Process Of Reshaping Organization Structure Management Essay

Many of the big organizations have failed to understand the importance of effect of good organizational design on their company’s effectiveness and performance. Select any one organization which experienced enormous adjusting problem due to the poor organizational design and explain in detail its structure and consequences of that organizational structure.


Organizational design is defined as a process of reshaping organization structure and roles , or it can be more effectively defined as the allignment of the structure , process , rewards and talent with the strategy of the business . Amy Kates and Jay Galbraith have found (building on years of work by Galbraith) that attention to all of these organizational elements is necessary to create new capabilities to compete in the given market . This systemic view is referred to as the “star model” approach and is more likely to lead to better performance .

Organization design may involve strategic decisions , but is properly viewed as the path to execute strategies effectively . Many companies fall into the trap of making repeated changes in the organizational structure, with a little benefit to the business . This often occurs because the changes in the structure are relatively easy to execute while creating the impression that something substantial is happening . This may leads to confusion within the organization . More powerful change happens when the design objectives are clearly driven by the new business strategies or forces in the market that require a different approach to organizing resources .

The organizational design process is often defined in the phases . Phase one is the definition of a business case , including the clear picture of the strategy and the design objectives . This step is followed by the “strategic grouping” decisions , which defines the fundamental architecture of the organization – essentially deciding that which major roles will report at the top of the organization.

The most successful organizational design processes have the following three things in common

Focus on the excellence – create an organization that will respond to the customer needs today and in the near future , that will create a competitive advantage and will both reflect and encourage the values and culture you desire . Even if the cost cutting is a part of what is driving your change , do not start with the cost-cutting as an objective rather start with the organizational effectiveness as your objective .

The people in the organization drive the process and not the organizational design consultant – clarifying roles at the beginning of the process is essential . Organizational design should be created by the human beings responsible for the organization’s success . Consultants should need to create a partnership where expertise is shared freely , but where those who know their own business should drive the process .

Involve and Communicate – it has been found that when more people gets involved in the process, the more effective will be the outcome . Involve as many people at as many different levels as early as possible in the process . There should be a multiple team approach. They need to be addressed as they are working through the organizational design process , so that they can continue to include those people who knows the work the best .

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The below “Organizational Design Model” not only describes the above issues but also provides an overview of the major steps in the designing process .


Vision and Values

Business Rationale

Establish Design Team

Customer Requirements

Focus on excellence

Draft preliminary change plan


Assess current structure

Assess key work flows : measures and performance


Gap Analysis

Change Readiness


Determine design goals

Draft Strategic Organization Chart

Job skill requirements



Develop Selection Process

Select Staff

Change Plan


Evaluate Measure


A framework , typically hierarchical , within which an organization arranges its lines of authority and communications , and allocates the rights and duties. Organizational structure determines the manner and the extent to which roles , responsibilities and power are delegated, controlled and coordinated and how information flows between different levels of management .

The structure depends entirely on the organization’s objectives and the strategies chosen to achieve these goals . In a centralized structure , the decision making power is concentrated in the top level of the management and a tight control is exercised over the departments and divisions. In a decentralized structure , the decision making power is distributed among different levels of management and the departments and divisions have varying degrees of autonomy .



Two important factors in the organizational development are the organizational structure and design . These two components help defining the corporate cultures , expectations and the management style . When the organizational structure and design works together , they create a higher productivity and efficient working environment , where the employees are motivated and the customers are satisfied .

A good organizational structure and design is necessary for an organization to accomplish the following aspects :

COMMUNICATION – The flow of information is always essential for the success of an organization . The organizational structure should be designed in such a way to ensure that the individuals and the departments need to coordinate their efforts and should have the lines of communication into their structure . The financial planning and the analysis department might report to the Chief Financial Officer and the Senior Vice President of the marketing , because both of these members of the top management team depends upon the information and the reports provided by the financial planning.

REPORTING RELATIONSHIPS – Reporting relationships should be clear so that all the members of the organization should understand what their responsibilities are and to whom they are accountable. These clear relationships make it easier for the managers to supervise those who are in lower organization levels . Each employee should know that whom they can turn up for direction or help . In addition to this , managers are aware of who all are outside the scope of their authority , so that they dont overstep their boundaries and interfere with some another manager’s responsibilities .

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GROWTH AND EXPANSION – All those companies that grow rapidly are those that makes the best use of their resources , including managemen . A good organizational structure ensures that the company has the right people in the right positions . The structure may suggest some weak spots or the deficiencies in the company management team . As the company grows , the organizational structure must evolve with its growth . Many a times more layers of management are created , when one department head has too many individuals reporting to him at one time , to give each of the employee the attention and the direction needed for the employee to succeed .

TASK COMPLETION – A well designed organizational structure confirms the completion of the projects . Project managers can better identifies the human resources available to them , if the scope of each department’s responsibility and each team member’s capabilities are clear . A project to develop a new product requires market research . The project manager needs to know that who in the organization can provide this kind of research and whose permission should be needed for the research to be complete .

FIT’S COMPANY NEEDS – Companies in different industries require different mixture of talent and relatively greater emphasis on the certain management functions . A software company often has a large staff for development . Companies often have to go through a re-organization phase in which the individual positions or even the whole departments are repositioned on the organizational chart , in an effort to maximim utilize the company’s human resources and makes the operation runs more smoothly .


How a bad organizational structure contributed to Italy’s Cruise Ship Disaster in January 2012 .

Why exactly the cruise ship Costa Concordia ended up on a reef 60 feet off the shore in only two hours on 13th January 2012 , is still not clear . What is clear is that it took around 70 minutes , until the captain gave the order to evacuate the passengers .

It was found that some of the crew members disobeyed the captain’s orders and started to evacuate earlier . However , one crew member said , ” We could have all reached the shore safe without even getting our feet wet . ” There was plenty of time and room to safely evacuate everybody . Nobody needed to die .

The facts was : the ship was slowly getting tilted and the captain have waited a long time to order the evacuation , the majority of the crew memebers followed his command but some of the crew members started evacuating on their own initiative .

So, why did it happen and what can an organization watch out for and should learn from it ?

What leaders should have to think about it :

The possible explanations for the disastrous evacuation includes negative effects of steep hierarchies , which are characterized by the large power disparities and rigid lines of commands . An example of this is when a plane crashes in a mountain because the senior pilot ignored the co-pilot’s warning of the mountain ahead , and the co-pilot dutifully followed the senior pilot’s orders.

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As a leader it should need to be concerned about :

What a steep hierarchy can do to the employees – If the employees are expected to simply follow the orders and not to question them regardless of the orders make sense or not or are they are the right thing to do , chances are there that they might be not proactive .

What a steep hierarchy can do to the superiors – People with the power often tends to overestimate the accuracy of their judgments , believe that they are more competent than the others , and reports a larger sense of control over the uncontrollable events .

What a steep hierarchy can do to the relationship between the superiors and the employees – The superiors tends to use the control and command authority to get the things done as their way . Combined with the employees dependence on the supervisors , the quality of the relationship becomes dominated by the concern to please the supervisor . This will lead to less honest communications and less trust and less innovative proactive actions . Thesel conditions results in reduce in productivity and increase in stress.

Unfortunately , the effect of hierarchies on the supervisors , employees and their relationship affects each other . A supervisor taking the wrong decision is convinced that they are making right decisions and therefore they do not like listening to the employess ideas and suggestions.

On the other hand employees stop expressing their opinions and ideas and reduce their engagement and just wait for the orders . This results in decrease in employees confidence level .

How can an organization avoid negative effects of steep hierarchies ?

Hierarchies do have functional utilities , but even relatively flat hierarchies can have the negative effects. The problem is that even the mindful leaders and their managers also have blind spots .

Be aware that the downside exists – Simply being aware of the existence of the hierarchical dynamics can help the supervisors to listen better and encourage the employees to speak up . The team can designate some humorous code word , which can be used in the heat of the moment to interrupt the conflicts .

Encourage disobedience and proactivity –  Creating a safe work climate , where people should be encouraged to respectfully disagree and proactively take sound actions without or against orders .

Learn to communicate effectively –  Learning and practicing to communicate with respect and honesty can easily avoid disasters and conflicts , but more importantly it can improve everyday work processes .

Why is the need to flatten the hierarchies ?

Addressing the root cause means reducing hierarchical layers and decreasing the distance between the supervisors and the sub-ordinates. This results in

Increase in productivity

Increasing employesss motivation and proactivity

Improves the organizational atmosphere and well being .

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