Organizational Design

Organizational Design

Introduction

Change cannot be successful without prior planning, which must be initiated by those who really feel the need for change. It is possible that the influence of leadership has its limits, particularly in large companies where top management is far removed from the management functions at the operational level. Whatever the case, when the company is in process of change, cultural norms must be reoriented by changing the management system, i.e., multiple management processes, organizational structure and management style that drives the company to gain competitive advantage.

Thesis Statement

Organizational design helps a company to gain a competitive advantage, manage diversity, and effectively manage change

Discussion

An organizational design usually takes on a hierarchical structure. It is important for the organization to establish appropriate organizational structure that meets the need of organizational culture to gain competitive advantage by setting the right team, right incentives, right leaders, right programs, and right communication process.

Organizational Structure

Organizational structure helps the organization to help its progress to achieve goals and objectives. Different organizations use different structures to carry out task by matching their needs to operate. There are three main types of organizational structure.

Functional Structure - organization groups their portion according to their shared purposes. Organization that produces products, it can have some common functions like marketing, production, sales and accounting. The idea behind to use functional structure is to maximize profit by grouping them to increase productivity. This structure fits best for a small organization.

Divisional Structure - is generally used in a large organization where organization covers large demographic area or different business units working under one umbrella and produces different products. It is further divided into three categories i.e. Market structure, Product structure and Geographic Structure. It is based on more rapid and specific needs of an organization.

Matrix Structure - is the third main type of organizational structure, which is a hybrid of divisional structure and functional structure. This is mainly use in large multinational companies, where they get the benefit of using components of both structures.

Organizational Culture

Organizational culture can be defined as the set of beliefs, values and norms which identify the organization's way to carry out its business. Hofstede (1980) proposed four criteria to describe national cultures.

Individualism versus collectivism: It is the relation between and individual with fellow employees.

Large or small power distance: It deals with the distribution of equal or unequal power or authority in an organization.

Strong or weak uncertainty avoidance: It involves how the employee deals with uncertainty and how they avoid uncertainties in an organization.

Masculinity versus femininity: It involves the division of roles among different sexes in an organization.

Organizational Culture and Structure, and impact on Performance

Organization makes sure that organization's culture fits and has a positive impact on organizational structure that ultimately leads to gain competitive advantage. Culture-structure approach of an organization holds a two-way causal relationship among structure and culture.

Figure 1: Source: Davis (1984)

An organization has to maintain a relationship between culture and structure of an organization. Organization has to maintain both structure ...