Elements of an Effective Organizational Design - Assignment Example

Organizational Theory and Design Organizational design is an important factor in the effectiveness of an organization. This paper will discuss one organization that has an effective organizational design and why the organization is effective. In addition, the paper will discuss one organization that could benefit from restructuring its design. The paper will explain why this organization needs restructuring and propose how it can restructure. A section of this paper will document predictions of the future of organizational theory and design and its potential challenges. The new insights gained in the organizational theory and design class will be discussed. The paper will close with a discussion on the elements associated with an effective organizational design and examples of organizations that have effective organizational designs. DQ 8-2: Identify one current organization that, in your opinion, has an effective organizational design. What makes the organization effective? Coca Cola Company is an organization that I think has an effective organizational design. Several things make Coca Cola Company effective. Work in the organization is highly specialized so that individuals know what they are supposed to do. This avoids duplication of duties and enhances employee performance because everyone is assigned the role for which they have expertise. Coca Cola Company is departmentalized into five departments namely, human capital, finance, industrial relations, sales and marketing, and production. Departmentalization helps the organization to group jobs in order to increase their productivity by pooling and maximizing on the expertise of different employees. Coca Cola’s manager’s span of control goes to as low as between three and five employees. This helps in the effective management of employees and resources (Galbraith 3). Decision making in Coca Cola is centralized in some aspects and decentralized in others. Decentralized decision-making helps the organization make quick decisions that address the felt needs of the consumer at the grassroots. Centralized decision-making helps the company to make the decisions that affect the organization’s operations on a wide scale. Coca Cola’s has low formalization and as such allows employees at the grassroots to modify operations in order to suit the unique needs of the consumer. The clarity of Coca Cola’s chain of command is another thing that enhances its effectiveness (Puranam 14). DQ 8-3: Identify one current organization that, in your opinion, could benefit from restructuring their design. Why does it need restructuring? How would you propose restructuring the organization? Wal-Mart is an organization that, in my opinion, could benefit from restructuring its design. This is because it uses a divisional structure that separates business operations into separate, semi-autonomous divisions. Examples of Wal-Mart’s divisions include Wal-Mart Specialty Stores, Wal-Mart International, Supercenters, Sam’s Clubs, and Wal-Mart Realty. A manager who is responsible for its success or failure heads each division. Whereas this organizational structure has advantages such as enhancement of quick decision-making, faster problem solving and availability of highly skilled professionals, it has its share of weaknesses (Argote 696). Every division that Wal-Mart launches or expands takes a sizeable share of the organization’s resources that could have been used in another business aspect such as product research and development. Another weakness of this structure is the fact that it limits chances of information and knowledge sharing between divisions. As such, best practices in one Wal-Mart’s division are less likely to be implemented in another division and this eliminates the chance of maximizing on the benefit of such best practices. Wal-Mart’s individual divisions can engage in unhealthy competition thus jeopardizing strategic thinking. I think Wal-Mart should adopt a learning organizational structure that helps organizations to develop a capacity to continually learn, adapt and change (Gulati et al 571). In order to this, Wal-Mart would have to retrain its employees to be able to and enjoy generating and sharing information in their fields of expertise. Wal-Mart would need to overhaul its organizational culture in order to give employees common goal and foster employees’ willingness to work together sharing knowledge and information. Changing into a learning organization would require Wal-Mart to organize its employees into teams and assign them exceptional leaders. Adopting a learning organization structure would give Wal-Mart leverage over its competitors (Mohrman & Lawler 62). DQ 8-4: What trends do you predict for the future of organizational theory and design? What organizational design challenges could the future hold?  Organizational theory and design will be a competence area for human resource managers. The growing competition for talent between organizations will require organizational theory and design to provide of intertwine organization design with talent management. This will provide the leadership and resources that that companies will need in order to benefit maximally from their talents. Future organizational design will be more organic, sustainable, ongoing, and less short term and mechanistic. The need to externalize and manage stakeholders will require organizational theory and design to change in order to allow for up-front external involvement and continual participation of stakeholders in design process. Organizational theory and design will need to take a global view due to increasing globalization. The ever-growing speed of social media and its importance in the engagement of stakeholders will require organizational theory and design to incorporate this new technology (Galbraith 4). A future challenge for organizational design is developing the capacity to counter the unintended consequences that will draw from the multidimensional and interdependent spaces in which organizations will operate. Such capacity will have to be more sophisticated than that of the traditional and current times. Another future challenge for organizational design will be to enable organizations to form complex collectives and work well without clashing. Organizational design will face the challenge of having agility that will help organizations survive in the dynamic and uncertain environments of the future (Puranam 15). DQ 8-5: What new insights has this class given you about organizations and their structure? What new insights do you have about your organization, or an organization you are familiar with, and its structure? Have you identified areas within your organization’s design that you might improve if you were chief executive officer? What are these areas? This class has taught me that organizations have structures which are more than the organizational charts I previously knew about. I have learnt that organizational structure incorporates accountability, lines of authority and acceptable behaviors within an organization. The class has taught me that an organizational structure exists in order to facilitate efficient operation within an organization that helps in the achievement of an organization’s goals. In addition, I have learnt that restructuring needs caution in order to achieve the desired change. The type of business, goals, environment and needs are some of the factors that I have learnt are important in designing an effective organization structure (Argote 697). In regards to my organization, I have learnt that although it might seem as if there is a flat organizational structure, there could exist hidden hierarchies. Hidden hierarchies manifest in the way people work and they come up when explicit organizational structure clashes with the actual functional structure. In this class, I have learnt that job description is an aspect of my organization’s structure that could be impending both employee and organizational growth. The knowledge I have obtained in this class has enabled me to understand that there is a lot that goes into expansion and this could be the reason why my organization is hesitant to expand (Gulati et al 572). If I were the chief executive officer of my organization, I would change the way incentives and rewards are given in my organization in order to have them well aligned with the business strategy and purpose. This way, I would eliminate the risk of units becoming self-serving. As the chief executive officer of my organization, I would want to relinquish the incumbent rigid structure and adopt one that is less hierarchical that supports an innovative business strategy. Additionally, I would maintain high specialization so as to enjoy the economies of scale warranted by the large size of my organization (Alberts 53). DQ 8-6: What are some elements associated with effective organizational design? What makes the organization effective? Provide some examples of organizations that have an effective organizational design.  Many elements are associated with an effective organizational design. An effective organizational design ensures that work is specialized proportionately and in a way that ensures that business activities are broken down into steps. Departmentalization in an effective organizational design ensures that jobs are carefully classified in terms of function, product, geographical region, process, or customer. This classification ensures smooth flow of work activities. An effective organizational design has a clear chain of command that outlines the authority and responsibilities of each individual of each individual while maintaining a unity of command. The element of span of control helps an effective organizational design to spell the number of levels of managers that would work best for an organization (Mohrman & Lawler 63). In addition, the span of control of an effective organizational design helps determine the number of employees that each manager should oversee efficiently and effectively. Effective organizational design provides for the right degree of centralization and decentralization needed in order to ensure that the organization’s decision-making runs smoothly. Lastly, an effective organizational design allows for the right degree of job standardization, rules and procedures guiding employee behavior. Nokia, Microsoft and IBM are organizations that have effective organizational designs (Galbraith 3). In conclusion, this paper has discussed the Coca Cola Company as an organization that has an effective organizational design. High specialization and a small span of control are some of the things that make Coca Cola effective. Wal-Mart is an organization that can benefit from organizational restructuring because of the weaknesses of its divisional organizational structure. In the future, organizational design will be organic, dynamic, and short term. Building a capacity to handle unintended consequences will be one of the challenges that will face organizational design in the future. Work specialization and departmentalization are examples of elements of an effective organizational design. Works cited Galbraith, Jay. The Future of Organizational Design. Journal of Organizational Design, 2012, 1(1); 3 – 6. Puranam, Phanish. A future for the Science of Organizational Design, Journal of Organizational Design 2012, 1(1); 14 – 17. Argote, Lowly. Introduction to the Special Issue. Organizational Science, 2011, 20(4); 696 – 717. Gulati, Ronald, Puranam, Phanish. & Tushman, Michael. Meta-organizational design: rethinking design in inter-organizational and community contexts. Strategic Management Journal, 2012, 33: 571 – 586. Mohrman, Saum. & Lawler, Edmund. Useful Research: Advancing Theory and Practice. Berrett-Koeler, San Francisco. 2011. Print. Galbraith, Jay. The Future of Organizational Design. Journal of Organizational Design, 2012, 1(1); 3 – 6. Puranam, Phanish. A future for the Science of Organizational Design, Journal of Organizational Design 2012, 1(1); 14 – 17. Argote, Lowly. Introduction to the Special Issue. Organizational Science, 2011, 20(4); 696 – 717. Gulati, Ronald, Puranam, Phanish. & Tushman, Michael. Meta-organizational design: rethinking design in inter-organizational and community contexts. Strategic Management Journal, 2012, 33: 571 – 586. Alberts, Donalds. The Agility Advantage: A Survival Guide for Complex Enterprise and Endeavors. Department of Defense, Washington, D.C. 2011. Print. Mohrman, Saum. & Lawler, Edmund. Useful Research: Advancing Theory and Practice. Berrett-Koeler, San Francisco. 2011. Print. Galbraith, Jay. The Future of Organizational Design. Journal of Organizational Design, 2012, 1(1); 3 – 6. Read More