A divisional structure is also a framework best leveraged by larger companies; instead of economies of scale, however, they are in pursuit of economies of scope. Economies of scope simply means a high variance in product or service. For example, Disney may have a division for TV shows, a division for movies, a division for theme parks, and a division for merchandise. A matrix structure is used by the largest companies with the highest level of complexity. This structure combines functional and divisional concepts to create a product-specific and division-specific organization.
In the Disney example, the theme park division would also contain a functional structure within it i. Structure becomes more difficult to change as companies evolve; for this reason, understanding which specific structure will function best within a given company environment is an important early step for the management team. Smaller companies function best as pre-bureaucratic or post-bureaucratic; the inherent adaptability and flexibility of the pre-bureaucratic structure is particularly effective for small companies aspiring to expand.
Larger companies, on the other hand, achieve higher efficiency through functional, bureaucratic, divisional, and matrix structures depending on the scale, scope, and complexity of operations. Technology impacts organizational design and productivity by enhancing the efficiency of communication and resource flow.
Technology is an important factor to consider in organizational design. Modern organizations can be treated as complex and adaptive systems that include a mix of human and technological interactions. Organizations can utilize technological tools to enhance productivity and to initiate new and more efficient structural designs for the organization, thereby adding potential sources of economic value and competitive advantage.
Technology : Technology has opened doors to incorporating new and advanced forms of organizational design. This is most notably seen through rapid global communications and the ability to constantly and economically be in contact. Over the internet, an organization with a small core can still operate globally as a market leader in its niche. This can dramatically reduce costs and overhead, remove the necessity for an expensive office building, and enable small, dynamic teams to travel and conduct work wherever they are needed.
A similar organizational design that is heavily reliant upon technological capabilities is the network structure. While the network structure existed prior to recent technologies i.
Technology can also affect other longstanding elements of an organization. For example, information systems allow managers to take a much more analytic view of their businesses than before the advent of such systems. Managers can communicate and delegate much more effectively through using technologies such as email, calendars, online presentations, and other virtual tools.
Technology has also impacted supply chain management —the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.
Supply chain management now has the capacity to track, forecast, predict, and refine the outbound logistics, contributing to a wide variety of logistical advantages such as minimizing costs from warehousing, fuel, negative environmental impacts, or packaging. Technology simplifies the process of managing reports, collecting communications, and keeping in touch, enabling management in more formal structures to take on more workers. Increases in technology have essentially allowed organizations to scale up their companies through more effective and efficient teams.
The life cycle of an organization is important to consider when determining its overall design and structure. Organization design can be defined narrowly as the strategic process of shaping organizational structure and roles to create or optimize capabilities for competition in a given market.
Now the task is to make the design live. People are organized into natural work groups which receive training in the new design, team skills and start-up team building. New work roles are learned and new relationships within and without the unit are established.
Equipment and facilities are rearranged. Reward systems, performance systems, information sharing, decision-making and management systems are changed and adjusted. Some of this can be accomplished quickly. Some may require more detail and be implemented over a longer period of time.
A few years back we worked with a company within the aluminum industry. The company recognized they were becoming bureaucratic and unresponsive to their customers needs. Following a period of assessment of the strengths and weaknesses of the existing organization, they went through a process of organizational redesign in which they organized their front office functions to become more collaborative and customer focused.
The diagrams below illustrate, at a high level, this change. Pre-design Workflow. Post-design Workflow. The first chart illustrates the tendency of most people within organizations to think in terms of silos and organize people according to the similarity of their functions. The second chart illustrates how the company redefined structural boundaries to become much more cross-functional on the front end of their business.
They combined people from a number from a number of departments into teams that took full responsibility for managing customer orders. Of course, this chart greatly simplifies all of the design decisions which included improvements in workflow and system support, and the role of leaders and other support functions in the new organization. But this gives you an idea of the kinds of integration and improved collaboration that can result from organizational design. The good news is that it can be used in most any type and size of business.
The length of time required to complete a redesign varies depending on the nature, size and resources of the organization. Large and complex redesign projects can be completed within several days. Smaller organizations require much less time and fewer resources. We are experts in strategy and organizational design.
Call or email us for a no-obligation conversation to answer a question regarding your company or to explore bringing our services in-house. I have gone through your article on how to design and redesign organization. It is really interesting to add my knowledge on how to design orgaizations.
Kindly please i have my article which we have gone through the re-design process in our department however, we would like your advice if we have followed the correct direction and how we can integrate your model or can it be anyway to share my article with you.
Thank you. I see your methodology as a comprehensive model in which everything has a logical sequence and inclusive approach for people of the organization. I am planning to use it in a re-design of a distribution company.
Do you have a detailed list of to-do activities under the seven step model? Or perhaps a questionnaire guide to cover all phases.? Very interesting read. If yes, what would be your guidance around this? Process of Org. Birth , also known as Start-Up Youth , also known as Growth or Fast Growth Mid-Life , also known as Slow Growth or No Growth Maturity , also known as Decline Environment, controls, and incentives are additional considerations when thinking about the appropriate structure of your organization.
On Guard! Video 3: What's Your Why? Preventive Maintenance - Which is Best? January is National Blood Donor Month. Technical Instruction or Career Mentoring? Why Talk About Them? Often those at the top of an organization are oblivious to these problems or, worse, pass them off as or challenges to overcome or opportunities to develop.
Here are some of the stories I have come across recently — if you have experienced anything similar or have different insights, it would be useful to hear them in the coming week.
Any suggestions for pushing back or reshaping unnecessarily complex or outdated organizational structures are also welcome! Moreover, he was stretched beyond his limits by the scope of the role and the fact that he had to operate across several time zones.
Over-regulation : a British banker explained how he was required to get approval from so many people for a major project that he wasted six months trying to get it off the ground, severely limiting his ability to compete in the market. Applying for your own job : a French executive of an international food company explained how a new chief executive wanted to make his mark by restructuring the group. The exec made people apply for their own jobs, and determine who was redundant.
Cultural clashes : I once worked in a consultancy firm where a sizeable group of people still defined themselves by the organizational culture of a company that was taken over 20 years before.
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