Organization Structure Design

QUESTION

For your Initial Response, in 300–500 words, please address the following:

While each type of organisational structural design appears to be applied in different situations, addressing some demands and/or responding to some external pressures, it is often the case that those demands are in conflict.

• Discuss this statement in light of your experience and own readings. For example, consider Gulati and Puranam’s (2009) discussion of the possible trade-offs between informal and formal organisational structure, Daft, Murphy and Willmott’s (2014) view on hybrid structures or Burgers and Covin’s (2016) perspective on integration and differentiation efforts in designing organisations.
• Present your answers backed up with evidence from your experience whenever possible and your review of literature and theoretical concepts.

ANSWER

Organization Structure Design

Introduction

The choice of an organizational structure depends on various factors. Two main designs exist, the informal organization design and the formal organizational structure. In the formal organizational structure, every role is well defined, and the structure is properly detailed in writing. The informal structure incorporates the culture and social structure in an organization, including the behaviors and interactions within it. Both the written design and the cultural design are used together for efficiency in an organization, creating a structure that is hybrid. Each of the structures meets certain requirements and has certain benefits.

Organizational Designs

The formal organizational design provides an environment where workers are able to interact freely. It also gives a well-organized hierarchy of leadership for the organization. It is easily understood and there are no questions on who reports to who (Meyer, Rowan, 1977). Misinterpretation is therefore avoided, as protocol and procedures are spelled out and adhered to. It, however, may result in bureaucracy and create challenges in decision- making. The informal design is characterized by culture, which includes behaviors, patterns, and interactions coming from personal relationships (Chan, 2002). It is concerned with individuals and their way of accomplishing tasks, instead of looking at their set out roles. This design changes frequently and, as such, adapts easily to organizational changes.

The informal structure is however prone to communication challenges such as misinterpretation and misinformation in an organization. It is referred to as ‘grapevine’ structure. It encourages gossip and time wastage during personal conversations. Moreover, the informal organization structure being incorporated in an organization that has a bad corporate culture will result in the creation of an environment or atmosphere which can ensure that employees are comfortable when hindering or resisting positive changes.

Hybrid organizational structures incorporate aspects of both the informal and formal structures, to try and fix the disadvantages of one design, with the advantages of the other. Strong informal structures fix formal structures during re-organization (Gulati, Puranam, 2009). Formal organization structures are needed for formulation and the implementing of strategies in an organization. New innovations require design changes in an organization. A firm will have to rearrange activities to ensure that there is ease in focusing on the core product. They also have to improve the design to ensure efficiency in internal processes and innovation adoption.

Hybrid organizational structures have many advantages. They result in the reduction on structure complexity, resulting in flexibility for effective innovation adoption, and also reduce costs that may be incurred when adapting to organizational changes. Integration of both structures helps in reduction of costs involved in the coordination of duties when firms enter acquisitions and mergers. Hybrid structures enable organizations easily respond to any changes in the market and changes in the needs of customers. Top level management continuously strives to ensure that the adopted organizational design is ready to absorb any innovative ideas while being rigid enough to adapt to market changes. However, the available resources and the effects of changing the structure should be considered before any structure change decision is made.

References

Gulati, R., & Puranam, P. (2009). Renewal through reorganization: The value of inconsistencies between formal and informal organization. Organization science, 20(2), 422-440.

Chan, Y. E. (2002). Why haven’t we mastered alignment? The importance of the informal organization structure. MIS Quarterly executive, 1(2), 97-112.

Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 83(2), 340-363.