Introduction
Organizational structure and design emanated in the 19th and early 20th centuries after the Industrial Revolution. Large business organizations controlled world economies thereby, leveraging tremendous amounts of capital to finance the undertaking of large commercials. The response of the government was centralization of regulatory bodies and social welfare programs. For example, P&G centralized decision making platform in its Connect and Develop strategy, which has enabled it foster risk-taking, long-term thinking, and monitoring (Lee, Min, & Lee, 2016). Decentralization then came into the picture after World War II, where a decision-making process was delegated to smaller autonomous units. Effective decision-making and organizational architecture contributes greatly to the success of innovations (Lee, Min, & Lee, 2016).
During the post-industrial economy, smaller organizations possessed an advantage over large organizations because of their quick reaction to dynamism and change in the environment. Globalism emerged through revolutions in the transport and communication sector, which continues to work well for both large and small organizations. Governments have also become global in their operations by cooperating with other using bodies such as the International Monetary Fund and the United Nations. The evolution of organizational structure and design led to the introduction of laws restricting their powers and according their citizen certain rights. The laws were put in place to prevent abuse and thus, countries have their unique laws dictating definite organizational forms.
Delegate your assignment to our experts and they will do the rest.
Organizational structure is the coordination of team and individual work within an organization in order to achieve organizational objectives and goals. In achieving coordination, structure is proven to be a valuable tool. Today, organizational structures comprise of leadership styles (transformational and transactional) and relationship style (among employees; the organization and employees). Their interplay positively or negatively impacts the innovativeness of employees.
Four Types of Organizational Design
Functional organization is a structure where organizations employ hierarchical structures wherein people are grouped according to their areas of specialization or similar roles or tasks. These people will be supervised by functional managers that have expertise in the same field. Through this structure, employee skills are effectively utilized and this helps organizations to achieve their business objectives. As such, employees of such organizations are grouped according to the functions they perform. Such organizations are known to work well in stable environments because their business strategies become less inclined to dynamism or changes. General Motors is one such company employing functional organization due to its division of work and employment hierarchy.
Matrix organization is a grid-like structure allowing companies to address multiple dimension of their business by using multiple command structures. While the basic structures of matrix organization are either of function by product matrix or geography by product matrix dimensions. The complex matrix organizational structure encompasses more than two dimensions. The three common forms are the balanced matrix, functional matrix, and project matrix. Many organizations changed their organizational structures to a matrix because of the environmental complexity and uncertainties (Burton, Obel, & Hakonsson, 2015). Starbucks is an example of a company using matrix organizational structure; a hybrid mixture comprising of different features.
Networked organization is described in two aspects: computer connection and communicating with other people. This implies that it is a flexible organization that has a network based structure allowing workers communicate without hindrances of space or time through ICT as they execute their duties. According to Tobias-Miersch, network organization are models of organizations distinguished from others through their emphasis on collaboration and reciprocity (2016, p.474). Hennes & Mauritz (H&M) is an example of a company using networked organizational structure in outsourcing their production and goods processing to different countries in the Asian and South East Asian.
Virtual organization is a presentation of routine information representing a competitive and productive associations or groups of companies. The characteristic of virtual organization is the existence of cooperation and loyalty between partners based on mutual trust. The virtual organization can also be viewed as a representation of ensemble production companies that are placed in different locations. Nonetheless, these companies work together in an environment that is distributed in achieving a common goal. In these companies, communication processes are deep due to the new information technologies. Geographically, virtual organization is a distributed enterprise that has members bound by a common interest. These members pursue goal that is long-term and use specific information technology tools to communicate and coordinate their work. By work, we mean that the organizations will be pegged on four elements: purpose, connectivity, separation, and technology. Examples of firms include the glass and ceramics maker, Corning, that uses this new organizational form to make partnerships work for their advantage. Economically speaking, virtual organizations are collaborative systems (Ivan, Ciurea, & Doinea, 2012). They ensure people share resources and realize activities that complement their distinct locations in achieving common goals. Computer companies employing forms of this organizational structure are Apple Computer and Sun Microsystems.
Comparison of Design in terms of Structure
The matrix organizational structures are uniquely developed to entail multiple business dimensions from dual reporting structures. On the other hand, functional organizational structures use hierarchies where the individual interests of their subordinates to goals of their superordinate of the organization. Networked organizations use ICT. Virtual organization structures are based on cooperation and loyalty by looking at the partner’s mutual trust. As such, all stakeholders (technicians, distributors, suppliers, and customers) connect digitally.
Comparison of Design in Terms of Strategy
Networked organizational design accommodates strategic alliance among their competitors and quickly responds to threats and opportunities present in their satellite organizations. Functional design uses similar task or roles as their strategy in attaining their organizational goals. Matrix design employs competitive strategies, as well as, intensive growth strategies to fit into their dual structure of reporting. Virtual organizational designs employ generic strategy due to its broad differentiation mechanisms that helps companies to stand out in competitive markets. Through differentiation mechanisms the design is able to support company’s goal of leading in the market through innovative products. Functional employ the use of focus strategies to help them reduce costs of specialization. Strategic partnerships can also be employed under functional organizations as ways of enabling organizations expand their services.
Comparison of Design in Terms of Challenges in Today’s Local and Global Environment
Matrix faces intense power struggle and people involved feel insecure and conflict. Management positions encounter dual staffing and this leads to excessive overheads. Performance evaluation is also a problem with this design, which arises due to dual bosses sharing employees. Virtual organization has teams conflicting because participants are unwilling to change their biases and preconceptions. The contribution for this is because they rarely or never meet face-to-face (Stowell & Cooray, 2017, p.138). Functional organization is a design facing challenges related to inter-departmental communication. Most of the issues raised happen at the managerial level among individual departments.
A Model for Organizational Structure that Leads to High Performance
Matrix management model can be applied to managers who will report to geographical and product division managers. Such reporting has been assigned to cover the functional and project lines. By so doing, the matrix will ensure employees report to a functional manager who will help them with their skills. This will help employees to prioritize their work and also do some reviews. For the product line, managers will set a proper direction for the company pertaining to products being offered to its target market. Employing such a structure will come in handy because resources will be used efficiently. The projects and products are also formally coordinated across the functional departments of the company. Communication is fully established as information will flow across and up the organization. Contact between employees is spread to cover other people and this helps in the sharing of information. Thereby, decision-making processes become easier and faster. Autonomy is will be enhanced in the organization and this results in enhancing motivation of employees. Overall, the model will lead to high performance due to the motivation and communication channels present in the design.
References
Burton, R. M., Obel, B., & Hakonsson, D. D. (2015). How to get the matrix organization to
work. Journal of Organization Design , 4(3), 37-45.
Ivan, I., Ciurea, C., & Doinea, M. (2012). Collaborative virtual organizations in knowledge-
based economy. Informatica Economica , 16(1).
Lee, J., Min, J., & Lee, H. (2016). The effect of organizational structure on open innovation: A
quadratic equation. Procedia Computer Science , 91, 492-501.
Stowell, F., & Cooray, S. (2017). Virtual action research for virtual organizations? Systemic
Practice and Action Research , 30(2), 117-143.
Tobias-Miersch, Y. (2017). Beyond trust: towards a practice-based understanding of governing
‘network organizations’. Journal of Management & Governance , 21(2), 473-498.
