Organizational Structure & Leadership and Culture

Week-7 DQs

1.        What are the five traditional organizational structures? What are the pros and cons of each? Explain what organizations of the future will look like. Why do you think they will develop as you predict?

Organizational Structure refers to the formalized arrangement of interaction between and responsibility for the tasks, people, and other resources in an organization (Pearce II, J.A.,& Robinson, R.B., 2012). It is true that no organization can be formed without organizational structure so it must be designed in such a manner to achieve the organizational objectives.

There are basically five types of traditional organizational structure which are explained along with its pros and cons as follows:

1.      Simple Organizational Structure: This is the simplest form of organizational structures in which there is an owner who arranges the tasks, responsibilities and communicates them informally among a few employees under direct supervision. The pros of this include direct supervision, quick decision, cheaper in terms of cost and so on. On the contrary, its cons include requirement of a multitalented, resourceful owner, no flexibility, and unsystematic activities.

2.      Functional Organizational Structure: It refers to an organizational structure in which the tasks, people and technologies necessary to do the work of business are divided into separate functional groups such as finance, marketing, operating and Human resource with high formal procedures in order to coordinate and integrate their activities for providing the business’s goods and services. The major pros of this include, efficiency through specialization, functional tactics, delegation of day-to-day operating decisions, and tightly connected structure to strategy by designating key activities as separate business units. On the other hand, the major cons of this include narrow specialization and functional conflict, difficulty in functional coordination, no larger scope for general managers, and pressure for outsourcing.

                                    

3.      Divisional Organizational Structure: It refers to an organizational structure in which a set of relative units or divisions are controlled by a central corporate office and each of these functional division has its own functional specialists, providing goods and services differently from those of other divisions. This structure fosters the coordination and necessary authority down to the appropriate level for quick response, and broader strategic decision. It provides platform for strategy development and implementation according to different divisions by retaining functional specialization within each division. However, it is difficult to determine the level of authority to each division managers so that there is dysfunctional competition and policy inconsistencies among divisions. In addition, it may also increase costs in terms of duplication functions and corporate image.

4.      Matrix Organizational structure: This structure is likely to combine the specialization provided by a functional structure and the focus provided by a divisional structure. Each employee belongs to at least two formal groups; one is a functional group, and the other is a project, product or program team, and they have to report to both bosses. This structure increases the employees’ motivation and allows training across functional areas. However, this type of structure is difficult to implement, and this may create misunderstanding or confusion among subordinates because it involves negotiating the use of resources, shared responsibilities, and important priorities.

5.      Product-Team Structure:  In this type of organizational structure, different functional managers and specialists are assigned into an objective-based group to make major decisions about product or services. Members from each of different departments work together to solve problems and discover new opportunities. It can help remove barriers between departments and foster effective problem-solving relationships. It can also motivate employees and increase decision-making times. However, there is a high possibility of making decisions with firsthand understanding of the issue in regards to the product or process.

In the future, it seems that there will be highly use of an agile organization which identifies a set of business capabilities central to high-profitability operations and then builds a virtual organization around those capabilities (Pearce II, J.A.,& Robinson, R.B., 2012). This trend is likely to be as per predicted because it allows firms to build its business around the core, high-profitability information, services and products. It also helps strategic managers to form an agile, virtual organizational structure which involves outsourcing, strategic alliance, boundary-less structure, an ambidextrous learning, and Web-based organization.

References

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

2.        What are the pros and cons of outsourcing? When is it desirable and necessary?

While it is true that there are many ways to cut the cost of the companies, outsourcing always comes at first in the mind that can reduce the cost substantially. Then you may be thinking that what actually outsourcing means? Outsourcing simply means the process of obtaining work previously done by employees inside the companies from sources outside the company (Pearce II, J.A.,& Robinson, R.B., 2012). However, deciding whether to outsource or not is always strategic challenge so that it is necessary to calculate its pros and cons before deciding it is as a right option for any businesses. For example, in one of the largest U.S. outsourcing venture companies, DuPont hired Computer Science Corp. (CSC) and Andersen Consulting for $4 billion over a 10-year period to develop and manage its IT. On the same way, Xeroxs dealt $3 billion with EDS and the McDonnell Douglas dealt $3 billion with ISSC (YVONNE LEDERER ANTONUCCI, FRANK C. LORDI AND JAMES J. TUCKER III, 1998).

The pros and cons of outsourcing:

Pros: Outsourcing plays a pivotal role to create an agile, virtual organization so that it possess the following advantages:

1.      It can lower costs.

2.      It can reduce the amount of capital a firm must invest in production or service capacity.

3.      The company can focus on the most critical activities rather than doing so on less expertise activities. When a company does so, there is more possibility that the source of competitive advantage can be controlled and enhanced.

4.      It is also possible that when a firm selects the outsourced partners carefully then the potential learning and development of knowledge, skills and abilities can enhance the expertise of the firm.

Cons: Although there are several advantages of outsourcing, it is not free from its cons which are as follows:

1.      Outsourcing includes loss of some control and more reliance on “outsiders.”

2.      It can create future competitors.

3.      There is a possibility of losing the skills, abilities and so forth to a product or service.

4.      It can cause negative reaction from the public and investors.

5.      Outsourcing service or intellectual property in terms of crafting legal agreement is difficult.

6.      It can lead to increasingly fragmented work cultures with unfair treatment among employees such as low wages, labor issues, discrimination etc.

The desirability or necessity of outsourcing:

A recent study has shown that it is necessary or desirable when a company wants to gain access to specialized skills which are done by outsider with more expertise or efficiency. In addition to this, if a business needs to act quickly to take advantage of a market opportunity but doesn’t have the internal talent to respond then there is need for outsourcing. Indeed, this is quite useful when a company wants to improve business processes and workflow, flexible staff allocation and the ability of internal staff to focus on other important business areas. In a nutshell, it can be said that pros of outsourcing outweigh the cons of it so that outsourcing can be considered as a right option to gain a competitive advantage if analyzed properly.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://smallbiztrends.com/2009/12/the-pros-and-cons-of-outsourcing.html

(n.d.) Retrieved from http://www.journalofaccountancy.com/issues/1998/jun/antonuci.html

3.        What are sources of power for managers? How does power relate to emotional intelligence? How can they both be used in providing vision and direction for an organization and its employees?

There are seven sources of power available for managers. The first four powers are derived from the organization and remaining three powers are from personal influence (Pearce II, J.A.,& Robinson, R.B., 2012). The brief discussion of each of these is outlined as follows:

1.      Position Power: Position power refers to a formal establishment determined according to the manager’s position in the organization. Managers are entitled to use their authority and responsibilities for decision making to get things done.

2.      Reward Power: It is managers’ power available to confer rewards to their subordinates in return for desired actions and outcomes.

3.      Information Power: It refers to a set of information available for managers to access and control over it in the organization.

4.      Punitive Power: It refers to the power of managers that is exercised through coercion or fear of punishment for mistakes or undesired actions by a manager’s subordinates.

5.      Expert Influence: Expert influence refers to a manager’s knowledge and expertise in a particular area or situation so as to influence other subordinates (Pearce II, J.A.,& Robinson, R.B., 2012).

6.      Referent Influence: This power can stem from others who identify the managers by their personal attributes such as their charisma, personality, empathy, and the like.

7.      Peer Influence: This refers to the power available for managers to influence the behavior of other subordinates with the help of peers in the organization.

An emotional intelligence refers to a person’s ability to communicate, influence and make a change within and outside their organizational setting. It is believed that managers who do not develop their emotional intelligence properly have difficulty in making good relationships with their peers, subordinates, superiors and clients (Goleman, 2016).  Hence, having said this, it can be true that there is a positive relation between the power and emotional intelligence. In other words, it is necessary for managers to have both power and emotional intelligence to empower their subordinates effectively in achieving organizational goals.

On the other hand, both power and emotional intelligence can be used in providing vision and direction for an organization and employees through different mechanisms. For example, these powers help to direct, control and coordinate with their subordinates so as to prepare them for achieving the company’s vision and direction. In addition to this, they can be used to provide the intrinsic and extrinsic motivation such as reward, bonus, appreciation, apprising, self-realization, achievement for an organization which could be used as a power of the managers to empower towards achieving and directing the company’s overall vision, mission, objectives, strategies and tactics.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

Goleman, D, (2016) What Makes a Leader. Harvard Business Review. January -February, pp. 93-102.

Mechant, P. (n.d.). 5 Sources of Power in Organizations. Retrieved from http://smallbusiness.chron.com/5-sources-power-organizations-14467.html

4.        Is corporate culture an important element in an organization and its strategic direction? How can organizational culture be created, influenced, and changed?

Organizational culture is the set of important assumptions (often unstated) that members of an organization share in common (Pearce II, J.A.,& Robinson, R.B., 2012). It is true that assumptions will be shared assumptions when they are internalized and institutionalized among an organization’s individual members. It cannot be refuted that each and every organization has its own culture and that is paramount in an organization and its strategic direction.

Generally speaking, Corporate culture is the pattern of fundamental assumptions or beliefs that a specific group has developed through learning to deal with its problems of internal assimilation and external adaptation, and that have been approved to work effectively, and therefore it can be taught to new members as the correct way to perceive, feel and behave in relation to those problems (Schein 2009).

There are many ways for shaping organizational culture such as creating, influencing, and changing the culture within a corporate culture which are as follows:

·         The organization should emphasize on key themes or dominant values so that its culture can be created, influenced and changed to fit the organizational resources and capabilities.

·         The company should encourage in disseminating the different stories and legends about core values that will have a greater impact on their employees’ motivation.

·         The company should institutionalize practices that systematically reinforce desired beliefs and values of the company so as to direct, control and coordinate its strategic direction with employees.

·         The company should use or adapt the common themes in their own unique ways so that they would realize their value as strategic ones to be achieved.

·         The organization should focus on managing organizational culture globally by delivering and communicating organizational norms, values, attitudes, religion and education about products or services of the company.

·         It is also possible to create, influence and change the organizational culture by formulating, implementing and controlling of different policies, strategies, and tactics. It is important to make them to fit with the organization and support their employees for organizational change.

In a nutshell, it can be concluded that organizational culture plays an important role to protect and sustain their competitive advantage from their competitors. As organizational culture keeps creating, influencing and changing their culture, I strongly believe that applying above ways successfully, company will be able to direct their company's vision and achieve their goals.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

Solomon, M. (2014, September 27). 9 Leadership Steps For Corporate Culture Change. Forbes. Retrieved from http://www.forbes.com/sites/chrismyers/2016/04/14/learning-to-let-go-how-i-evolved-from-founder-to-ceo/#3d8a946438a0

(n.d.) Retrieved from https://www.ukessays.com/essays/business/the-importance-of-organizational-culture-in-strategic-management-business-essay.php