Organizational Design and Structure free essay sample

Each person assumes a role within the organization, and the organizational structure determines the reporting relationship between the individuals. The organizations strategy determines the organizational structure that will work best for a business at a particular point in time. For example, a small business that hires only experienced personnel, who require limited supervision, will likely adopt a different organizational structure than will a business that hires a number of recent college graduates, who require extensive supervision. (McShane and Steen, p. 362). In this assignment I would like to offer to your attention an ABC Ltd. IT company, it’s organizational structure, job design and other segments of corporate system. All organizational structures include two fundamental requirements: the division of labour and the coordination of that labour so that employees are able to accomplish common goals. (McShane and Steen, p. 364). ABC Ltd. is a large IT company with divisional organizational design. ABC’s design is organized around products, projects, and markets. Each division includes its own functional specialists typically organized into departments. A company has North American division, exploration division, marketing division, production divisions and others. Divisions are relatively autonomous and consist of products and services and are different from those of other divisions. Divisions executives help determine product-market and financial objectives, manage their own hiring, budgeting and advertising. Using this structure, division heads have decision-making power, which they rely on to respond to changes in their particular markets or areas of responsibility quickly. In addition, one division might compete with another division for resources and market standing, just as one company competes with another. A divisional organizational structure helps ABC Ltd. to segregate large sections of the companys business into semi-autonomous groups. These groups are mostly self-managed and focused upon a narrow aspect of the companys products or services. As with any organization structure, divisions have both strengths and weaknesses (advantages and disadvantages). Advantages: A divisional structure provides some distinct advantages for large organizations. Each division can specialize and focus its efforts on its particular product, service or market and not be distracted by competing interests. Since each division is semi-autonomous, operational decisions that you need to make are made by employees closest to the specific issues and problems. Not only are these employees closer to the problem, they also tend to have the specialized knowledge and skills best suited to resolve the problem. The divisional structure also provides a great deal of flexibility for the overall organization because each division operates separately and focuses on the most pressing issues facing it rather than being triaged by a central authority. In other words, the leader of each division can focus on the specific goals of his division and leave the overall strategic management of the company to the folks at the corporate headquarters. Additionally, it may be easier to pinpoint problems in the overall organization and hold specific divisions, and their leadership, accountable. Finally, a hierarchy is still maintained by a central authority, but it is limited to providing the strategy for the entire organization and coordinating its implementation across divisions. In other words, a corporate headquarters will generally let you do what you have to do to achieve your divisional goals, but will work with you to implement general corporate strategy and help you work with other divisions as necessary. Disadvantages: In spite all the strengths of the divisional structure, it also has some weaknesses. Maintaining an appropriate balance of power between the central authority and the divisions is often difficult. Corporate headquarters will want to maintain sufficient control to direct general business strategy, but if it is overzealous, the company will lose the flexibility that semi-autonomous divisions provide. Divisions must have operational freedom to achieve goals specific to the division, such as creating a new product, but still concede to the strategy provided by the organizational headquarters, such as the general market the company wants to target for the new product. Another disadvantage is cost. Each division, in essence, is a company unto itself, which results in functional duplication across the organization such as duplicate financial departments, research and development departments, sales and marketing departments, operation facilities and, of course, duplication in levels of management. Divisions may compete against each other rather than cooperate to achieve the organizations strategic goals. Finally, large companies increasingly have global business customers who demand one global point of purchase, not one in every country or region. (McShane and Steen, p. 366). Recommendation: To be successful, divisions must be well managed. Executive leadership is the single most important determinant of success for a company using a divisional structure. The top leaders need to understand what each division is doing and provide leadership to the division chiefs on how to accommodate new strategic directions or more effectively partner across divisions. In addition, the executives should have a solid grasp of resource use. Having a shared pool of centrally-managed resources like administrative support or office equipment can reduce costs and organizational complexity. 2. Job Design Job design is the process of assigning tasks to a job, including the interdependency of those tasks with other jobs. (McShane and Steen, p. 161). Some jobs have very few tasks and usually require very little skill. Other jobs are immensely complex and require years of experience and learning to master them. From one extreme to the other, jobs have different effects on work efficiency and employee motivation. (McShane and Steen, p. 161). Employee motivation is likely to increase if jobs are well designed. [1] Managers in ABC spend time analyzing each job to ensure that it will engage and motivate the employee while meeting business needs. Employees feel motivated if the job requires them to use a variety of skills and involves them in a range of different tasks. Having responsibility for the whole job, rather than one small part of it, and understanding the significance of their role also contribute to employee motivation. Systematic approach to designing the organization is a key responsibility of senior executives of ABC and one of the few levers they can directly manage to help them achieve competitive advantage in an extremely challenging marketplace. In ABC organization design is built on the principle that an organization consists of interrelated groups that are structured to interact with one another in ways that get work done. ABC uses scientific management design that influences work and management practice. ABC’ general principles from motivation theory: We should set goals; We should involve the employees concerned in designing and agreeing the goals; ‘Stretch’ goals’ can lead to significant increases in employee performance; We should link rewards to performance when possible; We should increase employees’ sense of ‘self-efficacy’ (confidence that they can perform the job or task well) The main motivating strategies of ABC Ltd. : Recognition Employee’s motivational recognition combined with public acknowledgement through schemes such as an â€Å"employee of the month† program or a well-designed incentive scheme. Involvement and Participation Increasing employee’s motivation by ensuring that they are involved in decision making that will have an impact on them. When possible, ABC management allows employees to have control over aspects of their work, such as how they structure their day. Give responsibility ABC hires people who have a track record of taking on additional responsibilities, and then let them have space. They should feel it’s up to them to make a customer’s day. Give power Empowering employees to make decisions that will benefit customers. Give employee the ability to fix customer problems without having to consult with their supervisor or manager first. This will ensure that problems are fixed quickly and efficiently. Give feedback Feedback is important. When structuring feedback, whether written or verbal, ABC’s managers make sure to always start and end with positive points, telling employees what they’re doing well before explaining what needs improvement. Rewarding system Performance-based rewards, Individual rewards, Team rewards, Performance Based Incentive. ABC Ltd. employs several practices to motivate its employees such as: job enlargement, job enrichment, job empowerment. They produce 3 psychological states, very important for motivation: -experienced meaningfulness (belief that one’s work is important) experience responsibility (employee’s belief in accountability for the outcomes of his effort) knowledge of results (employees want information about the consequences of their job) (McShane and Steen, p. 166). 3. Decision making Making decisions in a company or organization happens at all levels. A manager of a business shouldn’t assume he’s right in every decision he has to make. In that regard, different types of decision-making should be taken depending on the situation at hand. (McShane and Steen, p. 182). Identifying Problems Before making any decision, the ABC’s managers have to identify exactly what the problem is. According to them identifying the problem could lead to an erroneous decision. The manager of the department evaluates the issue with all employees so everyone knows about it, and then makes a decision that taps into whats worked before if that decision process is right for solving the issue. This form of decision-making can be made into a computer program with a set pattern of rules to follow in amending a problem. Multiple Perspective Analysis Sometimes using multiple perspective analysis to make a decision is best so managers force themselves out of their usual method of thinking. According to ABC’s manager Alex, by considering few different decisions you can make a decision using different thinking approaches. It is critical to be aware of how other people will react when the decision is made. Creativity in making a decision plays a significant role. Decision can be made using differing points of view from customers, clients or colleagues from different  departments. Short-Term Decisions Another decision method effectively used in ABC is the short-term method, or operational decisions. These decisions usually solve a problem in the immediate term through the action of employees. The method to this involves practical steps for a quicker outcome. Following Up and Feedback After an organization has made a decision, the manager needs to follow up on it to make sure it was implemented co rrectly. Communication with every employee involved in implementing the decision is important in this scenario. Additionally, a leader of an organization or department manager should get feedback from those directly affected by the decision. By doing so, the ABC management can know whether the decision was the right one. This helps in gauging how to make future important business decisions. As we can see management in ABC has been implementing scenario planning strategy, which involves thinking about what would happen if an environmental condition changed and what the organization should do to anticipate and react to such an outcome. (McShane and Steen, p. 192). Divergent thinking is been used as well, which helps to generate different approaches to the issue. ABC’s management considers that communication is improved when everyone in the decision-making process feels that her contribution is being respected. A group environment of acceptance leads to more comprehensive input from all stakeholders, which in turn leads to better communications and decisions that take all aspects of the situation into account. 4. Equity Equity theory is an employee’s perceptions of fairness by comparing their own outcome ratio to the outcome ratio of some other person. (McShane and Steen, p. 142). In ABC management is persuaded that inequity would harm employee motivation. Employees who feel they are on the receiving end of inequitable treatment will be emotionally motivated to gain equity. When inequities persist, employees may do any of the following: Decrease inputs (give less time, do less work) Push for more output from the company (more pay, authority) Go into survival mode (do their job and little more) Become resistant (act out on other issues) Become overly competitive (focus on reducing the outputs of others) Increase absenteeism Quit These outcomes harm an organization’s bottom line and where organizational turnover occurs the loss is two-fold (economic and talent based). Equity theory explains how employees determine what is fair and how they act upon their perceptions. As a result, employee perceptions about fairness do matter–whether they are real or misguided. For ABC managers it is better to effectively address these concerns than ignore them. As most leaders are operating in good faith in an organization, â€Å"the cure† is often just better communication. Leaders may need to manage unrealistic expectations by more open and active communication. Other solutions may involve acknowledging and addressing legitimate employee concerns. Finally, ABC leaders lead change efforts thoughtfully to avoid generating employee resentment. In ABC management works towards it’s trustworthy with employees, but they know that need to be mindful of the dynamic that human psychology plays in shaping employee perceptions, attitude, motivation, and behaviours, short and long term. Treating employees fairly and with respect remains priority for ABC that seeks successful and sustainable organizational results no matter what the market conditions are. In ABC expectancy theory has been provided throughout the departments. Management tries to increase can-do attitude by assuring employees that they have the necessary competencies (Increasing E-to-P Expectancies). (McShane and Steen, p. 366). In ABC employees get regular performance evaluation and distribute more valued rewards to those with higher job performance. Thus employees believe that higher performance will result in higher rewards. (Increasing P-to-O Expectancies). (McShane and Steen, p. 133). As Alex D. , the manager of ABC puts it wisely, The productivity of work is not the responsibility of the worker but of the manager. 5. Organizational culture An organization’s culture influences the ethical conduct of its employees. (McShane and Steen, p. 390). Organizational culture defines the way employees complete tasks and interact with each other in an organization. The cultural paradigm comprises various beliefs, values, rituals and symbols that govern the operating style of the people within a company. Corporate culture binds the workforce together and provides a direction for the company. The ABC way is about commitment and ownership, customer focus, and innovation and leadership. An executive of ABC informs â€Å"At ABC, we live our core values through our actions. This helps drive our business. Being a socially and environmentally responsible business is an important part of ABC’s culture. Set of key of ABC’s Organizational Culture: †¢ Shared understanding that members have. †¢ How things are done. †¢ The way members are supposed to behave. We believe that our employees are motivated to work hard and innovate when they see their jobs as their cause, and we offer ample opportunity for them to make a meaningful difference through the everyday work that they do†. â€Å"We support those core beliefs through: Achievement: We plan and play to win in all we do, every time. Every day matters. Accountability: We build trust by honouring our commitments. Alignment: We work as one ABC to debate, decide, embrace and execute. Agility: We continuously learn and improve in all aspects of our business. â€Å"When we look at our accomplishments, we look through the filter of our company culture, asking if we got there the right way—the ABC way†. Employees at ABC thrive on challenge and aren’t afraid to test limits. Together, they drive the innovations that break the barriers of technology. Their employees energize the industry, helping their customers win and building learning for a lifetime. Push Boundaries: ABC employees thrive on challenge and aren’t afraid to test limits. Together, they drive the innovations that break the barriers of technology. Deliver Innovation: ABC employees energize the industry, helping our customers win and building learning for a lifetime. Change the World: ABC’s employees make a world of difference, leading sustainable global communities, inspiring customer trust with innovative products and building a company to last. Effect on Performance: Leaders of ABC are confirmed that investing in organizational culture has a major effect on the organizational performance. Improvement strategies can only contribute to solving organizational problems when the organizational culture is correctly aligned. â€Å"Managing and aligning organizational culture can make your organization outperform other organizations: today and in the increasingly competitive future. † Organizational cultures can have varying impacts on employee performance and motivation levels. Oftentimes, employees work harder to achieve organizational goals if they consider themselves to be part of the corporate culture. Organizational Socialization: is the process by which individuals learn the values, expected behaviours, and social knowledge necessary to assume their roles in the organization. (McShane and Steen, p. 396). The first process of socialization in ABC is a â€Å"critical task for newcomers to acquire an understanding of the responsibilities and goals of their job expectations† and interaction with other employees. The second process the employee understands the job to perform, understands the company values and goals, and work/life balance can be establish. The third process job satisfaction becomes apparent. In the third process turnover is where an employee leaves the company for a variety of reasons. Formal socialization may occur through a mentoring process whereby values, skills and habits are communicated to a new hire by a more senior employee. In both cases, the intended effect is to alter the behaviour and values of the new employees until they are in line with those behaviours and values prized by the organization. Informal socialization in ABC occurs through any number of informal channels via peer interactions and informal interactions with management. In many ways, this is where the most effective and lasting socialization take place. As new hires observe and interact with fellow employees in the lunchroom and around the water cooler, and as they observe the accepted behaviours of both peers and superiors in a variety of workplace situations, they gain an understanding of the true values of an organization, and soon change their behaviours accordingly. Organizational socialization is a process of both learning and adjustment. (McShane and Steen, p. 396). 6. Organizational Change It is difficult for organizations to avoid change, as new ideas promote growth for them and their members. (McShane and Steen, p. 410). In ABC changes occur for many reasons such as new staff roles, increases or decreases in funding, acquisition of new technology, new missions, vision or goals, and to reach new members or clients. Changes can create new opportunities, but are often met with criticism from resistant individuals within the group. Resistance to change takes many forms, ranging from overt work stoppages to subtle attempts to continue the old ways. (McShane and Steen, p. 410). To better manage, ABC’s management introduces changes gradually into an organization. Organizational change management begins with a systematic diagnosis of the current situation in order to determine the organizations need for change and ability to change. Managers track transformation projects, organizational change management align group expectations, communicate, integrate teams, manage and train people. Areas that need to change are identified through interviews, focus groups, observation, and other methods of internal and external research. In ABC leaders clearly identify the desired culture, and then design a change process to implement the desired culture. ABC provides different types of organizational changes including: mission changes strategy changes operational changes (including structural changes) technology changes changing attitudes and behaviours restructuring Since change can threatens the organizational culture of a workplace things like a companys core values, mission and work environment fear is natural. ABC’s executive informs that sometimes in their company employees gain a sense of group identity and belonging and collect into opposition teams to gain strengths to stand against the changes if they feel that the changes may be threatening. Knowing employees have both a professional and personal stake in changes helps managers begin to understand resistance to change. The most recent change provided in ABC was organizational restructuring. One of the reasons why employees resist changes is that they lack role clarity about the change. (McShane and Steen, p. 412). Employees in a post-restructuring context are understandably wary about the future direction of the organization and their roles within it. It is crucial to examine the social-psychological impact of organizational restructuring on trust and work satisfaction. ABC management takes any organizational changes very seriously and conduct it thoroughly through several stages. Communication: communication is the highest priority and first strategy required for any organizational change. (McShane and Steen, p. 414). Leader of ABC motivate employees and tell them about all pros and cons of the change. Employee involvement: Employees who participate in decisions about a change tend to feel more personal responsibility for its successful implementation. (McShane and Steen, p. 416). Research Thoroughly: Any new additions to an organization are thoroughly researched before they are introduced to the company. Changes are examined from as many different perspectives as possible. Start with Trial Group: Whether implementing new software program or creating a new department in the company, management build a model first to see how the change works within your organizational structure. Preliminary Planning: Collect the data from research and the trial run, and put together a preliminary roll out plan. If it is possible, plan on implementing change in phases. This allows working out any problems with the change once it goes live with the rest of the company, but because it is done in phases you can limit potential problems by limiting the companys exposure to the new process. Training: Begin training employees on the change at least 30 days before implementing preliminary roll out. Designate a group of people that employees can go to with questions about the change, and allow employees to give input as the change rolls out. Ongoing Monitoring: To limit the negative effects of change, management conducts monitoring of the progress of any change as it is being introduced to the company. Solutions: supervisors who directly manage employees are prime change agents. They try to won over, are trained manage the change, with their feedback evaluated as change moves forward. Such communication is important for employees as well, since full disclosure breeds security, a remedy for resistance. Leaders address individual concerns employees might have about job security, wages and loss of control. A key element to leading change is a strategic vision. It minimizes employee fear of the unknown and provides a better understanding of what behaviours employees must learn for the desired future. (McShane and Steen, p. 418). 7. Work Groups and Teams Teams are groups of people who influence each other, accountable for achieving common goals associated with organizational objectives, and perceive themselves as a social entity within an organization. (McShane and Steen, p. 212). There are five main types of work teams in ABC: The problem-solving teams: an assemblage put together to solve a particular problem or improve activities within their own department. Once they conduct research and arrive at a proposed solution, the present their findings to the proper person or panel who may or may not implement the recommended course of action. Formal self-managed work teams: operate independent of a supervisor and are given authority to complete an assignment, coordinate across departments, and allow team members to select tasks they would like to undertake. In other words, they both manage and execute themselves. At the end, they are all held accountable equally. Cross-functional teams: on the other hand are comprised of members from a diversity of specialized backgrounds. For example, a content delivery network account representative may request a conference call with a customer, to which he may invite a solutions engineer, a channel sales director, an account development representative, and a professional services member. The expertise and information each brings to the table will aid in a smoother more efficient sales process that is not only practical but may spur the customer to request a purchase order. Work Group: people who have responsibility for the same process form a work group, also referred to as a natural team, to identify the ways in which their process can best support the organization. Work groups include employees who work in the same department or on the same product. Work groups are permanent teams that meet regularly. Theyre primarily self-managing, as each team members accountability to the group encourages active participation. Virtual team: is composed of members that are dispersed in different areas, but are still able to work together by using technology to assist them in accomplishing their communications objectives. These team members operate across space, time and organizational boundaries and are linked through information technologies to achieve organizational tasks. (McShane and Steen, p. 213). ABC leader believe in their teams contribution to organizational effectiveness such as: Retain valuable organizational knowledge that comes with the continuity of staff and sharing of information Enhance the power and feeling of satisfaction of individuals working on the team Establish trust relationships that lead to better sharing of knowledge and understanding Achieve objectives because individuals are working together Hold team members accountable to one another accountable Combine the talents of individuals and contribute more than the sum of its parts Create an environment where the input from people at all levels is valued Create new knowledge through working and learning with others Provide a process and place for multiple perspectives to be applied to complex problems and issues Generate new ideas and insights Create a climate where innovation and new ideas are supported and members listen to diverse points of view Multiply impacts while maintaining or reducing the resources needed to do the job Empower individuals, the team and the organizations All teams are groups, but teams are a special subset of groups. Work groups have a strong individual focus and teams have a strong collective focus. The individual is not lost on a team, but that persons work is coordinated to fit in with the greater good. Groups include people assembled together, whether or not they have any interdependence or organizationally focused objective. (McShane and Steen, p. 212). Informal groups are normal thing in ABC. The main reason for informal groups forming is social relationship, empowering individuals with self confidence, releasing stress. These types of group help their members minimize stress; provide emotional and informational social support. Importance of groups is in affecting the behaviour of individuals at work. Organizational effectiveness is a function of productivity that results from employee satisfaction. 8. Conflict Conflict is a process in which one party perceives that his interests are being opposed or negatively affected by another party. (McShane and Steen, p. 298). ABC executive admits that conflicts unfortunately are inevitable in their Company as anywhere else. Thus sometime departments have conflicts with one another, senior managements have power struggles and ABC even may have conflict with other organizations. Interpersonal conflicts happen in ABC once in a while. Some people dont mix plain and simple. Perhaps outside work they would choose not to socialize or interact. Perhaps if they werent forced to deal with one another, they could have friendly, polite conversation as acquaintances. But when forced to work together to achieve goals or to share workspace on a consistent basis, friction may arise. In these situations, managers take on the roles of mediator and counsellor to diffuse the situation and find resolution, or make a difficult choice to transfer or remove someone based on inability to function in a team. This type of a conflict is considered as relationship conflict in which people focus on the characteristics of other individuals, rather than on the issues, as the source of conflict. (McShane and Steen, p.  300). Managerial expectations: it is the job of an employee to meet the expectations of his manager, but if those expectations are misunderstood, conflict can arise. In such cases ABC managers spend time clearly communicating their goals to employees and then confirming those goals in writing. Managers also encourage his employees to ask questions about their goals, and hold regular meetings to discuss the goals and how best to reach them. Inter-gro up conflict usually occurs because of the roles and functions of teams and departments. Both are just trying to do their jobs, but somehow run up against each other. An example might be conflict between a sales and information technology department. The sales department needs software to perform certain functions that support their sales and invoicing. The IT department finds the request difficult because the requested changes would negatively impact other parts of the company database. The result is a tension or conflict through neither partys fault. This is considered a problematic conflict requiring resolution by mediation or managerial decision. If the conflict persists and becomes part of the company dynamic or culture, it can become very destructive to the organization and everyone involved. In other circumstances inter-group conflict can be healthy. Such an example would be two sales teams that compete for the best results. While there may be some jeering and prodding between them, they drive each other to perform better, producing higher commissions for everyone and better results for the company. Conflict theory holds this to be a healthy or useful conflict. For ABC management it is very critical that all the conflicts are solved as soon as possible with the potential of win-to win orientation. (McShane and Steen, p. 213). Their preferred conflict handling style is Problem solving, as their participants usually have trust and open to different solutions. In ABC third-party conflict resolution is used through Mediation. Even though mediators have high control over the intervention process, the parties make the final decision. (McShane and Steen, p. 213). 9. Leadership style Leadership is about influencing, motivating and enabling others to contribute toward the effectiveness and success of the organizations of which they are members. (McShane and Steen, p. 328). Leaders styles encompass how they relate to others within and outside the organization, how they view themselves and their position, and to a very large extent whether or not they are successful as leaders. ABC has successfully adopted Innovative Leadership Style. Innovative leaders are not just CEOs. They are team leaders, division managers