Different Organizational Designs and Learning Organization

A learning organization is An organization that is continuously expanding its capacity to learn.

Measures to Use Time Effectively are

1. Systems thinking

The ability to see the organization as a system and to see the bigger picture rather than focus on small parts of it.

2. Personal mastery

Members engage in continuous and objective assessment and try to bridge the gap between the current and the desired states.

3. Mental models

Deeply ingrained assumptions, generalizations, or even pictures are replaced with an open culture.

4. Building a shared vision

Members have a shared vision that provides focus and energy for learning.

5. Team learning

A group’s learning ability becomes greater than that of any individual in the group.

Building a learning organization

  1. Awareness at All Levels in the Organization
  2. Flexible, Organic, and Flat Environment
  3. Leadership Encourages Systems Thinking
  4. Empowerment
  5. Learning Labs

Organizational Design

It is the process of coordinating the structural elements of organizations in the most appropriate manner.

Common organizational designs

  1. Simple structure
  2. Bureaucracy
  3. Matrix structure

Lets understand each of these designs in detail.

1. Simple Structure

Characteristics

A single individual with unlimited power (that is, Centralized authority), Low degree of departmentalization, Flat organization and Very little specialization.

Strengths include

Fast & flexible, and Quick response to environmental changes.

Drawbacks

High risk as everything depends on one person, and as organization’s size increases, decisions are made slowly.

An example of a simple structure is a small start-up business with few employees and an owner who manages and controls most business functions. Start-ups such as Mumbai-based edutech start-up iSymplifi and Bangalore-based start-up Learners Route have simple organizational structures.

2. Bureaucracy

Characteristics

  • Highly routine tasks are performed,
  • Very high level of specialisation with many formalized rules,
  • Decision-making follows a chain of command.
  • Generally, such a structure is found in Military and Government agencies like the Department of State, public sector companies, and large corporations.

Advantages

  • It can be managed with less talent and cost
  • High specialization results in economies of scale

Disadvantages

  • Conflicts may arise between different functional units.
  • There is an obsessive concern for rules.

According to 2012 statistic by the Political & Economic Risk Consultancy Ltd., India had the worst bureaucracy out of 12 Asian countries for 10 consecutive years, due to poor infrastructure, widespread corruption and fickle regulations. On a scale of one to 10, India’s bureaucracy scored 9.21.

Key Facts

  • According to 2012 statistic by the Political & Economic Risk Consultancy Ltd., India had the worst bureaucracy out of 12 Asian countries for 10 consecutive years, due to poor infrastructure, widespread corruption and fickle regulations.
  • On a scale of one to 10, India’s bureaucracy scored 9.21.

EXAMPLE OF BUREAUCRACY STRUCTURE

Tata Motors is considered too bureaucratic on decision-making. It hired Accenture to chart an organizational restructuring and performance improvement programme in 2015.

The Goal was to achieve certain benchmarks across the company, from shop floor to sales office in each of its divisions.

3. Matrix structure

Characteristics

  • It combines two forms of departmentalisation – Functional and Product.
  • There are three major roles in this structure:
  • Two-Boss Employees – Employees who have two managers or bosses and report to both product and functional managers.
  • Matrix Bosses – People who head functional departments or specific products and do not have complete authority or control.
  • Top Leader –Manager who has control over both functional and product managers.

Advantages of Matrix structure

  • It facilitates coordination between complex but interdependent activities of an organisation.
  • It increases flexibility and communication among matrix bosses.

Disadvantages include

  • Power struggle between matrix bosses as each one tries to gain control over subordinates.
  • Unclear expectations give rise to role ambiguity and role conflict.

Examples of matrix structure

1. L’Oreal India

The Matrix structure at L’oreal improves coordination with the rest of the departments in the organisation as well as on shared technologies. It also allows information to move easily.

This has resulted in effective communication throughout the whole organisation as well as developing effective market strategies and new product ideas.

3. Infosys

Infosys has had a matrix format organisation at the top level in business unit, but now it has extended the format throughout the organisation. It calls the new structure Zero Distance because one has zero distance to the client as well as zero distance to the value.

At the heart of the new structure is the project manager, who has his own team. Each project manager will be supported by functional teams such as human resources, legal, finance and purchasing.

New Organizational Designs

Companies have adopted three new organizational designs

  1. Team Structure,
  2. Virtual Organisation,
  3. Boundary-Less Organisation.

1. Team Structure

The first design is team structure.

Characteristics

  • They use teams to coordinate work activities.
  • It breaks down departmental barriers.
  • Decision making is decentralised to the team level.

Advantage

Its advantage is that it allows large organisations to enjoy both the efficiency of a bureaucracy’s standardisation and flexibility.

2. Virtual organization.

Characteristics

  • It is a small core organisation that outsources major business functions.
  • It is highly centralized with no departmentalisation.
  • It creates a network of relationships that allows them to outsource several activities.

Disadvantages

  • Management has little control over key parts of its business.
  • The outsourced company may leak out the virtual organisation’s trade secrets.

Advantages

  • Highly flexible
  • Each participating company contributes core competencies.
  • For example: Nike performs well in product design and marketing and relies on outsourcing for IT to maintain inter-organisational coordination.
  • Other examples of companies having virtual organizations are Amazon, Reebok and Dell.

3. Boundary-less organization.

Characteristics

  • It seeks to eliminate the chain of command
  • Has unlimited spans of control
  • Replaces departments with empowered teams
  • Also called barrier-free organisations as they attempt to eliminate internal and external barriers.
  • Vertical boundaries are reduced by keeping status and ranks to a minimum and flattening the organisational hierarchy.
  • Horizontal boundaries are reduced by establishing cross-functional teams and performing lateral transfers and job rotations.

Disadvantages

  • It requires high level of trust betwen all parties concerned and everyone involved to have high skill levels.
  • And, it weakens managerial powers and authority.

Example of Boundary-less Organization

Coca-Cola considers itself a global corporation and not as one based in Atlanta or the US.

Models of Organisational Design

1. Mechanist Models

Mechanist Models have extensive departmentalisation, high formalisation, and little participation in decision-making by lower-level organisational members.

Examples are Healthcare providers, universities, and governmental organizations.

2. Organic Models

Organic Models have low formalisation, possess a comprehensive information network, and involve high level of participation in decision-making.

For example: Google Corporation is an excellent example of a firm with an organic structure. Their employees are encouraged to use creative problem-solving skills and participate in critical decision-making.

3. Innovation strategy

  • Emphasizes the introduction of new major products and services.
  • Organic design is most suitable as it allows flexibility to innovators.

4. Cost-minimization strategy

  • Emphasizes tight cost controls, with avoidance of unnecessary innovations, marketing expenses, and price cutting.
  • Mechanistic design is most suitable as it affords tight control, high formalization & centralization, and extensive work specialization.

5. Imitation strategy

  • Organizations seek to move into new products and services after they have proven to be successful.
  •  A mix of mechanistic and organic models is most suitable.

Organization size

Large organizations tend to have more specialization, more departmentalization, more vertical levels, and more rules and regulations than small organizations.

Technology

Routine technology: Involves automated & standardized activities.

Non-routine technology: Involves customized operations.

Technology tending toward routine tasks promotes taller and more departmentalized structures.

Environment

It refers to factors that are external to the organization but can nonetheless affect it.

Three factors influence environmental certainty/uncertainty:

Capacity: That is the Degree to which an environment supports growth. It is concerned with scarcity or abundance.

Volatility: Refers to stability in the environment

Complexity: Which is the degree of heterogeneity and concentration among environmental elements.

In a scarce, dynamic, and complex environment, an organic structure is suitable, while in an abundant, stable, and simple environment, a mechanistic structure is suitable.

Organizational Design and Its Impact on Employee Behaviour

An organizational structure’s impact on employee behaviour is unclear because individual and cultural differences strongly influence employee performance and satisfaction.

Some employees may prefer jobs requiring high specialization or minimum intellectual demands, creating dissatisfaction in others.

1. Span of control

Some employees like to be left alone whereas others prefer to have the security of a boss for consultation.

2. Centralization

Employees with low self-esteem prefer centralization, whereas those with high self-esteem do not.

3. Power distance

Employees from high power distance cultures prefer a mechanistic structure, whereas those from a low power distance cultures prefer an organic structure.

Individual and cultural differences must be considered when predicting an organizational structure’s impact on employee behaviour.