Changes in Organizational Structure - Essay Example

Changes in Organizational Structure Introduction An organizational structure mainly entails the hierarchical subordination of the different functions that team up and contribute for the success of the organization. It mainly implies how organizations are run and the flow of authority and information within the organization. An organization is composed of various entities. The organization structure therefore, entails how these entities work together for the success of the organization as a whole. An organization structure is very critical to the triumph of the whole organization. This is for the reason that it determines how responsibilities are allocated to different functions such as the various departments, branches workgroups and individuals within the organization. There are various types of organizational structures adopted by different organizations. The choice of an organizational structure depends on some factors for example, the organization’s size and the nature of its business. Examples of organizational structures commonly adopted by organizations are pre-bureaucratic structure which is highly centralized, bureaucratic structures, functional structure, divisional structure, and matrix structure. Does organizational structure have an impact on business performance and can structural change improve business performance? Defining the organizational structure is inadequate without examining its role on business performance. The kind of organizational structure adopted by a particular firm depends on its goals and objectives. Similarly, achievement of these goals will also depend on the organization structure. Therefore, in determining the kind of organization structure to adopt, the management should critically examine their goals and objectives. The various members of the organization should also be taken into consideration. Underdown (2003) argues that once the organization decides on how it desires its members to be viewed, the culture it would like to influence and what it wishes them to attain, it ought to subsequently plan its structures and promote development of values and norms to achieve the preferred attitudes, behaviors and goals. Even though some people find no relationship between worker performance and organizational structure, advanced levels of employee’s job fulfillment are evident in decentralized organizations. Organization structure consequently reduces worker uncertainty and helps explain and forecast behavior. Organizational efficiency and its relation to structure is controlled by a fit linking information dispensation necessities so employees have enough information necessary for the smooth flow of work. Organizational structure affects the success of an organizations operational strategy. It shapes the competence of the organization and the processes that define its performance. Burns, T & Stalker, (1961) says that organization’s structure determine its performance. He says that if good performers were to be employed in an organization with poor structures, it is no doubt that their performance will also be poor. Workers in many organizations with poor structures become victims of such structures. This is because they have no say in their work processes, policies, procedures, know-how and other support systems. This makes workers to behave like robots in odder to comply with the systems they have been forced into. Such structures not only hinder organizational performance, efficiency and effectiveness. A good organization structure should therefore ensure effective control and coordination of all the functions that compose the organization. Organizations with poor structures lack flexibility and hence are unable to adapt to changes when the changes are necessary .This is reflected in the organization’s management, inventive processes, composition of the labor force and association with external environment or interest groups. Such organizations are characterized by unsuitable personal conduct, lack of policies or failure to put into practice the present ones, managerial negligence, favoritism and failure to deal with situations that can be detrimental to the organization. Such organizations usually do not have clearly defined roles and responsibilities. This brings about confusion within the organization. Consequently, the performance of the organization is affected. As stated by Allen (2004), the kind of an organizational structure an organization adopts is critical to its success. This is because the organization structure defines the organizational channels of communication between the various functions of the organization. It is the organization structure that defines the roles and place of the various organizational functions in relation to one another and to the organization as a whole. It also establishes a clear flow of power and authority within the organization. This is of much importance as far as reporting lines are concerned. Without a proper organizational structure, a junior member of staff may not know where to report to. A good organizational structure also facilitates the adoption and assimilation of new employees into the system. This lessens the amount of time lost as the new employee tries to settle down. It is the organization structure that defines the relationship between the organization and the external environment. For example, it shows how customer orders are acted upon. Without a good company structure, customers’ needs may not be promptly attended to. As seen from above, an organization’s structure greatly determines its performance. However, Sometimes an organization may choose a bad organizational structure which may have adverse effects in turn. Also, an organization may grow out of its original size .Its current structure may no longer be adequate for its sound operation. When this happens, its performance decreases. A wrong organizational structure may also hinder cooperation hence interfering with completion of customer’s orders promptly and in the most economical manner. This place the organization in a risky position since it’s likely to loose its customers. A defective organization structure interferes with working relationships between various functions in the organization. This decreases working efficiency of the organization as a whole. The organization is not able to maintain order and control and can not monitor its processes. Furthermore, such an organization can not cope with change .Therefore; organizations should constantly review their organizational structures for any defects that would call for any change. Therefore, the chief executive officer’s decision is not wrong. This is because it has come as a result of a critical review of the existing structures. The structures have been found inappropriate and therefore in need of change. As argued by Johan (2001), a wrong or defective company structure should be changed in order to boost the company’s performance and ensure its survival. A company structure may become defective in two ways. First, the management when establishing the organization may fail to come up with the right structure. In this case the organization may fail to perform as expected and this may call for a review of the structure. Secondly, an organization may start as a small organization and grow into a big organization. In such a case, structures that were once adequate may no longer be adequate. For example if a sole proprietor decided to convert into a limited company, the original structures may no longer be adequate .this may call for a review of the structures. When changing the company structure, the chief executive needs to make a number of considerations .first; he should consider whether the resources available are adequate to maintain the chosen structure. For example, do you have resources to support the new managerial levels? The adequacy of the chosen structure should also be considered. One should consider whether the alternative structure is adequate to bring about the intended results. This is because organizational structure changes involve usage of a lot of resources. Therefore, use of the resources should be justified by the success of the new structure. The chief executive needs to ask himself how the intended structure will be different from the existing one. Information is the most vital resource in any organization. For this reason, any structure adopted should facilitate communication at all levels of organization. Information should also be accessed in a timely manner. Hence, the kind of structure chosen should ensure timely flow of information. The chief executive should also consider the size of his organization in changing its structure. The type of structure chosen should be appropriate for the size of the business. If the organization is small, a simple structure with few levels of authority is appropriate. Similarly if the organization is a big one, it can even call for additional managerial levels. Also, the kind of structure to be adopted should not impair decision making. In fact, it should facilitate faster decision making .this will enable the business to have a competitive edge over other organizations. The chief executive also needs to consider the cost effectiveness of the new structure. The new system should be more cost effective than the previous system. The management should ensure that the gains made by changing the system outdo the overall cost of structure implementation and maintenance. According to Allen (2001), the structure to be adopted should also allow for decentralization. The flow of power and authority should also be clearly explained in order to avoid confusion and delays. Conclusion Though organizational structure is not the only factor tat determines the success of the business, it is in no doubt vital to the performance of business. These calls for its constant review so as to ensure all the structures are functioning. It should be constantly improved and changed if need be in order to ensure sound performance of the business. In so doing, the organization will always have a competitive edge over other organizations. References Allen, PM 2001, A complex systems approach to learning in adaptive networks, Internal journal of innovation management, vol5, no.2, pp.149-180. Allen, PM 2004, Frontiers of complexity, New York, fawcet columbine. Burns, T & Stalker, G1961, The Management of Innovation, London, Tavistock. Grey, C & Garsten, C 2001, Trust, Control and Post-Bureaucracy, New York, Sage Publishing. Grey, C & Garsten, C 2001, Organizational Behavior, Aderide, Pearson Education Inc. Johan, M 2001, The web of life, London, HarperCollins. Underdown, 2003, Fundamentals of organizational structure, New York, Cambridge university press. Read More