Changes in Organization Structure
Background
Along with the growth of Tam Construction Co. come different challenges and problems. The company has been facing stiff competition from foreign contractors such as those from China, France, Korea and Japan since mid 1980s. Mr. Tam realized that the organization structure that Tam Construction has was not efficient. In addition, the organization’s image was tarnished by in adequate and poor quality building. In response to these challenges and problems, the company’s executives decided to hire four professional expatriates to manage projects and work as claims consultants. This scheme proved to be ineffective. Communication and cultural difficulties soon surfaced between the expatriates and local domestic subcontractors. The quality of work did not improve. The profit margins of project were also dropping and the tight cash flows resulted in delayed payments to suppliers and subcontractors. And to make matters worse, the staff were complaining about their year-end bonus, promotion and annual salary.
Theory
The components of an organization structure include the division of work into units and departments, the differential assignment of responsibility and accountability to positions, a benefit and reward system, the establishment of policies and procedures, and the distribution of resources. As an organization grows in size and complexity, the structure typically becomes more layered and formal (2000).
Content
An organic structure is more appropriate to those organizations where there is a need to be innovative. The pressure of innovation suggests a structure that can respond to environmental variations rapidly so it is necessarily loosely defined and flexible. The organization tends not to be formalized nor are roles too closely structured (2001). Organic organizations are stratified primarily in terms of expertise, and leadership accrues to those who are the best informed and capable. There is much more commitment to the organization, with the result that formal and informal systems become indistinguishable. A framework of values and beliefs, much like those characterizing a profession, develops that becomes an effective substitute for formal hierarchy (2002).
Mechanistic organizations are somewhat rigid in that they consist of very clearly delineated jobs, have a well-defined hierarchical structure, and rely heavily on the formal chain of command control. According to (2001), a mechanistic structure is more relevant when the environment is stable (). It is straight line, rigid, hierarchical and very efficient in operating in a stable environment. According to (1999), a mechanistic structure is composed of many hierarchical levels. Processes may be highly regulated through elaborate planning and control systems, specialization of tasks, and high degrees of standardization and formalization. Training and education and horizontal decentralization are very restricted, while the few cooperation devices are highly formalized. As a result, the levels of participation and delegation are low ().
What Organization structure does Tam Construction have?
From the background information given and the analysis of the characteristics of both mechanistic and organic structure, it is clear that the company has a mechanistic structure.
Conclusion
Changes in Organization are essential in order to succeed in an ever-changing environment and market. The process of reinvention must be done continuously in order to respond to demands and competitions. For an organization structure change to be successful, the company must have a clear vision for action, committed leadership, and exacting project management. The organization must also thoroughly manage its change program to ensure that key stakeholders are involved in and support the process, and it must monitor the emotional response of its employees. The change process must be addressed when the critical business issues are starting to be identified. The challenges and problems that Tam Construction Com. are facing call for an organization structure that is flexible to address the current as well as future issues and challenges.
Credit:ivythesis.typepad.com
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