New Design Options – Organisation Structure

Managers have been experimenting with various design options to compete effectively.

The term team structure refers to the use of teams as a central device to coordinate work activities. The bureaucratic structure is not suitable for most of today’s dynamic organizations. Employees with diverse skills and experience are required to work together (as teams) to successfully complete projects. As such traditional work areas have given way to more of a team effort, building and capitalizing on the various skills and backgrounds that each member brings to the team. Team members have a responsibility, purpose and establish specific goals and have the leadership and structure to provide focus and direction. They are held responsible – individually and jointly for results. They rely on each other and develop healthy  interpersonal relations based on trust. They exchange information, resources, feelings and thoughts freely and openly. The point is that teams do go beyond  traditional formal work groups by having a collective effect. The basis of these work teams, then is driven by the tasks at hand. Involving employees gives them an opportunity to focus on the job goals. The freedom that they enjoy empowers them to develop the means to achieve  the desired ends.

The virtual organization is a small core organization that outsources major business functions. Dell computer, for instance owns no plants and merely assembles computers  from outsourced parts. The core functions generally reflect the strength of the virtual organization. It can be designing, marketing, distribution etc. The core group consists of a small group of executives overseeing activities that are undertaken in-house and coordinating relationships with outside organizations that carry out work on behalf of the virtual organization. Most of the time the executives spend  in developing and coordinating links with outside suppliers through computer networks. The major advantages of the virtual structure is its flexibility. For instance it allows someone with an innovative idea and little money like Dell Computer – to successfully compete with giant outfits such as IBM.

The Boundary less organization is an organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. In a boundary less organization the vertical lines of hierarchy are eliminated . The pyramidal shape is decimated and a flat organization structure takes its place. Functional departments are replaced by cross functional teams. A cross functional team consists of employees from the same hierarchical level but from different work areas, who come together to accomplish a task. The attempt is to turn every employee into a kind of a generalist by putting him in various teams to improve his skills, experience and ability to get along with others. To this end, the organization rotates people into and out of different functional areas. Lateral transfers are also routinely carried out.

Factors influencing organization structure:

There is no particular type of organization structure that is best suited for all enterprises. Even two firms competing in the same industry with a similar set of products, technologies and markets, may find that a structure that works for one firm may need some modification in another. The issue depends on several contingency factors such as size,  technology, environment , people etc.

There is considerable evidence that an organization’s size has a significant influence on its structure. As an organization adds more employees there is more specialization and horizontal differentiation. To facilitate coordination more managers are needed. This increases vertical differentiation. The increase in complexity makes it more difficult for top management to directly oversee what is going on throughout the organization. Direct surveillance therefore is, supplemented by formalized rules and regulations. Finally, with top management further removed from the operating level, it makes it increasingly difficult for senior executives to makes rapid and informative decisions. Decision making is likely to become more decentralized.

Technology is another important aspect in the design of organization structure. To achieve satisfactory performance, managers must design an organization with the proper mix of technology, structure and human behaviour. Technology, in simple terms is the organization’s transformation process. It is the combination of skills, equipment and relevant technical knowledge needed to bring about desired transformation in materials, information and people. Technology looks at how the inputs are transferred to outputs. Broadly, speaking it is the application of knowledge to perform work.

The type of technology in the organization influences the type of organization structure that should be used. If the type of structure fits the type of technology, the organization will be more successful.

Different departments and divisions of the organization use different  technologies. Therefore the structure of these sub units should vary, depending upon the type of technology they employ. Not all sub-units have to be structured similarly.

Different types of coordination and control systems are appropriate for different types of technology. In short, organizational technology mellows down the relationship between organization design and organizational effectiveness.

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