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Introduction - A Comparative Analysis of Organizational Structure: Traditional vs. Modern Approaches
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This term paper discusses the organisational structure in traditional and modern day’s organisation. Various major differences in the organisational structure between the customary and team-based organisation will be discussed. It is highlighted that the former has centralised structure of authority and the decentralised structure of authority.
Seminar Paper
Literature Review
This section will describe the theories that have been used to highlight the effectiveness of the organisational structure for both traditional and modern day’s firm. Here, the meaning of the organisational structure has been discussed. In addition to this, dimensions of organisational structure, effects of organisational structure, Mintzberg’s five structures, decentralisation or centralisation.
Organisational Structure
Different researchers have given their own definition of organisational structure. According to Chandler (2013), the organisational structure is defined as some behavioural aspects that are effected by “pre-existing control and programs” in an enterprise. An organisational structure is an arrangement that reflects the activities that are carried out and directed to accomplish organisational goals and objectives (Chandler, 2013). However, Carlson (2013) gave the simplest definition of organisational structure as a group of people and operations into various units to enhance and improve coordination, decisions, and communications. Understanding the connection between the tasks carried out in the organisation will help in understanding the complexities of directing an efficient firm.
Dimensions of organisational structure
There have been mentions of various dimensions of organisational structure. Bryman& Bell, (2014) introduced the six distinct dimensions of the organisational structure, namely standardisation, specialisation, formalisation, configuration, traditionalism, and centralisation. In addition to this, Carlson (2013) argued that for an organisation to be called bureaucratic, it has to follow four underlying dimensions. The first dimension is “structuring the tasks.” This means that there are certain formal rules and regulation that controls the employees’ attitude and behaviour via processes like formalisation, standardisation, and specialisation. The next dimension is “concentration of authority” that is associated with the top management decision making. The third is “line control of workflow” that is concerned with the managers’ ability to control the flow of work. The fourth and last is “support component.” It reflects the extent of bureaucracy in the organisation based on size of administration.
Impact of Organisation Structure on Efficiency
According to Alston& Tippett (2014), the organisational structure has number of impacts or organisational activities and its modus operandi. The organisational design decides whether or not an organisation adapts its internal and external environment. In addition to this, the competitiveness of the organisation is also associated with organisational structure (Alston& Tippett, 2014).Internal and external changes, such as market share, customer demands, taste, technology, etc., affects the organisation structure. Brown & Duguid (2017) believe that organisation needs to change its structure based on the market strategies and policies. For instance, a manufacturer needs to change its strategy based on the new product or services or processes.
There are large number of researchers who have given their views and findings on the relationships of the organisational structure and its performance. Carlson (2013) argued that there is a week relation between organisational structure’s dimensions, such as formalisation and specialisation and performance of organisation. However, the other dimensions have a bit stronger relationship. For instance, degree of centralisation is directly associated with the organisational performance. Argyres (2016) gave a negative relationship between organisation size and performance. However, other researchers have proposed curvilinear relationships or no relationships.
Brown& Duguid (2017) argued that structure of an organisation defines a well-established hierarchy for responsibility and helps in creating different levels of communication. It is important for the organisation while monitoring the employee output to consider the impact of organisational structure on efficiency. Boehm (2016) mentioned in the study that efficiency and performance of the management team is directly associated with the team and organisational structure. If there is any weak link in the management, then its effects may spread in the whole organisation. On the other hand, the good decisions and intelligent decision-making improves the overall efficiency of the organisation. *** discussed about the structural flaws. The study mentioned that organisational structure might affect the information flow within an organisation and between different levels. Ineffective channels of communication might delay the important information to reach to the middle managers and to lower team leaders. This will definitely affect the efficiency. ** pinpoint the weak links between the different levels of organisational structure to be a major cause of inefficiency and poor performance. It is important for the corporate structure to grow with the company in order to maintain the productivity
Boehm (2016) talked about the impact of organisational structure in measuring the performance of employees. It is a well-known fact that organisational structure can enhance or inhibit the organisational performance. However, it depends on the effectiveness of supervisory relations and workflow. The characteristics of an effective organisational structure is that they have defined policies, procedures, and organisation. Chang (2018) gave various structures for the different types of organisations. For instance, an entrepreneurial organisation can have a flat organisational structure, whereas a bureaucratic organisation can have policies, standards, and routines. These might have fairly rigid vertical structure. In innovative organisation, the organisational structure varies with the market demand and the performance measurement in such organisation are very much informal.
Mintzberg’s five structures
Mintzberg in 1980 gave his arguments and divided the organisational structure into five distinct configurations. The first and foremost configuration is named as ‘simple structure.’ It is usually characterised by small-middle level management, loose division of labour, informal decision-making along with centralisation of power that assists in rapid response and actions. The second is called ‘machine bureaucracy.’ It is featured as centralised power along with highly formalised and specialised procedures with a clarity of organisational management. The communication in such structure is mainly formal throughout all the stages of organisation. The next structure is ‘professional bureaucracy.’It has highly particular occupations and insignificant formalization; the structure decentralized both vertically and evenly take into account a more liberated workplace, however, keeps the institutionalization prerequisites utilized by an extensive company in a steady and complex environment.
Decentralisation or Centralisation
According to Boehm (2016), the modern organisation have two forms of authority, namely centralised and decentralised. The centralisation of power can be defined as the concentration of the power for decision-making in the hand of the top-management. On the other hand, decentralisation of power means the distribution of the authority and the decision-making powers in the hands of different individual units at different stages of the organisational structure. The concept of decentralisation is not new in the business world. However, the choice for going with the decentralisation is optional for the organisation. There are many advantages of decentralisation. The first is it helps in developing initiative among the team members by establishing a sense of faith and trust. It helps in making rapid decisions without wasting any time. The team leaders and managers have the powers to direct on the issues faced by the employees. This results in faster decision making.
Literature Analysis Summary
From the above discussion, various new concepts of the organisational decision-making have been highlighted. The first and foremost was the definition of organisational structure. The simplest definition of which was discussed in the literature analysis part. It is discussed that understanding the connection between the tasks carried out in the organisation will help in understanding the complexities of directing an efficient firm. In addition to this, the six dimensions of the organisational impact and their importance have also been talked about. In addition to this, the literature review suggested that the organisational structure affects the organisational efficiencies and performance. In addition to this, it has been highlighted that organisational structure needs to grow with company. The performance also depends on communication between the organisational structures. The importance of centralisation and decentralisation also affect the organisation performance.
Current Practice Report
If an organisation is reorganising its business methods, then the best way is to form the teams. It has been that the traditional organisational structure has a leader and various layers of followers. In a functional organisation, the departments are grouped together. On the other hand, a divisional organisational structure has distinct unit for different organisational tasks. For example, there is a sales team, marketing team, and training team. Such traditional organisational structures usually depend on forming formal relationships for reporting and they work inefficiently if the working environment changes rapidly or without any notice. On the other hand, the modern day’s organisation are characterised as team-based organisation that are less structured and can adapt rapidly to the rapidly changing organisation. There are many major difference between current and traditional organisational structures. For that purpose, it is important to understand the modern organisational structure based on which the comparison between the two eras of organisational structure can be compared.
According to Alston& Tippett (2014), the modern day’s organisations are often characterised as boundary-less organisations that network and collaborate with one another. In addition to this, they can accommodate and manage with the rapidly changing environment. The best example of such a kind of organisation is IT-organisation. The modern organisational structure emphasises on building relationships with the stakeholders, understanding their needs, listen to their queries and resolve them as soon as possible, and most importantly consensus building. Regardless of whether little or expansive, each organization must consider the manner by which its tasks are planned and organized. To work adequately and productively, an organization needs a formal arrangement of communication, basic leadership, and completion of tasks that coordinate the requirements of the firm. A small organization, for instance, may just need a straightforward hierarchical plan. As an organization develops and turns out to be increasingly intricate, so the hierarchical structure develops and changes. All things considered, the hierarchical structure is frequently considered a ceaseless.
According to Alston& Tippett (2014), the modern organisation structures are based on the ideas taken from various fields in order to make communication a little more dynamic. In addition to this, they are more focused on blending individual and solutions proposed. The new organisational designs are focused on adaptability. They depends hugely on staff involvement, distribution of authority based on talents and expertise, and they have a bit lesser number of rules and boundaries. Basically, they are more of an organic structure instead of traditionally rigid structure of old times. Talking about the significance of modern organisation, Argyres (2016) argues that current business world is rapidly changing by virtue of transforming technology and customers’ demand. It has been noticed that there has been a great demand of boundaryless organisation as they are best to deal in the rapidly changing environment. The modern organisations are based on networking and collaborating with other organisations dealing in the same field.
According to Sharma (2017), the modern organisation are either project or team-based organisation and they do not have rigid structure or chain of command or stubborn hierarchy. Rather, each group works how it sees fit and afterward group pioneers facilitate crosswise over offices for explicit complex issues. These self-guided groups require another style of the management as it is very difficult to help self-guided group. In addition to this, the modern organisation have a better control as they are basically based on the decentralisation of the power at various levels and decision-making in such organisation is quick. Employees are more responsible as they are more accountable and responsible for their course of actions. There is no place for any blame game within the organisation. The control is good over the operations of the company and the employees.
Unlike the traditional organisation, modern organisation promotes creativity and initiative-taking attitude of employees. With the free hand and higher degree of autonomy, this helps them in taking initiative. Conversely, when middle and lower level executives are carrying out task of senior management, then it adds more creativity and quality to the work as they do work with utmost decency and concentration. In addition to this, the modern organisation focuses on improving the team work by facilitating the share of powers and freedom of making decision. This would help the employees to integrate their effort and establish a sense of teamwork among the workers.
Comparison of Literature and Current Practice
There are so much difference in the organisational types and the organisational structure that has been discussed in the literature analysis and the one in the above section. The first and foremost difference can be seen in the authority. The traditional structures give power to the senior management. In addition to this, they lack the management hierarchy. On the other hand, the team-based organisational structure depends on decentralisation of powers and provide them to the lower hierarchy staff. In traditional organisation, there is one manager who is responsible for looking after several team (Iveroth, 2015). Talking about the type of organisational structure, the traditional one needs a strict control and the overall functional structure of the traditional organisation depends on management hierarchy. Furthermore, the additional management is also important to manage the complexities that might affect the company. On the other hand, the modern organisation does not need such a stringent hierarchy and the bureaucracy would impart some sort of flexibility.
Other than settling on choices on departmentalization, the management must decide queries for power, limits, and chain of command. The choices bring about shifting degrees of basic rigidness or mechanization. It has been noticed that most mechanistic is the utilitarian organizational design. It is stringently developed, with secured jobs and divisions, much oversight, numerous principles and a formal hierarchy of command (Sharma, 2017). The modern organizational structure is free and natural, becoming out of the convergence of organization needs and the environmental issues afirm faces. Teams might be semi-perpetual or even only an impermanent measure. Where there is a rigid functional structure, the modern structure is flexible.
Most importantly the difference lies in the use of technology. Modern organization is more innovation-based and boundary-less. So the amount of workforce or office size doesn't make a difference. However, a customary organization is centralized and in reverse to acknowledge cutting edge innovation (Argyres, 2016). In the current circumstance, consumer demands are boundless and their consideration turned out to be broadened. So organization ought to be progressively unique, increasingly virtual and further developed in present-day innovation.
Conclusion
In the following term paper, a discussion has been done on the organisational structure in traditional and modern day’s organisation. Various major differences in the organisational structure between the customary and team-based organisation have been discussed. It was highlighted that the former has centralised structure of authority and the decentralised structure of authority.
References
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