It helps in providing precise information regarding an issue. Conversion into numerical values helps in the interpretation process and other lucrative variables. In this context, the method usually investigates on the general realities on a given issue. It can also use large sample sizes in order to attain a reliable inference. It also helps in unveiling general factors concerning a population or the variable of interest. Additionally, the method endures to provide significant research variables helpful in enhancing various aspects of the research.
Evaluating the references’ section as part of this assignment
The reference page used in this dissertation has not followed the required APA format fully. For instance, titles of the sources used have not been italicized as stipulated in the APA 6th edition. Other provisions incorporate the arrangement of the reference components as well as presentation. The year of publication has also been put at the end of each reference instead of enclosing them next to the author’s name as APA’s format stipulate.
References
Mena, J. A. (2011). A Quantitative Approach To The Organizational Design Problem. UMI Dissertation Publishing.
Schmieder-Ramirez, J. (2010). Guidelines for Organizational Leadership Doctoral Proposal Submittal.
In her article, Sheila Creth highlights the importance of a networked organization, particularly in the modern higher education environment. She notes that there is need for organizations to maximally utilize their members of staff to successfully run the operations.
Creth gives an example of networking between libraries and information technology services for a progressive transition to the future. The article further argues that the first decade of the 21st century was to be a challenging period for colleges and universities in their quest to review the mission and services without compromising the quality of services and traditions.
In the process of redesigning the organizations, according to Creth, administrators will be expected to make tough decisions when it comes to strategic planning and resource allocation.
Creth emphasizes the fact that administrators in nonacademic core operations like information technology services and libraries are the most affected by the changes compared with their academic counterparts. Several approaches that can be used by the administrators are identified by the author and recommended for use in addressing the challenges.
She observes that how the administrators choose to run their organizations is crucial for effective utilization of available resources. The peculiar experiences of a given organization play a central role in the selection of a particular design. However, general trends of redesigning organizations especially in higher education are highlighted by the author.
According to the author, organizational culture is very influential in the design of any given organization. These include the peculiar characteristics and traditions that define the organization. She suggests, and I strongly agree with her, that administrators and stakeholders should consider the structures and processes that promise to work within the local organizational environment.
The next consideration for the administrators is organization structure and processes. Organization structure refers to how the various responsibilities are assigned to the various units and departments with an aim of accomplishing given tasks.
On the other hand, organization processes involve the understanding of interactions, relationships, knowledge, and experiences among people in an organization. The human component in organization processes distinguishes it from organization structure.
However, according to the author, they are closely related trends crucial in ensuring effective organization design. Organization processes aim to foster a process of team work through enhancing responsiveness and vitality in a given organization.
Despite individual differences in opinion and philosophy, people in an organization are expected to cultivate a team process that will keep the organization operating at its best and in line with stated goals. This will greatly determine the future design of any given organization.
Another crucial trend in an organization identified by Creth is networking. Networked organizations promote effective working relationships among the components of an organization; structure and processes.
People in different units and departments are expected to interact freely as they share their relevant expertise. Through this trend, many organizations have become highly decentralized in most of its operations and decision making.
The author identifies the requirements in a networked organization like personal discipline, good communication skills and spirit of teamwork. With the current advancement in information, communication and technology, I concur with Creth that these are crucial characteristics that will help transform organizations and design them for the better.
It is apparent that there is need to consider organizational design as a way of attaining significant developments in productivity as well as the quality of services rendered by any given organization. This is because organization design is the best way towards addressing and overcoming the challenges that may be experienced.
Organization design will go a long way in facilitating the quest for new, timelier, and high quality services, as well as in the production of new products. The future of organizational design, if well managed, is bright and will result in increased efficiency in productivity and fulfillment of stated mission.
Organizational structures have existed for a long time and it is not a new phenomenon in management. An organizational structure is the hierarchical organization of authority and duties of organizations and it comprises of activities like allocation of duties, supervision and coordination that is intended to make an organization realize its goals.
The structure of organizations can be in many forms considering the different goals and objectives to be achieved. It is through organizational structure that power, roles and organization’s way of operations and performance are determined.
Organizational structures offer the platform on which the basic operating processes and events rest. It also decides on the specific personnel who may take part in the processes of decision-making and to the limit their ideas decides the actions of the organization.
In an organization where there exists centralization, decision making capabilities are bestowed on the top managers and the departments are under strict control. Organizations should develop structures because they provide the specific guidelines for operation and brings members together. When an organization adopts the required organizational structure, the management process becomes more effective.
The way an organization’s structure develops will depend on which organizational structure category it will fall. When referring to tall structures, we see the top most managers being the CEO and different management levels.
As growth in the organization sets in, the management levels increase too but the slim span of control enables strict employee supervision. On the other hand, flat organizational structures are characterized by fewer management levels, quick decision making processes, faster communication and a wide span of control (Ellis, 2003).
Southwest Gas Corporation is an American company that provides energy supplies. It buys transports and distributes natural gas. Southwest Gas Corporation has transformed a great deal, from the usage of traditional structures to contemporary designs and this has seen it adopt a flat organizational structure. This organization focuses mainly on customer satisfaction considering the fact that its employees work with freedom.
The department in this company comprises of accounting and finance, human resource, marketing and distribution departmrnts.The departmental heads are the team leaders who are responsible for coordinating and supervising their departments. A trick to business growth in today’s ever changing global economy is controlled by innovation and creativity (Southwest Gas, 2007).
An organization like Southwest Gas that has constant contact with its customer base gets to know better their market and respond to its needs. Innovativeness results to potential re entry into the market with better products and services hence making organizations with flat structures remain relevant in the market. A flat structure offers employees with the opportunity to grow and succeed (Southwest Gas, 2007).
Organizational design may refer to a formal way of binding together technology, human resource and information in an organization. The design process starts with strategy creation. Matrix involves the process of allocating duties to professionals from different departments to develop or oversee a single or more projects. Personnel from marketing and finance departments may be required to design marketing strategies and determine budgets when introducing a new product or service in the market (Ellis, 2003).
A functional structure is based on the basic organizational functions like accounting, human resource, marketing and finance. An executive in a small company may hire managers for these areas, managers may employ coordinators. When the organization expands in the future, managers may assume the roles of directors.
Customer design ensures that the organization positions its employees in a manner that they are able to understand its customers. Offering products and services to different customers may require that departments come up with structures and design that meet the diverse needs of different customers. There are many managerial levels in tall organizational structures.
In a bureaucratic structure, there exist specific extents of standardization that is good for larger and complex organizations to adopt a tall structure. Max Webber characterized bureaucratic structures as being hierarchical, having well defined organizational roles and responsibilities, and recognition of performance (Ellis, 2003).
Large organizations are mostly characterized by tall organizational structures. British Gas Company a good example of a tall organizational structure. British Gas is a British-owned organization that deals with energy supplies and its deals stretch from the United Kingdom to North America. Activities at the British Gas are divided into business units by products, services, and functions focusing on customer needs.
The active departments in the British Gas company are the finance and marketing departments, headed by departmental heads who assume the roles of team players. Team structure is applied in the British Gas company as every member of this organization works as a team member.
The team leaders are also known as service managers. There is span of control at British Gas as each team has a manager or a leader. Employees who start their career as apprentice may later be service managers and/or operational managers as they progress in their careers (British Gas, 2012).
Qualcomm Incorporated is an American organization that deals with next-generation technologies and 3G networks. Qualcomm Incorporated is another tall structured organization that applies traditional organizational designs namely divisional and functional structures.
However, contemporary design is evident when team structure is employed. This organization is divided into two units based on functional and product departmentalization. The administrative or the functional units comprises of Human resource, marketing, financial and global development departments. These departments are responsible for worldwide coordination of the organizations operations (May, 2005).
At Qualcomm, there is work specialization where various tasks are given to different individuals depending on their specialization. Qualcomm’s departmentalization consists of functional and product departmentalization that includes the business and administrative units. The business Unit is further divided into subunits considering product departmentalization. The finance department is headed by a manager who oversees budget allocation.
Product marketing is done by the marketing department headed by a sales manager. The head of the Human resource department is responsible for employees’ welfare and well being. Many employees have teamed up hence the unity of command is minimal. Qualcomm is quite decentralized because teams are their own decision makers (May, 2005).
Organizational structure highlights hierarchical authority and the roles of different individuals in the organization. Organizational structures offer the platform on which the basic operating processes and events rest. The way an organization’s structure develops will depend on which organizational structure category it will fall.
Organizational design process starts with strategy creation. Offering products and services to different customers may require that departments come up with structures and design that meet the diverse needs of different customers. Large organizations are mostly characterized by tall organizational structures. A trick to business growth in today’s ever changing global economy that is controlled by innovation and creativity requires that centralization be discarded.
References
British Gas. (2012).British Gas. Retrieved from www.britishgas.co.uk
Ellis, C. (2003). The flattening Corporation. MIT Sloan management Review, 4(4), 5.
May, L. (2005). Organizational structure and designs. Retrieved from www.emaytrix.com/mgmt307/section 7.php
Southwest Gas Corporation. (2007). Pro of the Southwest gas Retrieved from http/www.swgas.com/about/aboutus/index.php?val N…
As defined by Daft (2009), organizations are bodies with goals, structured and coordinated activities, and are linked to the external environment (p.11). Organizational theory depends on how a company operates and how the environment affects the running of the organization. In simple terms, organizational theory, also referred to organizational behavior, is defined as the study of how individuals or groups of persons act in an organization.
The organizational research and design are essential during restructuring or effecting changes in organizations; however, it is essential to apply the correct organizational changes to increase effectiveness and efficiency (Bollingtoft, Hakonsson and Niesen, 2009, p.79).
Organization theory is a tool used by managers to understand, diagnose, and respond to organizational needs (Daft, 2009, p.10). This theory can be applied to all industries, for-profit and non-profit organizations. Since organizations are not static, there is need for constant changes to adapt to new environment in the market. Some of the causes of the constant change include globalization, competition, diversity, technology, ethics, and social responsibility.
On the other hand, organization designs are means of evaluating which/and why certain methods are chosen to effect and manage structure and culture, and to control activities in order to achieve goals. Moreover, the benefits of proper organizational design are; the company is able to handle contingences, gains competitive edge, facilitate management of diversity, and promote efficiency, speed, and innovation.
Introduction to Organizational Theory
Code of ethics provides a framework of operation and code of conduct for persons and stakeholders in an organization (Berbeito, 2004, p.122).
Code of Ethics
The intent of this code is to guide all stakeholders and employees on lawful and ethical behavior. This code applies to all people including the directors. Various codes of ethics are discussed below.
Compliance with laws, regulations, rules, and policies: The employees and the directors should learn and comply with the rules, regulations, and policies of the company and the government, while any contravention will result to disciplinary measures.
Conflict of interest: Employees should not engage in activities that will result in conflict of interest; they should engage in acts that promote the interest of the company.
Employees’ relations: Employees should promote harmony and avoid discrimination at the work place. In addition, they should embrace diversity, inclusiveness, and understanding.
Confidential company information: Confidential company information is defined in three ways: information that is not known to the public, information that confers the company economic advantage and any information that reasonable measures are taken to keep it secret. All employees have the obligation of protecting classified information from the public domain or other competitors. The employees have a clear understanding of what information is confidential or not.
Violation: Violation of the code of ethic will result to disciplinary measure to the parties involved, and this may be in form of dismissal, legal recourse, or compensation for losses incurred by the firm as a result of employees failure to comply with the code of ethics.
The relationship between organizational theory, design, and change on one hand and organizational structure and culture on the other hand is that, they both depend on each other and influence one another to an extent that neither will be effective without the presence of the other.
Organization culture refers to the common values and norms that control how individuals in an organization interact. It includes interaction between members in the organization, with customers and suppliers and other persons outside the organization. On the other hand, the organizational designs are routes picked by managers to manage the structure and culture, while change is the process of current position to a desired one.
Organizational structure involves formal or informal frameworks and policies that define reporting relationships, procedures, controls, and authority and decision-making processes. Moreover, organizational structures are indicators of type of culture in an organization. Managers can use these structures to shape the culture, values and strengthen or introduce the desired culture (Daft, 2009, p.381).
Organizational Design within the Global Environment
There are several types of organizational structures used in organization, each having its advantages and disadvantages. Centralization is a structural policy where the decision-making organ of the organization is concentrated at the top of the organizational hierarchy while decentralization is structure where decisions are made in consideration of all levels of the hierarchy (Griffins and Moorhead, 2009, p.418).
Employees at the lower end of hierarchy are involved in decision-making in decentralization, while in centralization, they are not involved. The importance of decentralizing is that decisions are made by the persons who are involved in the implementation – lower rank staff.
The factors that affect the balance between centralization and decentralization are purpose and goals of an organization, knowledge, and experience of the executives, size of the organization, geographical dispersion, technical complexity of tasks, and the period of the decision. Further, others include the importance of the decision, views of subordinates, planning and control procedures, and environmental factors (Rao & Rao, 1999, p.105).
Mutual adjustments and standardization are important in a business organization; however, their application varies from firm to firm. Primarily, mutual adjustment is informal communication between employees about process of their work. On the other hand, standardization refers to planning and implementing of standards and procedures that regulate the performance of duties in an organization (Wagner and Hollenbeck, 2009, p.241).
The tasks are specified and programmed by rules and procedures to obtain the required results. Factors that influence striking a balance between mutual adjustment and standardization are size of an organization, level of skill and knowledge of the staff, types of tasks involved and technicality of the tasks.
Dependency theories indicate that organizations are interlinked in inter-organizational and societal networks that influence inputs and outputs, beliefs and norms (House & GLOBE, 2004, p. 81). The Resource dependency theory is the most well developed theory of inter-organizational partnership.
The basic assumption of resource dependency theory is that individual organizations do not have all the resources they need to achieve their goals, thus they must acquire resources such as money, people, support services, and technological knowledge from other sources in order to survive.
The motivation of inter-organizational linkages is that it provides stability in organization. These networks help organizations to deal with the uncertainty of lack of resources in the future and to achieve similar, compatible, or congruous goals. In addition, similarity in values and attitudes make the formation of inter-organizational linkages more probable and make these linkages more stable over time.
A firm may at times engage in strategic alliances, which are links that firms form in a specific area with other firms; the nature could be arms-length contracts to joint ventures (Yoshina and Rangan, 1995, p.4). Primarily, alliances aid firms to learn new techniques and technology of production from other firms. On the other hand, resource sharing facilitates use of expensive technology, which smaller firms cannot afford. These alliances can sponsor and fund research programs that aid in availability of information and technical advancement, they provide a quicker means of growing ones organization (Hitt, Ireland and Hoskisson, 2008, p.187).
Designing Organizational Structure
Organization structures are essential parts of an organization as they determine how efficiently and effectively an organization accomplishes its goals and objectives. This will involve empowerment, which is a motivation concept that enables employees to achieve desired levels of performance; it occurs when employees are trained and equipped with tools, and information and are fairly rewarded for their contribution (Jain, 2005, p.173).
An organization will as well require manage cross-functional teams and self-managed teams, whereby the former involves works teams with members of the same hierarchy level but from different fields of work who come together to accomplish a task, and the latter involves a group of employees who are endowed with authority to make decisions on how its members perform their duties (Boone & Kurtz, 2010, p.395).
In tall organizational structure, the management should provide empowerment, which is associated to enabling rather than delegating duties, hence employees have capacity to engage and participate in attainment of organizational objectives. By use of self-managed teams, the organization benefits from sound decisions, as decision are made by the persons who are tasked with implementing, hence there is more owning of the decisions.
According to DuBrin (2008, p.256), most organizations find it important to address the issue of bureaucracy, which is a systematic mode of organization where regulations and techniques of control are laid. As an organization becomes bureaucratic, it crushes individualism; the people at the top of the hierarchy become further removed from the dynamics of human relations at the problem-solving level, while organization becomes inflexible, which decreases the ability of an organization to respond to changes in the market.
Moreover, over-bureaucratization causes inefficiencies in organizations as there is confusing titles and overlapping roles and duties of employees. Nevertheless, bureaucracy characteristics assist managers to formulate hierarchies of authority and specific regulations, which brings order, and prevent abuse of power in organization. By decentralizing, managers can lower the cost of bureaucracy as lower-level managers can make decision (Hill & Jones, 2009, p.386).
Organizational Specialization, Coordination, and Management of Culture
Organizations should participate in CSR activities; indeed, the participation in CSR by companies does directly reflect or promote growth in a company. The promotion of the well-being of its staff influences their productivity. In addition, an organization benefits from increased financial performances and improved relationship between the customers, employees and the community.
Corporate organizations are involved in CSR to recognize the significance of its stakeholder with the aim of bringing sustainable results to benefit both the community and the company. Customers are drawn to consume products from organizations that are corporate friendly even if they are sold at a premium rate. In terms of environmental conservation, organizations have to maintain and protect the environment in which they operate, and preserve the natural resources.
Functional structure is a structure that splits its organization into different departments depending on their roles and functions namely accounting and human resources. These departments are headed by line mangers, with the overall head of the organization being a chief executive officer who is in charge of the whole organization (Hitt, Ireland and Hoskisson, 2009, p.314).
One advantage of functional structure is that it allows specialization and active sharing of information among the various functions in the organization, as well as supporting the use of business level and corporate level strategies. This structure is mainly used in simple organizations that have little diversification.
An organization may also organize itself around a multidivisional structure, which separates various departments or divisions in an organization led by divisional managers. This is a contrast to functional structure, which has all the branches of the organization under one key leader. Another distinction between the two is that multidivisional structure groups divisions of an organization based on products, services or the market, while functional structure has departments that are based on the functions they play.
Therefore, multi-divisional structure can be adopted by organizations when they grow and develop, and there is need for diversifying the products or market. Organizations that produce several types of products or services or conduct their business in different countries or regions also adapt multi-divisional structure. Finally, organizations that cater and produce goods to different customers also favour this organization structure.
Organizations move to multidivisional structure as they grow and diversify their businesses; indeed, this structure enables the managers to compare the performance of each division in terms of profitability (Hill & Jones, 2009, p.427). In addition, organizations shift to multidivisional structure when entering new markets and/ or start to produce different products and services to a variety of markets (product diversification).
Organizational Design in Changing Global Environment
Due to the ever-changing global business environment, organizations have to embrace designs that address the issue of technical complexity, which refers to the level that machinery is used in production at the expense of human resources. Continuous-process technology involves productions, which are entirely mechanized, and complex technology is involved.
Technical complexity is higher in continuous process technology since the level of human involvement is very limited; the process also runs continuously from the start to the end (Daft & Marcic, 2008, p.277).
The level of technical complexity of an organization influences the complexity of its structure. Primarily, “massive technological changes are apparent in areas including manufacturing processes, computer-assisted design, data transmission, advanced communication links, and sophisticated information systems” (Hill & Jones, 2009).
However, the complexity of an organization structure does not always because of the level of technical complexity. Technical complexity sometimes may result to greater complexity of the employees; this can be dealt with by hiring more qualified and experienced workers, thus raising the cost of operation.
Corporate level strategies are strategies that a firm uses to acquire competitive advantage by choosing and managing different groups of businesses competing in different products market (Hill & Jones, 2009, p.154). Organizations choose to engage in corporate level strategy to expand their core domain as it facilitates resource allocation process. This is a crucial element in organizations that have multi-business allocation of limited resources.
In addition, organizations use corporate-level strategies to expand their business, as the strategy defines the market and helps to evaluate the viability introducing new product lines on top of the existing ones (Hill & Jones, 2009, p.285). Similarly, it directs whether to compete directly with other firms or to establish cooperative relationships i.e. strategic alliances are influenced by corporate-level strategy.
Corporate strategies determine the type of structure an organization would adapt when they expand from their core domain. In addition, it evaluates the viability of setting up strategic alliances, to what level an organization can diversify and how to enter or leave businesses to maximize the long-run profitability of an organization.
When organizations enter new domains, their culture, and structure are likely to be affected or altered. Moreover, some cultures can shift from individualism to collectivism or vice versa.
Organizational Change and Stages of Transformation
When implementing organizational change, firms have to choose between two main forms of changes, which include evolutionary and revolutionary change. Evolutionary change occurs over a long spell of growth and does not cause any major disturbance to the organizational structure, while revolutionary change is more dramatic or shifts organizational structure (Henry, 2008, p.320).
Change is referred to as revolutionary when quantum change radically transforms many elements of a structure of an organization. An example of revolutionary change is sudden closure or merger of some functions or business in organization that result to cut down of staff. An illustration of evolutionary change is improvements or incremental steps to fix a problem or a large part of a system.
Organizations are constantly experiencing change caused by various factors in the environment. In this case, planned changes are effected to bring operational efficiency or generate new market, or introduction of new technology while unplanned changes i.e. loss of market or loss of employees can affect organizations negatively.
Organization change is any change in the work environment i.e. methods of organizing and running of organizations (Kondalkar, 2009, 159). In addition, organization change can involve major corporate restructuring or minor changes in basic operation procedures. Organization change is also viewed as evolution changes, which result to revolutionary change.
Organizations exist in environment that involves constant interaction; there are external forces that contribute to organizational change including technology, socio-cultural changes, political, legal and economics (Kondalkar, 2009, 161).
Resistance to change is attributed to both contextual and individual factors. The status quo is the main hindrance of change among individuals, as individuals are accustomed to habits and routines that are difficult to alter. Similarly, the fear of unknown plays a big role in hindrance of organizational change. Contextual factors like roles, attitudes, behaviors, and norms offer resistance to organization change. Therefore, managers should develop and introduce incentive programs that assist employees to accept change.
Other factors that cause resistance to change include uncertainty of job security, lack of information, and loss of power or control that may result from the change. Rapidity and the extent of change may also result to resistance; gradual change is easily adapted compared to one that is effected with speed.
These types of changes are resisted as they bring about loss of power, downsizing of departments or transfer of managers to sections that are presumed less influential. Moreover, employees in an organization resist technological change if it will result to downsizing or reduce their power and control (Kondalkar, 2009, p.172).
Organizational Decision Making, Technology, and Innovation
The rational approach to decision making is the systematic analysis of a problem and choice of a solution; it consists of two stages, problem identification, and problem solution. It also involves analyzing quantitative data obtained through observations, mathematical analysis or modeling to make long-term decision.
There are three main theories that explain the process of decision making in organization – Carnegie decision theory, Garbage Can theory and Incremental theory. Carnegie decision theory illustrates that decisions are not made from a single entity but collection of subunits that comprise an organization. Moreover, Carnegie allows diversity, unlike rational approach (Slack and Parent, 2005, p.263).
Garbage Can model/theory factors in, the social and economic structure when making a decision on whom to participate in decision-making and discusses how the cultural values limit the choice outcomes. Garbage Can theory of decision-making indicates that the identification of solution policy does not necessarily arise from problem identification and its analysis.
It is important to distinguish Garbage Can model from Incremental model, with the main difference being based on the number and systematic of decisions made; for instance, in Garbage can model, there is flow of multiple decision-making while incremental considers how a single decision is made (Daft, 2009, p.470). Incremental model places less emphasis on the political and social factors that may affect decision-making. Moreover, the incremental decision-making happens over duration of time and not on one spontaneous decision.
Innovation is the leading cause of technological change, new and improved methods of operations are being discovered. Technology change enables organizations to produce products and services more effectively. In quantum change, the process is dynamic and continuous; there is constant change in quantum and incremental technology change.
This change causes emergence of new range of products, services, industries and affects the economy directly or indirectly. Technological change has resulted to shift of new type of labor, which is cheaper and effective. These changes produce economic growth and increased productivity in the end. They also help to alleviate adverse environmental impact and overcome resource constrains and scarcity (Daft, 2009, p.417).
Managing Power, Conflict, and Politics
Power, conflict, and politics in an organization seem to be interrelated and interdependent. Power is the “capacity to influence the attitudes or behavior of others” (Griffins and Moorhead, 2009, p.357); however, politics and influence depend on the “power relationship between the parties involved.” There is constant competition between different subunits in organization, mainly for resource allocation. This can bring about rivalry among the managers of each subunit with the more influential units influencing decision to their favor.
Dominating of a subunit over the others results to conflict whenever a subunit influences decisions without considering the goals of other parties or subunits. Moreover, the subunit in a firm that has the capability of obtaining and controlling most of the resources attain more power over the other subunits. Subunits that are capable of dealing and coping with uncertainty caused by the constantly changing task environment acquire more power over other units.
Primarily, prevention, absorption, and acquiring information are methods that organizations can use to cope with uncertainty. The problem of uncertainty can be dealt with by attaining information of likely trends in the future i.e. the information of possible change of prices of raw material in the future help an organization to prepare how to deal with the problem. Another way is absorption, which helps organizations to deal with uncertainties as they affect a subunit.
Subunits central to work flow, which the other subunits depend on in order to perform their duties, tend to gain power and may influence decision making to their favor. Similarly, subunits that are less centralized from workflow have less power.
In addition, subunits that are irreplaceable or non-substitutable exercise power in decision-making, while subunits that are headed by employees who are influential or irreplaceable can use their power and influence to increase the power of their subunits and hence decision-making. Lastly, organization structure can aid a subunit to gain power by allocating roles of decision-making on important issues; subunits, which are actively involved in decision-making, became the most powerful in an organization (Jain, 2005, p.171).
Conclusion
The organizational research and design are essential during restructuring or effecting changes in organizations. A code of ethics outlines the mode of behavior that is expected from employees of an organization. Organization structures like centralization and decentralization determine how organizations make decisions.
Additionally, strategic alliances enable organizations to access technology and resources that they cannot afford hence promoting their growth. Empowerment of employees through training and provision of tools and information ensure high productivity of employees, while self-managed teams and cross-functional teams facilitate productivity through cooperation and teamwork.
Organizational structure, which may be functional or multidivisional, is important in enhancing the flow of communication and running operations in an organization. Organizations use corporate level strategy to identify the types of product or service they should produce, which markets to venture in or leave and what geographic regions to operate. Subunits can acquire more power through centralization, being capable of handling uncertainties, and ability of subunits to acquire resources.
Bollingtoft, A., Hakonsson, D. & Niesen, J. (2009). New Approaches to Organization Design: Theory and practice of adaptive Enterprises. NY: Springer publishing. Web.
This paper aims to discuss the changes in organizational structure of healthcare institutions. In particular, it is necessary to show how workplace hierarchy in these hospitals was restructured and how the administration modified means of coordinating and monitoring work of healthcare professionals.
Furthermore, we need to evaluate the efficiency of these changes and the improvements they brought. Overall, it is possible to argue that the majority of hospitals attempt to become less bureaucratic and turn themselves into adhocratic organizations. This means that they try to eliminate formal barriers between the top managers and their subordinates in effort to improve the quality of healthcare and remove time-consuming red tape (Mintzberg & Ghoshal, 2003, p 464).
One of the most common changes, underwent by many hospitals nowadays is the creation of interdisciplinary teams (Aikman et al, 1998). The members of these teams may belong to different departments or units, yet, they focus on the needs of a certain group of patients.
To better illustrate this concept, we can draw such an example as Toronto East General Hospital (TEGH); the administration of this institution decided to form workgroups that would address the needs of a specific population, namely pregnant women. These workgroups included obstetricians, counselors, midwifes, psychologists, and nurses; in turn, the decisions about healthcare were formed within these teams (Aikman et al, 1998, p 29).
To some degree, the formation of this mix groups can be regarded as a step toward a matrix management. The key principle of matrix management is that a healthcare professional can work under direction of several managers and support organizational activities. The main objective of this organizational change in TEGH was to provide medical workers with a higher degree of autonomy and better opportunity for decision-making (Aikman et al, 1998, p 34).
Another form of organizational change is the delayering of the workplace hierarchy. This policy is based on the premise that a medical worker, who is supervised by many layers of management, cannot perform his duties efficiently because he has to constantly ask for the authorization of the superior manager and other authorities in order to take any decision about patient care (Mintzberg & Ghoshal, 2003, p 172).
This argument is particularly relevant, if we are speaking about nurses who are closely monitored by head nurses, unit-directors, and case managers at the same time. Due to this continuous supervision they are virtually powerless. Therefore, the purpose of delayering is to make senior management more close their subordinates and ensure that both sides are able to quickly share information with one another.
To better explain the process of delayering, we need to refer to such organization as Saint Fransis Community Hospital. In this organization, the front-line workers are accountable only to the heads of interdisciplinary teams (Saint Fransis, 2010, unpaged). Subsequently, these heads of multi-disciplinary teams report to unit directors and vice presidents. The key issue is that members of these multi-disciplinary teams do not have to wait for the approval of head nurses and unit-directors.
Judging from these examples, it is possible for us to argue that modern healthcare organizations attempt to erase bureaucratic borders by relaxing supervision over healthcare workers and by reducing workplace hierarchy. To some degree, this tendency can be described as the move toward adhocracy. Yet, this process is far from being complete, even despite the fact that the necessity for organizational change in healthcare organizations became evident several decades ago.
Reference List
Aikman. P. , Andress I. Goodfellow I. & LaBelle N. (1998). System Integration: A Necessity. The Journal of Nursing Administration. 28 (2), p 28-34.
Mintzberg. H. & Ghoshal S. (2003). The strategy process: concepts, contexts, cases. NY: Pearson Education.
Saint Fransis Community Hospital. (2010). The official website. Web.
This report seeks to address the issue at hand of aligning Blue sky Media PLC for change and strategic renewal. It also aims at rebuilding the company and improving the position the company has previously held. There is also the aspect of restoration of employees trust in their leaders.
The leaders have to adopt the innovative programmes of work publicized by behavioral scientists for other levels in organizations. When they work with other leaders, they have to rely increasingly on matrix organizations, temporary tasks groups, and project teams.
The work most typically reflects what is described as an exploitative-authoritative organization. In contrast, other departments in companies are practising with the more open and practical participative group approaches described by Likert. Though it is not clear that these innovative designs may lead to increased productivity, growing evidence suggests such results for knowledge – based workers in complex information environments.
Introduction
Blue-sky media PLC is an organization which is changing fast. This organizational change is stimulated by a major external force, for example, substantial cuts in funding, decreased market opportunity and dramatic increases in services. It has therefore undertaken technical, structural or strategic shifts in the organization to evolve to a different level in its life cycle, for example, changing from a highly reactive organization to a more stable proactive environment.
Since this organization has been going through major changes in the aspects of employee’s relations to their leaders, the new CEO has to institute radical changes. There must be a paradigm shift in the manner of operations and also the method of handling issues, especially those related to new strategies for change.
Background
Blue sky media PLC is faced with several factors which necessitate change. These are societal, environmental and internal factors. External factors for change are globalization, differences in workers, technological change, and managing work ethics. These are challenges that cause change in organizations.
Internal forces for change originating inside the organization are recognizable in the form of signals indicating that something needs to be changed. For instance, reduction in effectiveness is a pressure to change. A company that incurs its last three months of the year loss in a span of a fiscal year is for sure forced to do something about it (Lopucki & Whitford, 1990; Weiss, 1990).
Strategic renewal is helpful in guiding the company to downsize, outsource, reengineer, and in corporate venturing, restructuring and rejuvenation. The major aim of strategic renewal is to see the company reposition itself in the market. This helps avoid threats like corporate takeover by other bigger companies.
Human resource management will be vital to either institute measures to retain staff or retrench them through massive lay-offs. The company could also invent other measures aimed at staff appraisal depending on performance and put requisite steps accordingly.
Leadership is essential in a successful corporate world. Visionary leaders help drive their companies to scaling professional and corporate heights. Leaders can either be democratic or autocratic. The company CEO who is democratic encourages workers contribution to the management and running of the company whereas the autocratic leader is strict and runs a one man show.
Project objectives
The first objective of the reorganization is to achieve a framework for financially stable business operations through a capital increase in the company. This will help widen the scope of operation. In addition, the reorganization brings the subsidiaries together directly under the umbrella of holding company making it possible to more efficiently manage the entire business, increase profitability, and strengthen the relationship between the company and its subsidiaries, while at the same time boosting the group’s sales.
The second objective is maximization of the total value of the company’s assets. There are two elements to this objective. First, it is desirable that as little value as possible will be dissipated during the reorganization process; to this end, it is desirable to minimize the time that the process will take and the direct and indirect costs incurred during this process.
It is a good thing that, when the reorganization process ends, the company’s assets will be allocated to their highest-valued use. This implies, among other things, that the assets will continue to function as a going concern if and only if the success value exceeds the liquidation value and that, if the assets continue to function as a going concern, they will be employed under the maximum possible capital structure and the optimal governance structure.
The third objective is highest division of total value: From an efficiency perspective, what matters is not only that the total bankruptcy value will be as large as possible but also how this value will be divided among the participants.
The reason for this is that this afterwards division has important later consequences. In particular, to induce participants to provide finance to the company ex ante, it is expected that, in the event of ex post insolvency, the value will be divided according to the distribution or ranking of priorities that were agreed upon as a contract.
Benefits and key outcomes
A well-defined business process benefits a company in three dimensions. These are productivity, process, and people. Since the performance of a particular enterprise is a combination of the results of its processes. Well defined business processes contribute to a well-managed company.
Productivity, process, and people are interdependent and synergistic. When people acquaint themselves well about the process and become experts in the process, productivity will increase, further increasing the morale of the workers (Gertner & Scharfstein, 1991).
Employees can be motivated through increased morale, which is very important as it increases their productivity. A percentage of between 10 and 70 is estimated to be the inefficiency effect. Improvement of productivity can be tremendously drawn from such inefficiency. Identification of the process activity to ensure error free work can be done since there is a clear definition of the business process. The people perform daily tasks which are persistently changing.
The prospects are finely-identified and invariable. However, in the event that errors take place – their cause can potentially be identified by the organization. The moment the root cause of the errors is pointed out, they can be fixed by making adjustments on the process, which also puts off their recurrence.
It is also very critical that the workers are motivated as it can help steer the process forward. The customers should be fully satisfied through a well-identified process. As a result, the customers become loyal to the business and feel satisfied, which brings about motivation (Lopucki & Whitford, 1990).
Assumptions/constraints
While dealing with individuals you will find that most individuals want to develop their potential. In addition, they have interests for personal growth and development in case they are provided with supportive and challenging atmosphere. They like to make a higher level of contribution in achieving institutional goals than is normally acceptable.
The manager asks, listens, supports, challenges, encourages risk-taking, allows failure, removes hindrances, gives freedom and responsibility, sets high standards and rewards success. This will in turn help to boost the morale of employees and aid in furthering successful organizational change.
While dealing with groups, the manager needs to understand that one of the most reference groups for individuals is the working group; this includes peers and the boss. Majority wish to be accepted, and socialize with one or more small reference groups. They make bigger contributions to the groups’ efficiency and growth.
The manager should let teams flourish; leaders should invest in groups/teams; adopt a team-leadership style rather than a one-on-one style. They ought to actively engage group members to help the leader in decision-making and problem-solving, by training them up suitably. Therefore this will help group members to deal with both positive and negative feelings hence solve problems through mutual interactions.
In designing and running an organization, traditional bureaucratic organization structures must give way to newer organizational designs. The needs and aspirations of employees ought to be addressed. Placing people first can lead to organizations that are more human, development oriented and encouraging. They are also high performing in terms of output, profitability and output quality. The result is that people are an organization’s most essential resource; they are the source of productivity and profits and should be treated with care.
The current bargaining-based process appears to fall substantially short of the goal of maximizing total reorganization value. This happens both because value is often dissipated during the process and because the ultimate outcome of the process might not be value-maximizing.
The redesign process under the existing rules takes substantial time (White, 1984; Weiss, 1990). In one re-organization of a major corporation, the administrative expenses of the company and of the creditors committee came to $3.5 million per month (Cutler & Summers, 1988).
Essentially, the company under reorganization might incur substantial indirect costs from functioning inefficiently during the reorganization process. Because the incentives of management during the process are generally not well aligned with the maximization of reorganization value, the management decisions during the process are likely to be distorted. In addition, because of the insolvency cloud hovering over the company, potential business partners may be reluctant to deal with the company or may demand especially favorable terms.
Potential inefficiencies in the structure emerging out of the process: There are reasons to suspect that inefficiency costs might continue to be incurred even after the reorganization process ends, because the structure emerging out of the process might not be optimal. White (1994) suggests that the existing process is biased in favor of continuation — that is, the company is likely to continue as a going concern even if the most efficient route would be liquidation.
Lastly, constraints under which the project must operate are based on the amount of resources available for implementation of aspects of the recommended strategies. However this can be addressed by ensuring that there are enough funds and requisite resources long before the organizational change, diagnosis and redesign is embarked on.
Quality control
Risk identified
Response to risk
By whom
Time factor being a constraint
Apportion enough time for each task to be completed
The project coordinator
Shortageof finances
Seek alternative sources of finance
The finance officer
External interference
Legal redress
The legal consultant
Other
This proposal will be effective only if the expected conditions prevail and the outcomes are only achievable as per the procedure set (Lawrence & Lorsch, 1967).
Milestones
Task
Milestones
By whom
Employee appraisal
A motivated workforce
Human resource manager
Increased emoluments
Better performance
The accounts manager
Revised strategies
Improved output
Strategy manager
External auditing
Higher accountability
Company auditor
Business expansion
Corporate takeovers
The CEO
Rebranding
New markets
Marketing manager
References
Cutler, D. M., & Summers, L.H. (1988). The costs of conflict resolution and financial distress: evidence from the Texaco-Pennzoil litigation. Rand Journal of Economics, 19, 157-172.
Gertner, R., & Scharfstein, D. (1991). A theory of workouts and the effects of reorganization law. Journal of Finance, 46, 1189-1222.
Lawrence, P.R., & Lorsch, P. (1967). Organizational and Environment. Boston: Harvard Business School, Division of Research.
Lopucki, L., & Whitford, W. (1990). Bargaining over equity’s share in the bankruptcy reorganization of large publicly held companies. University of Pennsylvania Law Review, 139, 125-196.
Weiss, L. A. (1990). Bankruptcy resolution: direct costs and violation of priority of claims. Journal of Financial Economics, 27, 285-314.
White, M. J. (1994). Corporate bankruptcy as a filtering device: Chapter 11 reorganizations and out-of-court debt restructurings. Journal of Law, Economics, & Organization, 10, 268-295.
