Organizational Structure Is Not Probably Aligned With Business Strategy

Organizational Structure is a topic seldom contemplated by most people working in organizational settings. We all go to work every day, go to assigned locations, and perform our jobs and we don’t ever think about how our organization is arranged.

However, Organizational Structure is critical both for a company and its employees. People should think very carefully about the organizational structure of the companies for which they work or of companies for which they intend to work. In the long run, Organizational Structure can spell the difference between success and failure for a company, as well as for the individuals who work there.

The purpose of this white paper is to examine those challenges facing any company wherein Organizational Structure is not probably aligned with business strategy, and to consider the benefits and pitfalls of a number of Organizational Structure options as they pertain to the long-term success of individual employees and the company as a whole.

DEFINITIONS

“Organizational behaviour is a field of study that investigates the impact that individuals, groups and organizational structure have on behaviour within the organization, for the purpose of applying such knowledge towards improving an

Organizational effectiveness”. The above definition has three main elements; first organizational behaviour is an investigative study of individuals and groups, second, the impact of organizational structure on human behaviour and the third, the application of knowledge to achieve organizational effectiveness. These factors are interactive in nature and the impact of such behaviour is applied to various systems so that the goals are achieved. The nature of study of organizational behaviour is investigative to establish cause and affect relationship.

OB involves incorporation of studies undertaken relating to behavioural sciences like psychology, sociology, anthropology, economics, social psychology and political science. Therefore, organizational behaviour is a comprehensive field of study in which individual, group and organizational structure is studied in relation to organizational growth and organizational culture, in an environment where impact of modern technology is great. The aim of the study is to ensure that the human behaviour contributes towards expansion of the organization and greater efficiency is achieved.

Organizational behaviour can be defined as “the study and application of knowledge about human behaviour related to other elements of an organization such as structure, technology and social systems (LM Prasad). Stephen P Robins

Defines “Organizational behaviour as a systematic study of the actions and attitudes that people exhibit within organizations.” It has been observed that we generally form our opinion based on the symptoms of an issue and do not really go to the root cause of the happening. Science of organizational behaviour is applied in nature.

Disciplines like psychology, anthropology and political science have contributed in terms of various studies and theories to the field of organizational behaviour. A leader should be able to communicate with his subordinate and keep them in picture as to the happenings in the organization. People promote organizational culture for mutual benefit. Conflict and manipulating power bases need to be handled in an appropriate manner to modify human behaviour and motivate various individuals towards achieving higher productivity. Power dynamics plays a significant role in organization situations in different environment.

Contributing Fields to Organizational Behaviour

Psychology: Psychology is an applied science, which attempts to explain human behaviour

In a particular situation and predicts actions of individuals. Psychologists have been able

To modify individual behaviour largely with the help of various studies. It has contributed

Towards various theories on learning, motivation, personality, training and development,

theories on individual decision making, leadership, job satisfaction, performance appraisal,

attitude, character state, job design, work stress and conflict management. Studies of these

theories can improve personal skills, bring change in approach and develop positive approach

to organizational systems. Various psychological tests are conducted in the organizations

for selection of employees, measuring personality attributes and aptitude. Various others

dimensions of human personality are also measured. These instruments are scientific in

nature and have been finalized after a great deal of research. Field of psychology continues

to explore new areas pertinent to the field of organizational behaviour. Contribution of

psychology has enriched the organizational behaviour field.

Sociology: Science of Sociology studies the impact of culture on group behaviour and

has contributed to a large extent to the field of group dynamics, roles that individual plays

in the organization, statement, norms, status, power, conflict management, formal

organization theory, group processes and group decision-making.

Political Discipline: Political discipline has contributed to the field of Organizational

behaviour. Stability of government at national level is one major factor for promotion of

international business, financial investments, expansion and employment. Various

government rules and regulations play a very decisive role in growth of the organization.

All organizations have to stand by the rules of the government of the day.

Social psychology: Working organizations are formal assembly of people who are

assigned specific jobs and play a vital role in formulating human behaviour. It is a subject

where notion of psychology and sociology are blend to achieve better human behaviour in

organization. The field has contributed to manage change, group decision-making,

communication and ability of people in the organization, to maintain social norms.

Anthropology: It is a field of study relating to human activities in various cultural

and environmental frameworks. It understands difference in behaviour based on value

system of different cultures of various countries. The study is more relevant to organizational

behaviour today due to globalization, mergers and acquisitions of various industries. The

advent of the 21st century has created a situation wherein cross-cultural people will have

to work in one particular industry. Environment studies conducted by the field of anthropology aims to understand organizational human behaviour so that attainments and unifications are smooth. Organizations are bound by its culture that is formed by human beings.

BEHAVIOUR MODEL FOR ORGANIZATIONAL COMPETENCE

Organizational behaviour is a study and application of professional skills and knowledge to

people in the organization to investigate individual and group behaviour. Various concepts

and models in the field of organizational behaviour attempt to identify, not only the human

behaviour but also modify their attitude and promote skills so that they can act more

Effectively. This is done scientifically; therefore, organizational behaviour field is a scientific

Discipline. The knowledge and models are practically applied to workers, groups and

Organizational structure that provide trappings for improved behaviour and dynamics of relationship.

The field of organizational behaviour also provides various systems and models

for international connection that are applied to organizations.

Leaders must look for effects of individual behaviour and of groups in any

Organization. Indicators have a root cause beneath. As a leader, it is that indication, which

must be assessed, and cause of human behaviour established so that if the behaviour is

good, the manager can establish the norms of behaviour. If the behaviour is not advantageous

to achieve the organizational intention then suitable alternative model can be applied to

channelize individual behaviour towards an appropriate organizational value system and

thus individual behaviour customized. Leader must be able to describe, understand, envisage and control individual behaviour in the organization. This is explained in the succeeding paragraphs.

(a) Describe: Study of organizational behaviour is based on scientific methods, which

have been applied on human beings. It is a science, those analyses as to how people

behave in different situations in the organization. A manager should be able describe

the behaviour of each of the individuals under his command, identify attitude,

and be able to pinpoint his behaviour so that the situation in the organization

is under control.

(b) Understand: Leaders must understand human deeds as to why people behave

in particular manner and try to identify reasons so that corrective actions can

be taken.

(c) Predict: By recurrent closer interaction, a leader is in a position to identify the

nature of workers. Some are more productive while the others are tardy and

troublemaking. In such situation, a leader should be able to handle each individual

in a different way so that his or her actions can be channelized to higher productivity.

(d) Control: Managers in the organizations should train their inferiors continuously;

aim being development of skills, promotion of productivity and improvement

of individual behaviour. It is a continuous process on the part of manager. He must

lay down control measures so that the energy of workers is diverted towards organizational

objectives. Communication should be used to ensure that the behaviour

of individual is controlled. Environment has a great impact on human behaviour.

Suitable internal environment would help organizations to built favourable

work environment that will help individuals and groups within organizations to

work effectively towards higher yield.

Organizational Components that Need to be Managed

People

People are the main element of any organization that has to be managed. Every individual

has a delicate goal to be achieved. Organizations must identify the need scale of

individuals and take suitable steps for its fulfilment to enable them to perform effectively

so that they complete their allotted task in time. Affiliation between the workers, with

subordinates and superiors should be recognized based on full understanding and complete

faith based on mutual trust so that it is easy to communicate and understand each other’s

views. Work teams and Groups play a vital role in the organization. Individual may have

to keep his personal interest aside if it conflicts with team or group goals.

Composition

There are two types of organizations, formal and informal. Informal organizations do not

have a specified structure. Formal organizations are build based upon the objective set for

it. Organizational structure in such organization is hierarchical in nature, with people at

each level having their own objectives, which contributes towards fulfilment of over

all organizational objectives. In such organization people at lower levels report to higher

level managers. The tier system has the principle of unity of command inbuilt in it. The

organization structure may depend upon the size, number of products/services produced,

skill and experience of the employees, managerial staff and geographical location of the

organization. An organization may have several levels and pyramid like organizational

structure or flat structure. The efficiency of the organization will depend upon the free

flow of the information, efficient communication system prevailing in the organization,

well defined authority and responsibility supported by detailed policies, rules and regulations.

The organization must have well laid out systems, which are understood by workers,

supervisors and managers.

Technology

Managing technology is an important job of any management. It is an important part

of any unit. Selection of technology, procurement, mechanism, operation and maintenance

is important and no conciliation should be made in procuring latest or advanced technology.

Various systems and sub- systems should support technology that exists in an

organization. Based on the technology, an organization should formulate job structure and

resultant procurement of human resource so that they are complimentary to each other.

Adequate attention is also be paid to service industry. For example an appropriate drill,

procedures are installed in hospital industry to ensure that the patients’ record is maintained

properly. On line operations of all systems relating to admission record, past treatment,

drugs, availability of beds, schedule of operations maintained so that the level of

patients satisfaction is raised. In minimum number of days, maximum numbers of patients

should be treated. Various processes required to regulate these functions form the

important part of service industry.

Jobs

Job is an assignment assigned to an individual. It encompasses various tasks within it. For

example, Personnel manager wants to fill up twelve vacancies in production department

within three months. Job will have various tasks inbuilt in it like designing of job

specification, selection of media, advertising vacancies, scheduling of selection and recruiting

process. Manager, therefore have to manage various tasks to accomplish a particular job.

This may form a part of managerial functions. Adequate delegation, supervision, application

of various control techniques makes the job simpler for the manager. Introduction of

computers have made managerial functions simpler, as required information is available

for decision making.

Processes

Management of processes and its inter-dependence is very crucial to high productivity and

higher job satisfaction. What is important for a manager is to ensure high morale of the

work force. To ensure this, he must identify various managerial dictums. Select appropriate

subordinates to carry out a job based on aptitude, personality traits, mental build up

and attitude. He should also involve himself and lead subordinates by personal example.

In defence services, it is the quality of leadership that encourages troops to achieve near

impossible task where every thing appears to be going wrong. Various role models assist

leaders in identifying as to which process, method or approach would be suitable to mould

subordinates in suitable mount that may be required by any organization.

Peripheral Environment

What we have so far discussed is various components of an organization that should be

managed properly. External environment also plays an important role in managing the

points discussed above. When we talk about managing people in the organization, what we

have to study and manage is the influence of culture and its impact on the individual. A

manager should examine as to how he is going to deal with the changes. Study of

external environment is very wide and encompasses economic, cultural, social, government

rules and regulations, legal aspects, political climate, demographics and its impact. If one

scans the external environment that is prevailing in Indian context, one will find that

individuals are racing to catch up the upper class as it relates to standards of living,

material tenure, higher education, effort to copy western culture, food habits, dressing

pattern and the like. Beauty parlours, pubs and cyber cafes around each corner are an plentiful proof of the impact of peripheral environment.

Styles of Management

What makes a good leader or manager? For many it is someone who can inspire and get the most from

their staff.

There are many qualities that are needed to be a good leader or manager.

ô€€µ Be able to think creatively to provide a vision for the company and solve problems

ô€€µ Be calm under pressure and make clear decisions

ô€€µ Possess excellent two-way communication skills

ô€€µ Have the desire to achieve great things

ô€€µ Be well informed and knowledgeable about matters relating to the business

ô€€µ Possess an air of authority

Do you have to be born with the correct qualities or can you be taught to be a good leader? It is most

likely that well-known leaders or managers (Winston Churchill, Richard Branson or Alex Ferguson?) are

successful due to a combination of personal characteristics and good training.

Managers deal with their employees in different ways. Some are strict with their staff and like to be in

complete control, whilst others are more relaxed and allow workers the freedom to run their own working

lives (just like the different approaches you may see in teachers!). Whatever approach is predominately

used it will be vital to the success of the business. “An organisation is only as good as the person

running it”.

There are three main categories of leadership styles: autocratic, paternalistic and democratic.

Autocratic (or authoritarian) managers like to make all the important decisions and closely supervise

and control workers. Managers do not trust workers and simply give orders (one-way communication)

that they expect to be obeyed. This approach derives from the views of Taylor as to how to motivate

workers and relates to McGregor’s theory X view of workers. This approach has limitations (as

highlighted by other motivational theorists such as Mayo and Herzberg) but it can be effective in certain

situations. For example:

􀁦 When quick decisions are needed in a company (e.g. in a time of crises)

􀁦 When controlling large numbers of low skilled workers.

Paternalistic managers give more attention to the social needs and views of their workers. Managers

are interested in how happy workers feel and in many ways they act as a father figure (pater means

father in Latin). They consult employees over issues and listen to their feedback or opinions. The

manager will however make the actual decisions (in the best interests of the workers) as they believe the

staff still need direction and in this way it is still somewhat of an autocratic approach. The style is closely

linked with Mayo’s Human Relation view of motivation and also the social needs of Maslow.

A democratic style of management will put trust in employees and encourage them to make decisions.

They will delegate to them the authority to do this (empowerment) and listen to their advice. This

requires good two-way communication and often involves democratic discussion groups, which can offer

useful suggestions and ideas. Managers must be willing to encourage leadership skills in subordinates.

The Essential Management Functions

The first thing to deem is that most people who study Management know that Organizational Structure is a crucial component of the overall business strategy, just as important as Planning, Leading, and Controlling an organization.

Flexibility of the Organization

While many companies today are still indisposed to change their Organizational Structure, more and more are coming to find that they need to be adaptive and they need to be flexible. In fact, Management Theorists – people who study this at the academic level – are starting to encourage organizations to change their structure because they need to be prepared to respond to what we call “trigger points.” A trigger point is an external event that has an impact on an organization. It could be a change in the markets; it could be a change in global competition; it could be the advent of new technology. These trigger points and any number of others call for immediate responses, as well as organizational flexibility and adaptation

Types of Organizational Structures

Regarding Types of Organizational Structures, I will first critically note that an appropriate organizational structure for any given company is a very elusive animal, indeed. Every company tends to organize itself differently, so there is no absolute right and no absolute wrong way to design an organization. Appropriate organizational structure depends upon the unique strategy of the business, its unique customer base, its unique sense of products and services, and its management of these considerations as they are dispersed throughout the enterprise.

The most common organizational types may be classified as follows:

The Functional Structure

The Divisional Structure

The Matrix Structure, and

The Horizontally Linked Structure

Before we discuss each of these structures, I’d like to note that with any given company, and especially with a very large company (an organization with ten, fifteen, twenty, forty thousand people, for instance), we typically do not see that a single organization adheres to a single organizational structure. Different structures may benefit different portions of the organization in both subtle and profound ways.

For a hypothetical example, the very controversial Matrix Structure may work extremely well in a company’s research and development environment; however, the sales environment of the same company may benefit greatly from the Divisional option. The distinctions and benefits of these structures will become more apparent as we discuss each of the organizational types.

Advantages and Disadvantages of the Functional Approach

First of all, the Functional Structure follows the Centralized Decision Making model, such that decision making in the Functional Structure occurs at the top. This can be advantageous in the sense that there is more upper management control in the organization. It can also help individuals in their career paths, inasmuch as motivated employees move upward within the organization to assume decision-making positions. For example, you come in from college, join the Accounting Department as a Junior Accountant, move up to Accountant, and then move up to Senior Accountant, it’s a very well-defined career path.

Functional Structures foster stability and efficiency. Everybody knows what his job is, and as a group they all use similar processes, so it’s a very effective way of operating. When you’re working with this type of structure, you can also take advantage of economies of scale.

Another disadvantage of the Functional Structure is that employees tend to identify themselves with their respective departments but not so much with the organization as a whole. Although the Functional Structure is the most popular and enveloping in the business world, companies should understand that the soloing effect is potentially detrimental to individual employees, departments, and the organization as a whole.

The Horizontal Aspect of Organizational Structure

The other dimension of an organization, the one called the Horizontal Dimension, basically addresses the division and assignment of tasks and functions across various departments within the organization. Herein I observe the second of the Organizational Structure types, the Divisional Structure.

Divisional Structure

The Divisional Structure is not so much based on the grouping of people according to their skill sets as it is concerned with placing groups of people with similar abilities where they are needed all across the organization. For instance, while under the Functional Structure you would expect to find accountants only in the Accounting Department, under the Divisional Structure you will find accountants in different divisions of the same company, in separate Accounting Departments which are dedicated to separate product lines.

A solid example of Divisional Structure can be seen in the Boeing Company. Boeing has three divisions within its organization: the Commercial Airline division; the Military Aircraft division; and a fledgling new division or product group called Private Aviation. Each of these divisions is a functional organization unto itself, each with its own R&D and Production and Sales and Accounting teams; yet, each is only a component of a much larger organization called Boeing Company.

Of course, organizational divisions can be and usually are much more than mere product lines. The divisions may be based on different consumer markets. Everyone knows that Black & Decker, for example, manufactures and sells construction equipment, but its divisions aim different consumer markets. One division markets to the layman builder, another division markets to the private proficient builder, and yet another division markets to large government contractors.

Some Final Observations

On the turn over, there is for most employees the allure of a secure and profitable career path, a reward that is pretty much assured through commitment to the tall and more traditional organizational structure. We find a greater number of inexperienced workers in the tall structures because they have that longing for a more defined and secure career path. Over time, they learn the ropes, all of their questions are eventually answered, and they prepare themselves for a series of promotions to their ultimate goal within the organization. Tall, multi-level companies are much more stable and predictable, offering the employee a long-term opportunity to “climb the latter to success” through such a series of promotions, providing the employee has the patience and resilience to toe the line and follow that particular goal.

Even so, the employee of a flat organization is granted much more independence, much more control, and many more decision-making opportunities, enabling him to hone his managerial skills on a fast track compared to the employee languishing for years in a tall organizational structure. We typically see older, more experienced employees populating a flat structure. These employees may even be specialists in their fields; as such, they don’t require as much direct supervision nor as many rules and procedures to guide them. They bask in the autonomy and personal responsibility of flat structures. In addition, they rub elbows with other diverse and highly experienced specialists who pass on their knowledge in the course of daily interface, making for a continuous and fast-paced learning environment. If there is one noteworthy lesson that we can take from this examination of Organizational Structure, it is perhaps that organizations should very carefully weigh their corporate structure options before committing to them and the same is true for the employee in selecting his working environment. Mounting evidence indicates that employees should very carefully choose the organizations best suited to their individual temperaments, skill sets and, yes, personalities. Personality is possibly the most important factor for a prospective employee to consider when choosing an organization.

Case Study

A unique Training Program at UPS

Mark Colvard, a United Parcel Manager in San Ramon, California, recently faced a difficult decision. One of his drivers asked for 2 week off to help an ailing family member. But company rules said this driver wasn’t eligible. If Colvard went by the book, the driver would probably take the days off anyway and be fired. On the other hand, Colvard chose to give the driver the time off. Although he took some heat for the decision, he also kept a valuable employee.

CIP was established by UPS in the late 1960s to help open the eyes of the company’s predominantly white managers to the poverty and inequality in many cities. Today, the program takes 50 of the company’s most promising executives each summer and brings them to cities around the country. There they deal with a variety of problems from transportation to housing, education, and health care. The company’s goal is to awaken these managers to the challenges that many of their employees face, bridging the cultural divide that separates a white manager from an African American driver or an upper-income suburbanite from a worker raised in the rural South.

Do you think individuals can learn empathy from something like a 1-month CIP experience? Explain why or why not.

How could UPS’s CIP help the organization better manage work life conflicts?

How could UPS’s CIP help the Organization improve its response to diversity?

What negatives, if any can you envision resulting from CIP?

UPS has 2,400 managers. CIP includes only 50 each year. How can the program make a difference if it include only 2 percent of all managers? Does this suggest that the program is more public relations than management training?

How can UPS justify the cost of a program like CIP if competitors like FedEx, DHL, and the U.S. Postal Service don’t offer such programs? Does the program increase costs or reduce UPS profits?

Conclusion

Organizational Structure is critical both for a company and its employees. People should think very carefully about the organizational structure of the companies for which they intend to work. In the long run, Organizational Structure can spell the difference between achievement and collapse for a company, as well as for the individuals who work there.