Literature Review: Evaluation of Organisation Structures
A literature review will be provided in the actual study, which will be put in the second chapter. Literatures will be about the studies on organisation structure, its changes and development and how it can influence the actions of the people within it. Initially, journal articles and books that generally discuss the subject have already been researched for this study. The insights from these published articles can be found in this paper. The document discusses issues and recent trends in organisation structure research and literature including organisational life as viewed based on structures and how such structures can deliver organisational effectiveness. Various changes and development such as changes in Mintzberg insights, multinational companies and innovation are briefly discussed. Issues on behaviours, ethics and decision-making are also addressed.
The Fundamentals of Organisation Structure
The structure of any organisation plays a significant role in charting out the plan for success. As such, structures facilitate effectual coordination and interconnection between employees and organisational systems. With operating core, strategic apex, middle line, technostructure and support staff as the core elements, organisation structure refers to the framework that relationship between different positions or levels within the organisation (Robbins and Barnwell, 2006, p. 20). Various business dictionaries relay that the form of organisation is evident in the way divisions, departments, functions and peoples link together and interact. Organisation structures disclose the vertical operational responsibilities and the horizontal linkages. Often represented by organization chart, organisation structures seize new forms including flat, network, matrix and virtual organisations. Nonetheless, the foundations of these new forms are challenged by the recurring trends of restructuring, downsizing and telecommunications technology development.
As business theorists advocated, the capture of organisational life always centers the study of structures. The prevailing viewpoint of the organisation structures embodies the concept of policies, prescriptions of authority and hierarchies of responsibilities. As structural frameworks, the allocation of work roles and administrative mechanisms that allow any organisation to conduct, coordinate and control their work activities are clearly manifested in these. Nonetheless, organisational structures do not only conform to structural frameworks but also structural process that yields better performance (Rapert and Wren, 2005). The dimensions of organisation structure that allow better functionality are centralisation and formalisation as Tata and Prasad (2005) advocates it to be. Organisation centralisation refers to the degree to which power is differentially distributed within an organisation; hence, a concept on continuum. On the other hand, organisational formalisation refers to the degree to which the norms of the organisations are explicitly formulated; thus, mechanisms of control.
The importance of efficient organisation structures lies in assuming a definite structure wherein the authority and the chain of command is precisely defined. Such ‘value-adding’ activity directly correlated with the extent of organisational effectiveness any organisation can achieve. According to Boudreau and Ramstad (2005), the organisation structure also outlines the strategic process for every organisation. Therefore, the capabilities, competences and expertise must be fully integrated to the organisation structure where they can have the greatest effect. Though it maybe a processual initiative, the organisation structures could affect the measure of decisions and behaviours that brings success to the organisation (Boudreau and Ramstad, 2006). A notion worthy of note is that the precise organisation structure assists in maximizing the efficiency and productivity of the organisation through facilitating the coordination of group of individuals and efficiently intertwining of employees with means of communications.
Organisational effectiveness that achieved through the organisation structure focuses on how leaders affect the organisational performance albeit being adhocratic or bureaucratic (Robbins and Barnwell, 2006, p. 131). In simpler terms, the personality of the leaders predicts leadership style, leadership style impacts employee attitudes and team functioning that, in effect, predict organisational effectiveness. Leadership involves the persuasion of individuals to give up purely selfish interests and contribute to the overall performance of the organisation. Leaders influence in two ways. The first is exerted on direct social interactions known as leadership in organisation. The second is evident on decisions about directions and objectives known as leader of organisations. The latter has direct impact on organisation structure as the leader guides the collective action by setting goals, defining roles and staffing positions, acquiring and allocating resources and establishing policies (Hooijberg, 2007, p. 178).
Adrian Furnham (2005) claims that the formal structures of organisations are being subjected to various changes and developments overtime in terms of size, purpose, structure and function. Such changes are brought by rapid changes in technology, economic shocks, social trends, global political changes and economic competition (pp. 654-655). These changes, by and large, threatened the organisational effectiveness; therefore, the processes of restructuring and reengineering. As a response to these endeavors organisation structures are designed to meet the current functionality requirements or needs of the organisations and flexible enough to be expanded towards satisfying future business requirements. The organisation structure changes in such a way that it could respond to the seven elements of change that Thomas (2005) outlines. These are leadership, work processes, structure, group learning, technology, communication, interrelationships and rewards (p. 263).
Organisation Structure: Changes and Development
Mintzberg offered comprehensive and lucid explanations on how organisations evolve to reach certain form and shape. Mintzberg claim that the structure of an organisation is an adaptive mechanism that allows the organisation to function in its surrounding and those organisations which posses maladaptive structures will eventually cease to exist. Taking this matter, various types of structure are possible and that organisation continuously seeks to find the structure that is an optimal match to its environment (as cited in Muchinsky, 2005, p. 255). Dubbed as the paradigm proliferation (Robbins and Barnwell, 2006, p. 59), among the notable changes is the flattening of the organisation structure basically because practitioners believe that compared to centralised and hierarchical and decentralised and flat, centralised and flat structures encourage direct communication between and among all staff and shorten turnaround time. In global contexts most specially, the flat structure is increasingly becoming superior to other structures because of its egalitarian nature. Flat organisation structures too are likely to be conducive to deeper integration between superiors and subordinates as what Graen and Graen believe (2005, p. 24).
This is specially true to unintentionally generating complexities within various structures. Facilitated by the degree of differentiation within organisations, Robbins and Barnwell (2006) stress that because of either horizontal or vertical integrations and/or spatial dispersion, organisations are ‘creating organisational silos’ (p. 105). Horizontal integration is the functional nature of the organisations while the vertical integration is structural, and that spatial dispersion is the gap between these functions and internal structures. The changes that are experience in one of these aspects has rippling effect to other factors making the organisations a breeding ground for complexities, making the organisation more vulnerable of the emergent ‘silos’ and therefore blurring the span of control (p. 107) especially in an organisational set-up where units/departments are geographically-scattered (p. 109).
Changes to organisation structures are most apparent on multinational enterprises as there is the necessity to carefully align organisational design with management ability (Robbins and Barnwell, 2006, p. 61). These private institutions that organise one or few industries across many countries have weakened corporate control since they span many countries and cultures. Provided that they should adapt local circumstances that call for decentralised decision-making, in paradox, they are also required to coordinate activities in various parts of the world and stimulate the flow of ideas from one part to another but, nonetheless, the illogicality is that organisation structure varies from organisation to organisation (Robbins and Barnwell, 2006, p. 137). The requirement for organisation structure is to balance the need for coordination with a need for adaption while also patch-working languages, laws and customs. In light of globalisation, in addition, the organisations, apart from the multinational ones, are forced to reorganise the structure so as to facilitate the actual and emergent changes on the administrative, technical, operational requirements especially in face of the growing battle for competitive advantage (Inkpen and Ramaswamy, 2006, p. 78).
For instance, the challenges of innovation for organisation structure, management and operation are immense. These are due to two basic reasons. First is that the innovative process involves the coordination and integration of specialised knowledge and that second, it necessitates the learning in face of uncertainties. As Lazonick (2005) argues, learning is “a social activity that renders the innovative process uncertain, cumulative and collective.” To wit, organisations, in itself, are social entities that are composed of two or more persons who work together towards the achievement of a common goal. With respect to organisation structure, companies, firms or business enterprises can be innovative. Despite the inherent risks delivered by the emerging technologies, the competitive advantage of organisations could be achieved by changing the skill base of organisations in terms of both function and hierarchical integration (Castellacci et al, 2005). Though lacking in evidence-based accounts, the authors pointed that organisation structure is more than about power and its distribution instead also on expanding the competencies and technical requirements of the roles and functions explicitly presented in organisation structures. Robbins and Barnwell (2006) also point out that technology plays an important role in determining the appropriate structure for organisations (p. 53).
Lam (2005) reiterates the worldview stating that the organisational forms are tended to vary in their innovative ability as respond to the fast-changing environments. The important interconnection between organisation structure and innovative capability is evident on the five dominant organisational configurations (as cited in Castellacci et al, 2005). These are simple structure, machine bureaucracy, professional bureaucracy, divisionalised form and adhocracy. Indeed, these configurations not only drives organisation to align their structures and designs to the changes but also proactively respond to those changes through innovation. Such stance points to another context true to contemporary organisations, but nonetheless would be more plausible if knowledge management (KM) strategies are integrated. This is the increasing demand in the necessity for collaborative activities. A trend that emerge over the last two decades, organisations of today realise the need to closely integrate several functions such as R&D and supply chain since these are positive source of innovative capability. As Powell and Grodal (2005) put it, the positive feedback loops by which organisations are becoming centrally placed drive them to become even more innovative and competitive.
Organisation Structure: Behaviours, Ethics and Decision-Making
Within organisation structure are various role schemas at relate how one’s knowledge is being organised about the set of behaviours expected of a person in a particular job, function or role. Towards functioning as a cohesive social unit and therefore realising the organisational goals, organisation structures must comprehensively spells out the roles and reporting structure between different employees at different positions within an organisation. Realising this matter, the corporate culture now embraces the concept of flattened hierarchical management structures, boundary spanning and cross-functional teams as a way to optimise role schema in the organisation structure (Joyce, 2005). Such endeavor was practiced basically because organisations have unique contexts and conduct. The premise is that strategy, structure, processes, core values and belief as well as organisational learning could be reinforced by the development of abilities and opportunities. How the organisation structure facilitates learning through role schemas is one imperative critical to every business organisation (Corbett and Hmieleski, 2007).
Organisation structures and the members of the top hierarchy are actuated to be responsible in ethical compliance of the organisations. Actions should be supported by the top management who are sufficiently holding the legitimate authority. The connection between organisation structure and ethical decision-making is evident on two components that Stanford (2005) distinguishes. These are the locus of decision-making responsibility and the opportunity provided to advance self-interests. The locus of decision-making responsibility is central on how organisations conform to the concept of centralisation and decentralisation. The difference is that the centralised structure locates primary authority for crucial decision-making while the decentralised structure purports the distribution or sharing of decision-making in varying degrees. Important to note is that organisations, aside from being a collection of people, are decision-making and information-processing systems as well (Robbins and Barnwell, 2006, p116). In furthering one’s self interest, centralised structures provide opportunistic situations and are inversely correlated to the degree of decision-making. As both can be shaped by organisational design modifications, the latter is beyond the control of any imposed mechanism as self-serving interests are pursued.
Geuras and Garofalo (2006) contend that administrative ethics are directly connected with organisation structure and organisational culture as both determine what they are and their importance. The organization chart as a commonplace reflection of the organisation structure informs who reports to whom, the chain of command and the span of control. Evidently, it also manifest that organisations do not function only in accordance with the formal design but , in reality, consists of informal structures that influence communication, decision-making and other important elements of the organisational life. Combined, both formal and informal structures can directly impact individual and group behaviour. On the other hand, organisational culture which comprise of values, assumptions and expectations influence how people think, act and decide. Likewise, organisational cultures have informal components that can be equally influential (p. 98). The pressing issue is that within organisation structure and culture ethics reside and that the widespread agreement of internal desirability varies from organisation to organisation. So, ethical practices may stay at a premium level in structures especially because these are tended to be challenged by individual perception as well as emergent constraints and pressures within the organisation.
Robbins and Barnwell (2006) manifests that when employee behaviours and attitudes are not explicitly regulated, there is something missing. This is the higher levels of formalisation. Perceived to be a contributing factor to organisational complexities, formalisation refers to the degree of standardisation intended for jobs and procedures. As such, the importance of formalisation lies in the fact that the standardisation of behaviours could diminish inconsistencies (p. 111). Organisations that are falling short of ethical practices might be problematic in terms of formalisation especially because they strategically lack the proper avenues to internalise policies which provide parameters to guide individual decision-making (p. 113). Coordination from among individual, collegial and organisational perspective then is critical as it align the objectives and activities towards functioning as a cohesive unit (p. 118) and therefore minimise confounding variables such as self-interests that result in unethical decision-making.
References
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