The Benefits of the Organizational Structure - Case Study Example

16 February 2007 School of Management Recent years, there is a great shift from traditional organizational structures based on bureaucratic strategies and hierarchies towards culturally-based organizations and controls. Researchers (Armstrong, 2003; Campbell, 1997; robins 2004) suppose that organizational culture can replaces organizational structure as the dominant method of management control. Large-scale bureaucratic organizations are operating in a business and economic climate that is tumultuous and tension-ridden. To remain competitive in global markets, organizations must grow leaner, cut costs, create new technology, improve quality, and generally operate more effectively and efficiently. At the same time, these organizations must respond to the human condition by developing more open, trusting, flexible, collaborative, communicative, people-oriented cultures and environments for a changing workforce--changing in terms of age, gender, race, and ethnicity. Following Campbell (1997, 45) the structure and style of an organization are important determinants in the hierarchy of plans. Functional, centralized organizations tend to pass strategic direction downward, while divisional, decentralized structures tend to pass strategy upwards for consolidation. In some organizations, each type of plan (long-range, short-range, etc.) is distinct, prepared and reviewed on different time cycles and demanding considerable effort to make sure that everything is coordinated. In other organizations, these distinctions may be less clear, with planning documents containing strategic, tactical, and operational objectives together. A component of an organization could conceivably have a strategic plan, a tactical plan, and an operating plan--all of which must fit together as well as support the plans of the larger organization. Obviously, the structure of an organizations planning process determines the degree of overall coordination and effort required to maintain and monitor plans (Campbell 57). Organizational structure as the dominant method of organizational control is often criticized because of high degree of bureaucratization and centralization of authority (Galbraith 62). The problem with the functionalized structure is that it promotes "tunnel-vision," so that individuals are interested only in their particular area, whether it is marketing, sales, manufacturing, or research and development. In a functional structure, coordination and control is a problem that is dealt with by creating strict policies and procedures, by increasing the amount of red tape (Galbraith 65). The reliance on red tape to coordinate efforts reduces the operating units flexibility and the likelihood that it can move quickly to take advantage of market opportunities. This structure also fosters the tendency for managers to be technical specialists in some areas rather than general managers promoting the development of new ideas and coordinating the efforts of others to achieve the goals set for them. A divisional structure, on the other hand, increases the likelihood that company can be maintained or created because each division is responsible for a particular product or service. The managers of these areas must be true general managers since they are responsible for all aspects of producing a particular product or service: the sales, the manufacturing, the research and development. They can no longer be technical specialists or their areas will suffer. This suggests that when a firm decides to replace the functional structure with a divisionalized one, it must also replace its technical specialists with general managers. To accomplish this successfully, firms must either provide training to existing managers or go outside the firm and hire a general manager (Galbraith 69). Speaking about organizational structure as the dominant method of control, it is important to mention organizational paradigm which has a great impact on modern organizations (Ashkenas et al 21). The term "organizational paradigm" is used in two different ways. In the first, the term is used very broadly, to imply the organizational philosophy, beliefs, values, structure, policies, and operations. In the second, the term is used more explicitly, to imply the basic presuppositions that unnoticeably define and shape structures, policies, and operations. The definition of organizational paradigm that takes a broad, all embracing perspective is based on Kuhns (1970) description of a scientific paradigm (Hatch and Cunliffe 65). Kuhns definition is applicable to the organizational domain, and indeed was used to describe the organizational frame of reference and culture, and the organization world and world view. The technical paradigm includes the Weberian bureaucracy, job design, technical systems, scientific and classical management, and contingency theories. This paradigm is largely restricted to organizing most effectively and getting work accomplished. Following Ashkenas et al (2004): “the paradigm shift toward boundaryless structures is at the heart of all the new labels and to lay out the assumptions behind this shift" (3). Thus, organizational characteristics are the more enduring, structural aspects of organizations, such as the type of organization (bureaucracy or total institution, for instance) (Hatch and Cunliffe 65; Armstrong 61). Centralization and bureaucratization were found to be hindrances to innovations. Business organizations were found to be more vulnerable to changes in their environments than public organizations. Organizational change is a dynamic, systemic process that consists of elements affecting each other in multidirectional ways. The organization not only is changed by driving forces but also changes its external forces, internal forces, and the fit between external and internal forces (Galbraith 62). "Organizations are commonly thought of first and foremost as vertical structures. Managers are at the top and workers are at the bottom. Orders flow down the chain of command" (Ashkenas 34). In such organization as Apple Computer Company, organizational structure and culture play a dominant position. In this case, structure and bureaucracy are the main tools in maintaining control in Apple (Apple Home Page 2008). In such organization, organizational structure and strategy and attempting to change key personnel who are emotionally wedded to routine patterns of interacting and relating are extraordinarily difficult tasks. This involves acts of confrontation between consultants and clients, and between and among members. It also demands clarification of mutual problems, expectations, and meanings and interpretation of the sources and reasons for problems. Organizational culture is used as control tool which helps to coordinate and manage morale and climate within the organization. It is important to note that whether an organizational climate is warm or cold is not necessarily indicative of the degree of productivity, effectiveness, or quality of work. It speaks to what people in the organization, particularly executives, value--and that varies. It also signifies the entrants finding a fit or misfit as a member of this organization. In other words, some may prefer the warm climate and others the cold one. However, if the recruit is not sure, he or she will confront this issue during the process of socialization--the subject to which we turn next. Beyond artifacts, degrees of formality, socialization, rituals, myths, and governing values lies a deeper level of organizational culture--the personality of leaders. The degree to which a leaders personality influences organizational culture is to some extent based upon the organizational structure and procedures. Taller hierarchies with centralized authority produce inordinate positions of power at the top, which facilitate greater domination of subordinates and unilateral decision making. Consequently, these authoritarian structures require expansive personalities at the top and self-effacing ones at the bottom. If hierarchic structure is considered a given, then we must consider how individual personality fits and then affects organizational positions (Apple Home Page 2008) The psychological structure of bureaucracy developed by Baum shows that organizational structure can be an effective control tool in different settings (cited Hatch and Cunliffe 51). Baum has the following determining attributes: (1) hierarchy in which responsibility is dispersed while authority is centralized; (2) work that is appraised and rewarded by superordinates who are infrequently visible or accessible; and (3) responsibilities, authority, and relationships among bureaucrats that tend to be ambiguous (Hatch and Cunliffe 51). They are anxious about that which they cannot control, that which they are held responsible for, and the anonymity of their superiors authority. Baum tells us, further, that this social structure of alienated vertical and horizontal relationships produces decisions and actions based upon unconscious fantasy and imagination. Horizontally, bureaucrats experience fragmentation and a lack of purpose; vertically, they feel ambivalence to authority and confusion about power. The relative autonomy of superiors, he claims, is bridged by untested assumptions based upon unconscious interpretations of others. “That empty psychological space between superiors and subordinates is filled with reverie” (cited Hatch and Cunliffe 54). Following Keidel (1998, 82) bureaucracies are more than numbers of people or efficient administration. They are systems of values with goals and rewards. Bureaucracies have lifecycles and a propensity to stifle creativity and innovation, particularly as they grow over time or face an uncertain future. Bureaucracies are often thought to hold back progress, largely because of their rigid hierarchical formations, red tape, and paper-shuffling management. Bureaucracies are associated with the decay of civil infrastructures, lack of adequate quality education for tomorrows technologically driven society, failure of individual commitment to sociopolitical values, loss of the ability to make high-quality products, acquisitions and mergers, loss of a nations ability to be competitive or to be responsive to trade wars, and loss of scientific and technological dominance (Keidel 23). According to Mills (2003) and Robbins (2004) organizational culture cannot replace organizational structure as the dominant method of management control because it does not allow management to control duties and responsibilities of employees, measures organizational performance and effectives. The primary factor to consider in the organizational culture is the values. The values of the organization, and the people in the organization, determine what will gain attention. Values direct, not always at the conscious level, the outcome of millions of incremental decisions that are made daily by the members of an organization. Values determine who will rise in the organization. They are important to decisions about markets, products, and projects. "Authority is less a function of position or title and more a function of information and competence” (Ashkenas et al 47). Values are the bedrock of the culture. From this perspective, the organizational structure is, first of all, the metarules, or the conceptual framework and precepts, or the unquestioned assumptions that shape the organizations beliefs, values, and operations, and provide meaning and direction for members actions. To put it more precisely, the organizational metarules or basic assumptions are highly abstract mental constructs, some of which are taken for granted; others operate at the subconscious level and define the reality in which the organization operates (Robbins 81). These abstract constructs are translated into a lower level of constructs that are more specific and concrete, the values and beliefs. Three elements are important in reinforcing the values: rites and rituals, heroes and heroines, and the informal communications network. Rites and rituals are the formal and informal processes and procedures by which the values are canonized. The values are continuously reinforced by the policies, practices, rules, regulations, standards, and the informal method by which things get done (Mills 34) Thus, following Galbraith and Galbraith (2000) and Ashkenas et al (1998) organizational culture can be used as a management control method in some situation. Organizations are social settings where people can, ideally, express their true selves; however, they are often authoritarian cultures that promote false and inauthentic actions. Whether or not organizations facilitate genuine and productive human relations depends upon the values, ambitions, ideals, talents, and skills of key participants, members of powerful organizational coalitions, and their host political culture. If one acknowledges the influence of personality on power relations and decision making in organizations, then one must look beyond traditional organization theories. "A healthy hierarchy, with shared information and authority, requires a completely new role of the middle manager. Instead of control- ling, directing, evaluating, and ordering, the middle manager must facilitate, coach and counsel, mentor, translate strategies into goals” (Ashkenas et al 92). Organizations are produced and perpetuated by people who come together in order to accomplish something that they cannot achieve alone. Whether their purpose is to defend national boundaries; govern and collect taxes; build homes, roads, and schools; or provide health care and education, complex organizations are permanent fixtures of contemporary life. Thus, an in-depth understanding and evaluation of organizational life can be of great value (Galbraith and Galbraith 2000). Organizational culture encompasses three levels of analysis: artifacts, values, and basic underlying assumptions. Artifacts are material objects and, therefore, are the most accessible and readily observable facets of organizational culture. Material objects may include newsletters, computers, pens and pencils, and architecture such as office work space and the actual design of buildings (Robbins 51). These are components of what we call explicit culture in organizations (Ashkenas et al 94). The availability, quantity, and quality of such objects differ from one organization to another, even though they may have similar tasks and occupational membership across organizational boundaries. The most important aspect of these artifacts is understanding their often deeply held meaning for organizational participants. Knowing their official or avowed purpose does not lead directly to knowing what they mean to organization members and the consequences of their interpretations (Robbins 51). A recent alternative to monolithic bureaucratization is to utilize free competitive market mechanisms (Ashkenas et al 92). These mechanisms are utilized by capitalistic, socialistic large-scale bureaucracies. Such creative and innovative activities employ deregulation, privatization, and decentralization. Research opportunities abound in formulating an answer to the question of whether free competition markets are the only alternatives. Ashkenas et al (1998) believe they are developing an alternative when they integrate the advantages of central planning and a market economy. Organizational culture does not allow develop global infrastructures, exploit new technologies for the benefit of all people, and providing more space and a better quality of life on a crowded planet place ever-increasing demands on creative and innovative ways to manage bureaucracies. Organizational cultures may be distinguished by the degree to which learning and problem solving occur (Ashkenas et al 99). Organizations are dependent upon their surrounding environments for employees, clients, customers, and so forth. Organizational leadership must effectively adapt to the sociocultural, economic, and political nature of that environment. The prognosis for organizational survival is, in part, determined by executive awareness of organizational culture and its fit with the host culture. The ability of organizational leadership to read changes in the environment effectively and then communicate and discuss those changes with the staff is critical. The host culture may also define the social class and ethnic origins of employees joining the organization as well as clients and customers it serves. In addition, the host culture represents the character of the political climate of an organization, the degree to which it is friendly or hostile (Mills 65). Leadership sensitivity to the nuances of host culture assures the continued openness of the organization as part of a larger social system. Organizational structure and function come to serve defensive purposes, where boundaries enhance resistance to change and adaptiveness within and among organizations. The organizational identity becomes a social defense system against the anxiety of differences, separation, and individuality. Group cohesion becomes an important issue for organizational members. Taking into account organizational research and management theory, it is important to mention such gurus as Elton Mayo (1933) and Chester Barnard (1938) who stressed the significance of informal social structure to understanding human behavior in organizations more deeply and more realistically (Hatch and Cunliffe 31). The notion of culture in organizations reappeared in London in the 1950s and 1960s with the Tavistock Institute of Human Relations and, particularly, in a work by Elliott Jaques, The Changing Culture of a Factory (1951). He, along with such pioneers of group and organizational analysis as Wilfred Bion, Isabel Menzies Lyth, Eric Trist, Eric Miller, and A. K. Rice, is responsible for sustaining interest in the organizational cultural phenomenon. At the same time, however, in the United States, Harry Levinson (1962) at the Menninger Clinic in Topeka, Kansas, and Abraham Zaleznik and his associates (1965) at Harvard University were also thinking about organizations along these lines (Hatch and Cunliffe 17). For Hatch and Cunliffe (2006, 31) culture is as much a part of personality as of social structure; it is, in fact, an essential link between individual and society. This brief intellectual history of the notion of organizational culture provides some background for the exploration of its component parts, beginning with organizational history. Organizational myths and stories proffer meaningful information about individual experience and identification with institutions. When these stories are repeated by participants in discussions with nonmembers, such as researchers and consultants, themes often emerge that tell us how the organization and its leadership respond to critical incidents--patterns develop and a group identity is discovered (Galbraith 28). Cultural control means that formal rules and regulations are no longer necessary replaced by norms and values, traditions and beliefs. An adequate balance between role structure, status ranking, and power relations is very important to the functioning of a work team as well as for its survival. The distribution of power within a team has several consequences. In general, the expression of power by an individual team member makes him/her additionally attractive, influential, and well approved. The more power a team member has, the greater the probability that he/she may use it constructively. The question is how the utilization of power and influence fits into the role structure and status ranking. For example, among air crews, influence exercised by individual crew members usually goes well together with role (as well as status) ranking, and therefore there are relatively few tensions that would negatively influence the crew performance (Galbraith 91). The postulates mentioned above may be more or less harmoniously integrated within the particular structure. The configuration of that structure indicates the level of integration achieved as well as the balance of contradictions generated by the three basic exigencies arising from the postulates. One of the possible applications of the methodology described above is in the field of management. In order to study conflicts related to managerial roles, a dialectical paradigm was formulated related to dilemmas that management faces in the field of human relations. Five basic types of managerial tasks were matched with four basic fields of managerial activity. In each case an adequate dilemma was formulated relating to the particular match. (Galbraith 91). Even in a system of political relationships based on the rule of the elite with no control by the rank and file, egalitarian tendencies become firmly established among the masses, creating a powerful pressure of expectations which frequently are quite unrealistic within the framework of a bureaucratic structure. Time after time this structure begins to crumble under the pressure of the masses dissatisfaction, making the situation even more difficult for the centralized authorities (Galbraith and Galbraith 92). These authorities can choose between three basic possibilities: to tighten control, strengthening autocratic methods (thereby risking an even more violent mass reaction during the next crisis of authority); to transfer responsibility to the lower levels of control and thus exonerate themselves; or to allow grassroots social initiative for individual groups, permitting them to be somewhat self-governing. This last solution is, of course, the most effective one, since it not only releases the central administration from the burden of increasingly troublesome responsibilities, but also contributes toward creating authentic creative resourcefulness among the masses, which is indispensable for nurturing initiative, higher productivity, and the general commitment of people to what they do. The sources of power are located in special skills, functional specialization, the relations between the organization and its environment, control of communication and information, and even in the existence of general organizational rules. By using these sources of power, the organizational members establish their relative positions in the "shadow" organizational structure (Galbraith and Galbraith 97). If the organization had no structure, it would be impossible to delegate authority and control tasks completion. It would create difficulties in problem solving and collaboration among planners and administrators (Keidel 44). Absence of structure would lead to changes in the organizational status quo caused by management cutbacks, retrenchment, leadership transitions, budgetary revisions, audits, expansions in size and workload, and the like, trigger anxieties and feelings of panic. Consequently, organizational culture, and all that it entails, is both endangered and exposed. Psychoanalytically oriented researchers and consultants find that critical moments are opportunities for reaching the suppressed and denied emotions of organizational members (Diamond 1988 cited Keidel 44). In global context, generalization is important because they help to control multicultural environment and diverse traditions of the host and foreign countries. As a result of the complexity of large organizations, which include multiple layers of authority, responsibility, and tasks, groups emerge as subcultures with relatively distinct identities, our next topic. In addition to a leaders characteristic response to stress and anxiety, organizational cultures and subcultures are driven by underlying basic assumptions (Keidel 49). According to Keidel these organizations may or may not be compatible at any given time and, frequently, the unconsciously driven basic assumption group sabotages the more consciously driven task group. They include the following basic assumptions: dependency, pairing, and fight-flight. In the dependency subculture members desire a leader to protect and care for them. In the pairing subculture members focus on the relationship of two other members whose potential merger represents a sense of hope and rebirth. Multiple and diverse basic assumption groups, or subcultures, may exist in large organizations. Greater autonomy and independence of each group from the central authority structure contribute to a subcultures differentiation from the larger organizational culture. In most organizations, however, central authority patterns determine group subcultures, and the ways in which groups adapt to critical incidents become highly significant in comprehending the overall organizational culture (Keidel 77). When the set of ideas that define the business have been developed, the next step is to improve productivity to capitalize on the ideas. This is a process of routinization usually carried out by a bureaucracy. The organization grows too large and the issues too complex for any one individual to handle. Rules, regulations, procedures, policies, and beliefs are established. During the canonization of the beliefs, a value set is formed and the corporate culture takes shape. It is the bureaucracy that makes decisions (Galbraith and Galbraith 76). The system decides like some great mechanism (Armstrong 76). In global context, the informal communications network is the manner in which the values are perpetuated and strengthened. Each member of an organization has two jobs. The official job is the one defined by the formal structure. The second, and sometimes more important job, is that defined by the informal network. Information is passed much more quickly through informal channels (Campbell 44). Values are reinforced by stories that are passed around the informal network. Actions of individuals within the organization that are value-rich are passed around. Some stories in strong culture organizations have been known to be repeated for years. In a strong culture, there is an alignment of values, heroes and heroines, rites and rituals, and the stories passed along by the informal communications network. Strong culture organizations are more likely to be successful. They are efficient, take less time turning ideas into innovations, have high role, and require little day-to-day direction. Strong cultures are not easily changed; they resist change and are susceptible to attacks from outside their line of sight. A culturally astute manager assures that all the policies, practices, standards, promotions, and awards are reviewed against the values desired in the organization, and passes on the stories of the heroes and heroines actions. The challenge of a management system in these turbulent times is to create a strong corporate culture with flexibility. The culture must be able to change as the environment around the organization shifts (Campbell 96). Generally, the values of an organization are not in line with the newly established vision, objectives, and goals of the company. A transformation of the organization culture is therefore required. This is accomplished by determination of the values needed and an assessment of the current values. Bureaucracy has created many successful, large organizations (Ashkenas et al 23). These organizations have commercialized products and services that have added to the life of the organization and its balance of trade. They employ many people. To save these bureaucracies from extinction--and the dislocations that would result--it is necessary to revitalize them. These principles will allow large bureaucracies to transform themselves into innovative, vital, and productive organizations (Ashkenas et al 23; Armstrong 29). In sum, the benefits of the organizational structure in terms of providing the firm with the ability to remain competitive in a changing environment, however, often outweigh the cost. As a result of the problems of coordination inherent in the organizational structure, large companies tend to have control centralized in senior management. Since senior management sets the goals for the organization, they also adopt the role of controlling the behavior of their employees and areas so that they are constantly working toward the achievement of these goals. They tend to emphasize the achievement of the bottom line, and rewards are based on the ability of individuals and areas to produce the desired end. In global companies, each operating unit or product division is responsible for monitoring its own performance. Organizational culture as a control method can be used as a supportive tool which helps to maintain morale and climate but it cannot be a sole method of organizational control. Works Cited 1. Apple Home Page. 2008. www.apple.com 2. Armstrong, M. Human Resource Management. Kogan Page. 2nd edn. Boston: Kent Publishing, 2003. 3. Ashkenas, R. N., Ulrich, D., Prahalad, C. K., Jick, T. The Boundaryless Organization: Breaking the Chains of Organizational Structure. Jossey-Bass, 1998. 4. Campbell, D.J. Organizations and the Business Environment. Oxford: Butterworth-Heinemann 1997. 5. Galbraith, J.R. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. Jossey-Bass, 1995. 6. Galbraith, J. R., Galbraith, J. A. Designing the Global Corporation. Jossey-Bass; 1 edition, 2000. 7. Hatch, M. J., Cunliffe, A. L. Organization Theory: Modern, Symbolic, and Postmodern Perspectives. Oxford University Press, USA; 2006. 8. Keidel, R. W. Seeing Organizational Patterns. Beard Books, 1998. 9. Mills, H. Making Sense of Organizational Change. Routledge, 2003. 10. Robbins, S. Organizational Behavior. Prentice Hall. 11 Ed., 2004. Read More