Building Quality Organizational Structure - Essay Example

BUILDING QUALITY ORGANIZATIONAL STRUCTURE (Student Name) (Course No.) (Lecturer) (University) (Date) Introduction Airbus is a connection of the European Airline Industries, which originated after the merging of Germany’s Deutsche Airbus and France’s Sud-Aviation in 1970. The term Airbus was coined from the reference of the airplanes in the 1960s besides the term being familiar to the French. Globally, Airbus is one of the leading manufacturers of modern airlines with capacity ranging from 100 to more than 500 seat. In 2003, the realized turn over from Airline was approximately 19.3 billion euro. Airbus has it headquarter in France besides being the home of different company’s sites: Saint-Nazaire, Nantes, and Toulouse, which has 11500 employees and company’s training centre (Airbus, 2016). The customer service department, the President, Executive Committee Members each of whom serves core function, and Chief Executive Officer (CEO) of the company are in Toulouse. Besides, the headquarter is the home important departments such as procurement and communication, operations, engineering, finance, design, marketing, customer relations, programmes, and operations with subsidiaries located in Japan, Russia, and The United States. The final assembly of the manufactured planes is in Toulouse, Germany, Hamburg, and France. Classification of Organizational Structure Organizations tend to set up their structures in specific manners to assist in the accomplishment of the designed goals. However, depending on the nature of the organization, the designed structure might assist the organization achieve its goals or hinder the progress towards such accomplishment depending on the methods used in integrating the various key elements (Dive, 2008, 78). Organizations, large and small, can only realize higher sales and profits through properly matching their needs with the structures they use to achieve such objectives. Without proper structure, the organization might fail to function effectively since poor structures often result in bewildering morass of contradictions, confusions, inadequate coordination of responsibilities, poor decision-making strategies, and complexities. Considering the scope of Airbus, it uses divisional structure as operate in wide geographical area and have separate departments within its umbrella group to undertake the various types of activities on the products and market areas. The divisional structure offers several benefits to the organizations as it ensures the accomplishment of duties in time. However, the method tends to inhibit communication since employees in different locations are not working together. Considering the size and operations scope, the structure is quite expensive and inappropriate for organizations within poor performances. The key elements of organizational structure are complexity, formalization, and centralization of certain operations. Complexity relates to various activities taking place within the organization. According to Robbins & Barnwell, 2006, 105), complexity is the degree to differentiation existing within the organization. The horizontal differentiation relates to the various occupational, task, and administrative grouping within the institution while vertical differentiation is the amount of layers of management within the institution. Within the company, there several operations that require the workers to have adequate knowledge and skills for the achievement of the desired outcomes. Airbus has offices in different locations within their CEO. As a result, it has a complex hierarchical structure that defines the rules and procedures for efficient coordination of the responsibilities. Such activities allow it to enjoy the efficiency benefits of the machine structure. Any organization that exhibits specialized formalized, centralized organizational structure as Airbus has a tall hierarchy of authority, highly bureaucratic and the utilized structure is mechanistic (Reider, 2008, 104). Initially, when Max Weber coined the term bureaucracy, it had no negative connotation as it currently has since it meant complex organizations with hierarchical structures based on authority and adherence to the rules. The method within which an organization reaches a decision defines the efficiency and performance. Airbus has a centralized decision-making system considering the long chain of departments. Since the company has different CEOs based in different locations, the decisions should be made at respective stations (Mintzberg, 2007, 132). However, most departments are located within the headquarter without decentralization of certain activities. Decentralization limits the capacity of the satellite branches to undertake certain responsibilities. The airline company needs to decentralize most of its activities to encourage democracy and efficient operation of other segments as well. Airbus increases its scope of operation through focusing on specializations and division of labour to break down the responsibilities if its branches then assembling the manufactured components in a centralized place. The company has a formalized structure owing to the method in which the jobs are structured. Formalized structures take into consideration the degree to which the organization governs the rules and procedures of the employees. Additionally, a formal organization structure as portrayed in the Airbus seeks to distinct the employees from their roles or position to ensure that the roles played or held remains in position irrespective of the person holding it. On the other hand, organizations practicing informal organization place much value on the individual employee. Formalized structures allow for the evolution of the roles and positions based on the preferences and skills of an individual employee. Organizational Structure As Presented By Mintzberg Theory According to Henry Mintzberg, organizational structure tends to emerge from the interplay of organization’s strategy, the environmental forces influencing the experiences, and organizational structure itself. Proper integration of these factors might assist in creation of business entity that performs effectively. On the other hand, poor integration might lead to severe organizational problems (Dive, 2008, 115). Different organizational structure arises from various characteristics of such institutions and various forces that shape them, which Mintzberg refers to basic pulls. From the theory, Airbus portrays two distinct organizational structures: the machine and professional organization. The major feature that defines machine organization is the level of standardization. Airbus has a formalized, several routines, and procedures, and centralized decision-making. From the Mintzberg theory, professional bureaucracy is also a form of organizational structure. The major defining difference between professional and machine bureaucracy as presented by the theory is that professional organizations depend highly on trained personnel who demand control over their work (Smith & Hitt, 2005, 260). As a result, under professional bureaucracy, there is high degree of specialization and the involved decision-making is decentralized. Profession organization is a typical structure when it contains a large number of knowledgeable employees as in Airbus. Professional organizations are complex considering the rules and procedures involved. Therefore, such organizations enjoy the benefits associated with efficiency of the machine structure although the generated output comes from the professionally trained employees who enjoy the autonomy and considerable (Anderson, 2010, 105). However, the staffs within professional and machine bureaucracy typically follow the machine structure. The disadvantage of professional bureaucracy practiced by Airbus is the senior executives lack control over certain activities since the authority and power tend to spread down in a hierarchical manner. As a result, the structure makes it difficult to change the company. Effectiveness of the Organizational Structure The major organizational goals and objectives that define the activities carried out by Airbus are to increase its productivity level by 20% annually, to reduce its operational expenses and cutting the expenditure by $2billion annually, and increase the profits by 10%. On revenue objective, the Airbus aims to increase total revenue to €62 billion annually. Moreover, the company aims to increase its market share, savings, and creation of positive image of its brand towards the customers. Organizational structure determines the quality of services offered. To receive its competitive advantage, the company focuses various marketing activities and invests in highly qualified personnel to ensure efficiency and effectiveness of the services rendered (Elsaid, Okasha, & Abdelghaly, 2013, 7). As a result, the organization focuses much on the means rather than the end to achieve its desired results. Although focusing on the end might assist achieve the required objectives, the realized results in some cases could fail to reflect organizational competitive advantage. Some of the means used in ensuring the achievement of the objectives are employee engagement, motivation, efficiency improvement, and innovation. Employees are the most important organization approach, therefore, their involvement in organizations in ensuring an effective organizational structure (Anderson, 2010, 211). Proper alignment of the means with organizational objectives might assist to meet efficiently the required outcomes. Focusing on results could contribute to deviation of the required objectives or continuous realignment of organizational structure. The division organizational structure ensures achievement of the desired objectives at every department depending on the relevance of the goal to each organizational department. Evaluation of Effectiveness The effectiveness of the organization is an important part a measure of the effectiveness of the master strategy used by the organization. However, it is significant to note that selection of an appropriate method of assessing the effectiveness of the organization often presents the most challenging problem for the managers. There are several approaches to evaluating organizational performance. The goal attainment approach bases its premises on the mechanistic of the organization. The method assumes that organizations have effective plans, logic, goal-oriented, and meant to accomplish the predetermined goals (Robbins & Barnwell, 2006, 197). The approach majorly focuses on the output used by the organization and determines if the output assists in attaining the desired goals with regard to the levels of output. Moreover, the method views effectiveness with regard to the internal organizational objectives and performance. Therefore, the typical factors defining goal attainment approach are profit and efficiency maximization. The major constraints of the approach relate to content comparability of organizational goals, which makes dependable identification of the comparable goals within various organizational groups a serious problem. System resources approach to the organizational effectiveness tends to respond to the shortcomings of goal approach as it views an institution as an open system. From the approach, the organization obtains the inputs, ensure participation in the transformation mechanisms, and generate outputs (Anderson, 2010, 182). However, the method stresses on inputs over the outputs. The approach views most organizations as businesses that operate to survive while rivaling for the scarce and important resources. It assumes that the organizations have interrelated subsystems, which have to function effectively and efficiently. The balanced scorecard approach tends to fix the output view of the goal approach as it focuses on the internal activities. Furthermore, the approach assesses organizational effectiveness as internal organizational health and effectiveness. The balanced scorecard approach views effectiveness the ability to get better at the internal efficiency, staff satisfaction, commitment, and co-ordination (Ashkenas, 2010, 122). Therefore, the method assesses the efforts rather than the acquired effects. However, some researches cite that the approach cannot contribute a legitimate indicator of the organizational effectiveness. Airbus aims to achieve its outlined objectives through integration of all institutional processes. As a result, the company uses strategic constituencies approach that suggests that efficient institution is the one that fulfils the demand associated with such constituencies both internal and external to the institution. Furthermore, the approach assesses the effectiveness with an aim of satisfying multiple strategic constituencies (Robbins & Barnwell, 2006, 182). Since Airbus relies highly on the responses to demand, the approach suitably meets its organizational structure. The strategic-constituencies approach often takes into account that the organization has to fulfil multiple goals. However, the major challenge experienced by the organization in using the approach is isolating the strategic constituencies from the environment under which they function. Structural Problems and Improvement Mechanisms Divisional structure presents several challenges to Airbus considering the scope of its operations. The method involves duplication of the resources and responsibilities considering the fact that each satellite branch of the organization has complete functional department. Each product group of the organization requires most of the functional areas like finance, marketing, and production. Therefore, top leadership has the responsibility of deciding on the best methods of reducing redundancy that the institution can afford (Dive, 2008, 246). From the organizational structure, Airbus also suffers from weak accountabilities especially at individual level since it becomes difficult to monitor the activities taking place in different locations. The company is likely to suffer from the problems associated with poor coordination between the various organizational branches. As a result, problems from inadequate organizational frameworks are likely to occur (Elsaid, Okasha, & Abdelghaly, 2013, 10). In order to ensure effective ensure effective performance of organizational performance, it is significant to adequately proper integration of the goals and activities. However, frequent monitoring would be appropriate to ensure alignment of the organizational objectives and planned activities. For efficiency purposes, the organization should consider fully equipping each of its branches to encourage decentralization of the decision-making process and ensure effective and quality decisions (Dive, 2008, 214). Besides, considering the importance employees within the organization, it is significant to involve the employees to improve the quality of the decisions made since they are professionals. Conclusion Organizational structure defines the performance and the extent to which an institution achieves its desired objectives. Considering the operational scope of Airbus, it majorly uses divisional structure to ensure efficiency and improved operations across its function scope. Moreover, the organization has several defined objectives and a series of outlined activities of achieving such goals. The means focus rather than end focus strategy use by the organization encourages the institution to develop several designs and mechanism and integrate within the organizational structure. Mintzberg defines organizations structure as interplay of various institutional strategies of ensuring the achievement of the desired results. References Airbus. 2016. Innovation at Airbus : proven concepts, eco-efficiency, future by Airbus, R&T programme, well being & comfort |Airbus | Airbus, a leading aircraft manufacturer. Retrieved April 5, 2016, from http://www.airbus.com/innovation/ Anderson, D. L. 2010. Organization development: The process of leading organizational change. Los Angeles: Sage. Ashkenas, R. N. 2010. Simply effective: How to cut through complexity in your organization and get things done. Boston, MA: Harvard Business Press. Dive, B. 2008. The accountable leader: Developing effective leadership through managerial accountability. London: Kogan Page. Elsaid, N. M., Okasha, A. E., & Abdelghaly, A. A. 2013. Defining and Solving the Organizational Structure Problems to Improve the Performance of Ministry of State for Environmental Affairs -Egypt. International Journal of Scientific and Research Publications, 3(10). 3-12 Mintzberg, H. 2007. Tracking strategies: Toward a general theory. Oxford: Oxford University Press. Reider, R. 2008. Effective operations and controls for the small privately held business. Hoboken, NJ: John Wiley & Sons. Robbins, S. P., & Barnwell, N. (2006). Chapter 4: Dimensions of organization structure. In Organization Theory: Concepts and Cases (5th ed., pp. 105-142). Pearson Education Australia Smith, K. G., & Hitt, M. A. 2005. Great minds in management: The process of theory development. Oxford: Oxford University Press. Read More