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What is organisational structure and why does it matter
Explain about key terms of organization structure
What is organisational structure and why does it matter
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For this assignment I will be comparing and contrasting the different types of organizational structures and cultures, evaluating how they influence employee performance and the impact they have on the success of the Organization. I will be looking at the culture and core values of Capco and the NHS and comparing how they operate differently to achieve their set goals. From this I will conclude what I feel the strengths and weaknesses of each of the strategies are.
What is Organizational Structure?
“Structures incorporate a network of roles and relationships and are there to help in the process of ensuring that collective efforts is explicitly organized to achieve to achieve specific ends." Child (1977)
In simpler terms organizational
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The chain of command is long, running from Chairman and higher management down to lower authority e.g shop assistant. There are opportunities for employees to be promoted giving them clear incentives and goals to work towards, however the lack of freedom can also affect performance. The many layers of management can slow down the decision making process as approval may be needed making it unresponsive to change.
Flat Hierarchy
In contrast to tall organisations the chain of commands for flat structures is small and there are fewer management levels with a wider span of control. This can build closer working relationships between management and workers, boosting morale, communication and togetherness. However the wider span of control can be a disadvantage as managers may feel over stretched with managing a larger group and employees may have to report to more than one manager. The flat system tends to be used by smaller organisations as it keeps management layers and costs to a minimum.
Functional
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Contrastingly If a management system is decentralized and shares authority amongst members, the culture is likely to be seen as independent and personalized. A healthy culture encourages employees to perform and stay loyal to the organization.
Types of culture
Handys four types of Organizational culture:
Power
“A dominants central figure holds power: others follow the centers policy and interpret new situations in the way the leader would." Business study guide (2011)
Handy (1999) theory was that the key to the whole organisation sits in the center in which he compared Power culture to a spider’s web with a spider sitting at the center. The closer to the spider the more influence and authority the member has.
This type of culture tends to respond quickly to change but in order for it to be successful is highly dependent on the expertise and performance of the people at the centre of the organisation. The key element within a power culture is control. Role
Selected people choosen for a specific requirement. “Typical charactoristics of this culture are in the job description or the procedure. Managers define what they expect in clear, detailed job descriptions. They select people for a job I’f they meet specific requirements.” Business study guide
Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members, while organizational structure is an expression of social and economic principles of hierarchy and specialization (Kinicki, 2015). Both the culture and the structure of an organization are important things for management to understand in order to successfully set and achieve an organization’s goals. Companies who excel in highly competitive fields can attribute their successful economic performance to a cohesive corporate culture that increases competitiveness and profitability. This culture is best utilized in an organization that has the necessary structure to allow its employees to coordinate their actions to achieve its goals.
The organization has five hierarchical levels, consisting of a set of divisional/regional managers, and three additional levels that exist in the plant. The plant organization consists of three levels: the plant manager, the seven area superintendents, and the front line people. The two cofounders decided “to avoid creating bureaucratic organizations resembling the government” because of their bad experiences working for the government. As a result, the structure of AES is highly decentralized. This allows managers and employees to both take ownership of their roles and have input on the success of the company. It also allows individuals to develop leadership skills for potential promotions. This flat management structure encourages high employee involvement in all decision-making opportunities.
If it was a hierarchical then it will take a long time for the information to get to them. The workers will know exactly what they have to do because span of control is small. Also, Castell is saving money because of the size of the business. Disadvantages for Castell: Since Castell only have three directors they will have quite a few people reporting into them.
Vecchio, R. (Ed.). (2007). Leadership: Understanding the dynamics of power and influence in organizations (2nd ed.). Notre Dame, IN: University of Notre Dame Press.
Each plant comprises a number of small; multi-skilled; flexible; collaborative and self-managed teams instead of functional departments with specialised functions (e.g. legal, finance or human resources etc as in a conventional system). These teams have the decision-making power over all plant-specific business functions including capital allocation, expenditures, strategic planning and plant design. This bottom-up decision making process emphasises the trust the company places in its employees and is very effective in decentralizing the power base, consequently, involving every employee in being responsible for the performance of the company not just the CEO.
Looking at IKEA’s organisational structure, the chain of command shows a clear line for messages within functional departments, so therefore; it leads to good communication. For example, looking at the organisational structure of IKEA, there is a clear communication within a human resources department. However, the chain of command is very long from the top to the bottom of the organisation because, there are too many levels of management. This will lead to poor communication. For example, it takes decisions a long time to reach the workers at the bottom of the organisation structure.
Culture can be defined as “A pattern of basic assumptions invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid, and therefore to be taught to the new members as the correct way to perceive, think and feel in relation to those problems”. Schein (1988). Organizational culture can be defined as a system of shared beliefs and values that develops within an organization and guides the behavior of its members. It includes routine behaviors, norms, dominant values, and feelings or climates. The purpose and function of this culture is to help foster internal integration, bring staff members from all levels of the organization closer together, and enhance their performance.
This type of culture results in lack of communication, lack of direction towards a common objective/goal and lack of commitment to the To ensure all the employees are competent, they need to develop a system to measure this competency. For example, they can do assessments to gauge competency. Besides that, they should provide compulsory and supplementary training to their employees to add in value and skills. Mentoring systems also can be implemented to ensure sharing of knowledge and experiences. Performance Rewards.
The structure of management is hierarchical where decisions are made by the top management and passed down to the other managers and departmental heads. The objectives set are to enable one accomplish a specific goal. In traditional management authority and power are demonstrated in the way decisions are made, and the employees are internally motivated to achieve and to advance in their career. The authority is maintained and exercised through a command as well as a control style. Goals and also objectives aim at sales, policy, profits and the output of the organization (Whitman, Mattord, 1997). Traditional management cannot be practiced by an organization that wants to keep up with global competition. Challenges within the business environment have prompted the organization to change from the traditional management to a flexible
Morgan, T. (2007). Overpower Weak Leaders. Business Journal (Central New York), Vol. 21 Issue 16, p26-26. Retrieved from EBSCOhost
Culture varies from one organization to another as it is shaped by the values and beliefs of the people working there. As it progresses over the years, it takes form in such a way that it works or performs in a manner to regulate behavior, action and decision making processes within the organization. It not just includes written rules and regulations, but also the behavioral aspects faced by each one on a day to day basis.
As far back as history can be told mankind has struggled between balancing culture, power and politics. Many wars have been fought and many people have placed their lives on the line in order to stand up for what they believe in. The combinations of culture, power and politics have spilled over into the workplace. In today’s business environment individuals have much more to worry about than just completing their assigned tasks. Organizational culture, power and office politics influence day to day operations as well as govern the atmosphere within the organization. The amount of impact that power and politics have in the workplace, directly reflect the organization’s culture formally as well as informally.
This essay will set out to define what is organisational culture, examine the main attributes that characterise it and how cultural originate and develop within it. At the same time, this essay will also assess the importance of organisational culture to the financial performance and continued survivability of firms.
According to Parkinson’s Law the growth in the number of managers and hierarchical levels is controlled by two principles: (1) “An official wants to multiply subordinates, not rivals,” and (2) “Officials make work for one another (Parkinson 14).” Hence, managers are building an empire for themselves, a tall hierarchy. The higher the empire increases, the higher the managers position become in the organization.
A strong organisational culture leads to higher organisational performance. Organisational culture can be defined as a total function of common beliefs, values, patterns of behaviour that are held and shared by the members of an organisation. It is also a valuable resource which can improve the competitiveness of a company and is used to distinguish the company (Barney 1986). From the 1970's the study of organisational culture has become an important issue and closely studied in the early 1980s. Since then, organisational culture has turned out to be one of the most important factors which affects the overall performance of a company.