The company is established based on functional aspects rather than product lines. The functional framework teams specialize in the same capabilities in individual units. This framework is best utilized when establishing particular, uniform goods. A functional framework is best for companies which possess a solitary or dominant central good since each sub-team becomes well-informed at completing its specific part of the procedure. They are financially effective, but lack versatility. Interaction among operational units can be hard (Downey, 2001).
Most leaders know companies need to implement functional organizational structures in order to survive and there are many programs for launching such efforts. However, experience has shown that over the long haul most change initiatives for functional organizational structures do fail. They are expensive to implement, offer a poor return on investment and fall short of achieving the organization’s goals to better enhance good business performance. This happens because organizations don’t plan for sustainable change into a functional organizational structure. In other words, they succumb to what employees often refer to as “program of the week” syndrome. Most change initiatives, no matter how carefully planned, and are doomed before they even begin because they are designed as one-time events. They do well enough in temporarily focusing excitement and energy around a given program, and the initial results can seem very promising, but the lack of long-term follow through is their fatal flaw. The problem with functional organizational structure is that employees get the message that they have a job to do but that they must also pay attention to the program and that don’t see the change as something integral to their daily activities but as something quite outside of it (Galbraith, 2001).
B. Territorial / Geographical Organization
Territorial / geographical structure is established when a company is separated up into a number of self-controlled teams, each of which functions as an earning group. Such a team or territory may happen on the basis of goods or market or a mixture of the two with every group tending to function along operational or product lines, but with specific major operations (e.g., finance, human resources, company planning) given centrally, normally at an organizational head office (Miles, 2003).
If change initiatives for the territorial / geographical structure in the organization have arrived with fanfare and faded to obscurity in the past, workers may even see the new initiative as something to merely be endured until they can return to their normal routine. Such cynicism hobbles the success of any current or future change plans. Successful implementation of the Territorial / geographical structure is very much within the grasp of any organization if senior management is willing to think long-term. For change to be sustainable it must be completely integrated into the very structure of the company and its performance system from the CEO to the employees. Business Management must be committed to both the philosophy and the implementation of Territorial / geographical structure (McLean, 2005).
The strategies for the success of Territorial / geographical structure:
Ø Position Territorial / geographical structure as a basic element in the organization’s formal performance management system
Ø Design launch programs to fully integrate outcomes into the core Territorial / geographical structure
Ø Educate & train all managers in effective performance planning and management practices such as how to handle specific Territorial / geographical structure elements
Ø Identify change related performance objectives
Ø Define clear Territorial / geographical structure performance measures for management levels
Ø Tie change outcomes and competencies to manage business performance and its role to organizations change
Ø Express change objectives and descriptions of progress in the language of business
Ø Establish growth strategy in business
C. Product Organization
Product organizational structures do not have standardization of jobs and operations. This framework is most typical in tiny companies and is best utilized to solve basic operations. The framework is completely centralized. The strategic manager does all major decisions and all interaction is accomplished by personal talks. It is specifically helpful for fresh business entities as it allows the founder to manage progress and success (Nadler, 1997).
Henceforth, in order to successfully graft product organizational structures onto a company’s performance system, a strong, efficient performance core must already exist. No organization with a weak organizational structure will ever make product organizational structures work effectively and will only result in frustration and wasted money and that before the company undertakes a change initiative they should first take an honest look at their state of readiness. Most workers have a hard time dealing with product organizational structures, especially the incessant and unpredictable kind that experienced. A core competency for product organizational structures is their capabilities not just to tolerate change, but to actually generate and proactively manage it. If managers lack the skill, it will be difficult for product organizational structures to filter effectively throughout the organization. Thus, there are organizations that are implementing Product organizational structures successfully and reaping spectacular benefits as a result which made an integral part of that business’ operations and the company’s core business performance system (Ashkenas, 2002).
D. Customer Departmentation / Organization
Customer departmentation frameworks possess a specific degree of standardization. They can be used for more complicated or bigger scale companies.
Furthermore, the nature of customer departmentation frameworks within influences the state of adaptation sought. The effective use of customer departmentation frameworks must include culture evaluation and management if strategy is to be successfully adapted to the organization. Burgelman (1991) proposes that customer departmentation results, in part, from retention of those elements that have worked well in the past, and selection of viable new elements, based on administrative and cultural mechanisms. Whereas in the former an organization’s character can be maintained through induced processes, in the latter new autonomous processes will be necessary to foster the new character or elements required and the induced processes concern initiatives that are within the scope of the organization’s current strategy within the organization. The autonomous processes concern initiatives which emerge outside of the current organization realm and that provide the potential for business improvement (Fritz, 1996).
In other cases, customer departmentation frameworks could be as easy as qualitatively determining present existence, while in other cases; it could entail charting the number of occurrences of various events over time. The measurement of these key variables should provide useful information. It is suggested here that customer departmentation frameworks are obtained on key organizational cultural variables as those recommended by Applegate (2005). First, customer departmentation frameworks will illustrate how much of a change is needed as well as identify the areas in which the present culture is lacking. Secondly, the customer departmentation frameworks will isolate key elements for effectiveness in which the corporation is deficient, thus allowing for concentration on a few specific items.
E. Matrix Organization
A matrix framework overlays two company forms in order to exhibit the advantages of both. Some world companies implement a matrix framework that mixes territorial with product teams. The product-based framework enables the organization to explore world economies of scale, whereas the territorial framework manages information close to the necessities of each and every nation. Most companies also possess degrees of matrix framework, implying that every divisional team has particular roles, but some topics must be decided in unison across all of these teams. Rather than mixing two separate frameworks, some matrix frameworks overlap an operational framework with project groups. Workers are tasked to a cross-operational project group, yet they also belong to an established operational group to which they come back when a project is finished.
A matrix framework is facilitated through the selection and placement of new employees whose orientation is congruent with the desired culture. The company was moving into a different market that will hire a number of experts from other companies to help guide the new effort. A new style of manufacturing may call for bringing new employees aboard. This process normally occurs shortly after the employees are hired, and may be a way to gradually inculcate the various work groups with a new culture. A matrix framework may take place formally or informally, possibly through orientation of new employees or through a series of communications to existing employees. A matrix framework may be useful in the organization and maintenance of shared value systems. Thus, culture can be communicated through explicit or implicit means and research shows that implicit forms of communication tend to be more effective in changing culture than explicit forms of communication and the explicit and implicit communication must be relied on to provide external justification for the new strategy and persuade organizational members to adopt the new cultural beliefs and values (Earley, 1997).
Implementing the Organizational Framework
Lawler (2006) states that there are three basic techniques of organizational framework implementation: the top-down approach, the participative approach, and the subculture approach. Top-down or imposed changes in the organizational framework usually result in changes that are difficult to sustain, even though they may be easy to bring about. In other words, top-down approaches may result in overt compliance, but no covert acceptance. Participative approaches to organizational framework change are difficult and time consuming, but the commitment and acceptance to the change is superior to a changed atmosphere which improves performance.
Methods of evaluation of organizational framework could include monitoring, measuring effectiveness, or comparison of elemental frequency with original baseline measures gained during the internal organizational analysis. An increase in the key element frequency combined with a stagnation of organizational effectiveness could mean that the key elements were not defined correctly. The culture, in other words, has changed with minimal or detrimental impact on organizational effectiveness. It is clear, however, that culture can either facilitate or severely hinder a chosen strategy and further understanding of cultural influences may be paramount to full understanding of effective strategic change.
There is a general organizational framework of cultural modification that gives broad theoretical reasoning for an overall process which will necessarily for tailoring a particular situation. Culture modification should not be evaluated as a process for its own sake, but its success or failure should he determined by whether or not this change will enhance organizational effectiveness under a new strategy (Lawler, 2006) as it allows practitioners to understand and organize the constellation of variables that could influence or adversely affect successful business change. Success and failure in a business context are rarely clearly defined and are perhaps the extremes for the business to survive and grow, before succumbing to the temptation of changing the way things are done is increasingly becoming the central challenge facing managements that have enjoyed long-term performance success.
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