Definition of Organization Structure
Structure is “A formal system of task and reporting relationships that controls, co-ordinates and motivates employees so that they work together to achieve Organizational goals”
- Organization is uniform, structured and coordinated effort for achievement of economic/financial objectives for profit seeking firms and social for non-profit Organizations.
- To Satisfy Objectives, organization channel employee endeavors in unified direction and establishes means of allocating resources/responsibilities and control under arrangements referred as structure.
- Thus structure is synonymous to a rope that employees hold and binds all employees towards unified direction and aids the identification of “Who is Who” and “What is What” of organization.
- Structure affects both productivity and economic efficiency and also morale and job satisfaction. Important notion stemming from Mullins assertion is that good structure will not only have tangible effects i-e financial but in-tangible affects like motivation thus impacting organization’s operational effectiveness as employees carry out operations/tasks of organization.
Importance of Organization Structure
Structure is important as a mean of getting people work towards common goals thus acting as facilitator in pursuit of organizational goals. Looking simple but organization will have to make sure that employees identify with organizational thoughts and willingly forgo personal interests. Thus putting greater burden while designing structure which accommodates employees and harnesses an environment where staff takes organizational goals as their own and share believe of being valued through their work, hence good structure should provide right blend of command and control plus employee independence without feeling of resentment that hinders organization pursuit of its mission.
Superior structure promotes cultural values; cultivate integration and coordination as it seeks to strengthen relationship of individuals and tasks. Jones (2007) notes that from this relationship emerge norms and rules contributing to improved communications and common language that improves team performance. Contrary to Jones, Turner (2006) points to structure as primary reason why organization struggle with cultural change as these structure often box people in old styled formations which are not aligned to new business philosophies.
Organizational Environment, Structure and Strategy
Why shall an organization follow certain arrangements? Buchanan and Huczynski (2004) refer to “Strategy” as a reason. They view strategy and Structure as “mutually interdependent”, and structure as vehicle for implementing strategy.
Organizational environment influences strategy and structure. Strategy-structure relation owes a great deal to Alfred Chandler. He called strategy as determination of long-term goals and objectives and called it a means to administer structure. Changing organization’s strategy leads to administrative problems which require refashioned structure for successful implementation of new strategy. Thus if ideas of Needle and Chandler are linked, a 3-item relationship is established whereby at top its ‘Environment’ in which business operates, which affects ‘Strategy formulation’, followed by ‘Structure’ dealing with allocation of resources, responsibilities and authority.
Mintzberg identified 5 parts of organization, one of them is Strategic Apex, For Mintzberg strategy is interpretation of environment and managers develop strategies to deal with environment but Mintzberg contrary to chandler views points that Manager’s in strategic apex.
“Tailor strategy to its strengths and needs, trying to maintain pace of change that is responsive to environment without being disruptive to organization”.
CEO/Top Management considers both External and Internal Environment for formulating strategies (Strategic Management) whereby first official Mission is identified followed by Operational Goals and Strategies. The next step is to design structure. It is important to note that daft refers to relationship between Structure and Strategy as Two-Way, where Strategy affects Structure.
Organization Centralization and Decentralization
The extent of authority division in organization is termed as centralization and decentralization. when decision making power rests with single individual – its centralization, but power dispersed among many individuals in the organization – its decentralization. Shall an Organization centralize or decentralize? large organization like Microsoft, Intel picks decentralization and devolves authority to individuals at lower level, the term associated with employee freedom and autonomy to act is “Empowerment”. Empowerment is achieved through encouraging innovation, decision making, flexible response, and trusting employees. Bennett does mention problems like increased care that has to be taken while hiring employees since employees might misuse power which directly impact customers and company’s reputation but advantages reaped from empowerment overweigh its disadvantages.
Centralization keeps organization focused, and results in coordination of activities, adherence to rules and regulations without deviating from standards but centralized organization vowing to empower its employees might have to re-structure its organization.