Organizations Book – B200 Chapter 11

Organizations Book – B200

Chapter 11

Introduction

Organizational structuring and re-structuring are fundamental to the idea of a

strategic approach to managing human resources.

The main aim of this chapter is to explore how organizational structuring and restructuring

impact upon strategic human resource management. In pursuit of this

aim, this chapter will examine the potential for organizational re-structuring; the

dimensions of structure which are amenable to change; the type of structure

which have been designed; the principles underlying design and re-design

attempts; and we will also explain the key developments by presenting a new

classification of organizational design.

Recent years have been witness to a bewildering array of examples of extensive

drives to re-structure. For much of the twentieth century there seemed to be an

inexorable concentration of power in large corporations.

In order to help manage the large organizations, multi-divisional structures were

created. Such structures were designed to allow whole-company strategic issues

to be handled at the central

‘corporate’ level while developing other major

business decisions relating to marketing, business positioning and the like to the

divisional level.

At the same time, the growth of larger and larger firms and larger work

establishments has halted as the large bureaucracies have

‘downsized’. Along

with the smaller scale have been ushered-in a whole battery of

‘new’ managerial

methods. Flexible organizations, responsive organizations, lean organizations,

process organizations, re-engineered organizations, delayered,

‘flatter’

organizations, empowered, cross-functional teams – these are just a few of the

more significant attempts in recent times to restructure the organization of work.

Changes of these kinds constitute a key element in human resource strategies and

also, in turn, they carry important additional human resource implications.

Organizational structures and SHRM: the background

Central to the very idea of HRM are the ideas of flexibility, responsiveness,

‘

ownership’ of organizational problems by as many employees as possible,

empowerment and the winning of commitment. On the surface at least, each one

of these appears to be the objective of contemporary restructuring attempts.

Organizations in recent years have sought to enhance business and customeroriented

behaviours and priorities through the creation of Strategic Business Units

(

SBUs).

To a large extent the aspirations and principles underlying the recent structural

changes seem to reflect those which also underpin the ideas of HRM. There are

even the same hard and soft logistic at play. From an organizational re-structuring

point of view the

‘hard’ aspects are to be found in the drastic cuts in ‘headcounts’,

the

‘downsizing’ and the ‘outsourcing’.

The soft side of the rationale is to be found in the ideas of

‘empowerment’ the

‘

learning’ that is required to cope with multiple demanding tasks, and the

‘

teamworking’ that is invoked. Both sets of facets appear to constitute, above all,

a critique end of escape from bureaucracy.

Organizational structuring and re-structuring are intimately intertwined with many

aspects of human resource management. Different structures carry implications

for career opportunities, for job design and job satisfaction, for learning and

development opportunities, for power distance, work content and skill levels.

Bureaucracy was used to command and control. Initiative was stifled. In these

ways the departure from the bureaucratic control system could be interpreted as

actually rather more in tune with the principles of human resource management

than would its preservation.

An analytical framework

To assist the analysis in this and the ensuing chapter a conceptual framework can

be suggested, which arises out of the juxtaposition of different dimensions which

appear to have been critical in recent re-structuring attempts.

This figure uses three cross-cutting dimensions. On the top horizontal axis is the

dimension of

‘centralized’ to ‘decentralized’; on the vertical axis is the

dimension from

‘directive’ to ‘autonomous’; and on the horizontal axis at the

base of the figure is the dimension relating to size. For illustrative purposes, a

selection of different organizational arrangements are shown. At the bottom left,

the bureaucratic form is located to suggest a centralized, directive mode.

Ascending the ladder and moving to the right, one progressively moves to

divisonalized arrangements, to the use of strategic business units

(SBUs) and then

to autonomous, empowered teams.

Bureaucracy

The key attributes of bureaucracy in the descriptive, social science, sense

can be summarized as follows:

1.

A clear division of work with stipulated boundaries to responsibilities.

Officials are given authority to carry out their assigned functions.

2.

Referral by role occupants to formal (written) rules and procedures which

ensure predictability and routinization of decisions.

Small

Large

Rules/

Command

Directive

Autonomous

Centralized Decentralized

Size

Bureaucracy

Divisionalized

Structures

SBUs

De-structured

organizations

Downsized/lean enterprise

3.

A well-defined hierarchy of authority.

4.

Appointment to posts arranged not through patronage or bribery but on

the basis of technical competence.

5.

A system of rules with formal (written) documentation of actions and

decisions.

The model in its totality gave rise to impersonality – this was one of its untended

characteristics. It had the advantage of overcoming nepotism, favouritism and

arbitrary decision making. The principles seemed well suited to the administrative

needs of the new democratic states and the emerging large industrial enterprises.

Three sets of ‘unanticipated consequences’ and ‘dysfunctions’ of bureaucracy

have been pointed out by various organizational analysts.

1.

The first derives from the emphasis on control. This can prompt rigidity of

behaviour and defensive routines.

2.

The second focuses on the implications for the behaviour of subunits.

Division of task and responsibility can elevate departmental goals above

whole system goals – that is, lead to suboptimizing behaviour.

3.

And thirdly, as a result of the impersonality of rules the minimal

acceptable standards can become transformed into targets and behavioural

norms. Rules and procedures can also become ends in themselves.

Downsizing and lean production

Faced with rapidly changing environments many employers have responded by

downsizing and in the process have also retreated from long term commitments to

employees, which the internal labour market model allowed and facilitated.

In the United States it is estimated that over one million middle managers lost

their jobs as organizations flattened organizational structures. The strategy of

many companies over the past few years has been to reduce their size;

‘take costs

out of the business

’; increase productivity by having fewer people undertake the

same or even more work; and re-focus activity on the core business. Senior

executive were rewarded for so doing; share prices tended to rise when these

steps were taken and top management salaries increased.

Devolved management: divisionalization and strategic business units

Perhaps the most obvious way to respond to the catalogue of problems associated

with bureaucracy is to seek in one way or another to

‘decentralize’.

Be that as it may, for the past 20 years or so the cycle would seem to have been

very much on the downswing – that is, in favour of decentralized units. The

tendency began with a wholesale switch to divisional zed structures.

Hamel and Prahalad argue that senior managers should ‘seek to identify and

exploit the interlink ages across units that could potentially add value to the

corporation as a whole.

The devolution has been seen as part of a move to enable personnel practitioners

to play a greater strategic role and yet the logical consequence of devolution is to

make the implementation of the strategy extremely difficult.

‘De-structured’ organizations

By this term we mean to cover the collection of types of structural innovations

variously described as high performance organizations, knowledge creating

companies, empowered teams, ad hoc, boundaryless, and process-based

organizations – among other similar terms.

Despite the range of titles, the underlying ideas are similar: they point to a

departure from traditional bureaucratic forms with their formal rules, hierarchy of

office and vertical communication, and circumscribed role responsibilities and

celebrate instead the breaking down of internal barriers and formal structures.

The new watchwords are teams

(preferably cross-functional), lateral

communications, the minimization

(if not outright removal) of hierarchy, and the

sparse use of rules.

With some variance in emphasis, the same basic tents can be found underpinning

the so-called

‘high performance work systems’ and the ‘knowledge creating

companies

’.

The Boundaryless Organization and sub-title in Breaking the Chains of

Organizational Structure. No longer will organizations use boundaries to separate

people, tasks, processes and places; instead, they will focus on how to permeate

those boundaries – to move ideas, information, decisions, talent, rewards and

actions where they are most needed. This amounts to a

‘paradigm shift’ towards

boundaryless structures.

The organizational attributes which formerly conferred advantage can, under the

new conditions, constitute disabling impediments.

In summary from the contrast

can be depicted in the two lists below:

Old success factors:

-

Size.

-

Role clarity.

-

Specialization.

-

Control.

New success factors:

-

Speed.

-

Flexibility.

-

Integration.

-

Innovation.

For example

, according to Nonaka and Takeuchi (1995), the source of corporate

success under contemporary conditions resides in the ability of a company to

create new knowledge, disseminate it throughout the organization, and embody it

in new services and products. Japanese companies

such as Canon, Matsushita,

NEC, Kao and Sharp

have been identified as special in their use of knowledge

management to create new markets and develop many new products.

Making choice about organizational structure

What are the factors affecting the choice of the organization’s structure?

1.

The factors which could be said to constitute ‘rational’ considerations.

These include the desire to hold individuals and sub-units accountable for

the use of resources and the achievement of targets. Lines of reporting and

the use of job descriptions are the kind of devices used for this purpose.

Another criterion is usually to ensure the flow of communication.

2.

It has to be realized that particular structural forms can also arise from

reasons other than the technical reasons suggested above. Top managers

may judge it safest simply to follow the ‘industry recipe’.

3.

Various contingent factors such as technology have been argued as

exerting an influence on organizational structure. Rarely, if ever, is this a

determining factor, but the scale required in technological investment, in

say an oil refinery, is likely to have some influence in the nature of the

organization which is formed in order to exploit those technological assets

profitability.

4.

In a global marketplace, the need to ‘act local’ and yet take advantage of

the benefits of a transnational organizational resource is also likely to

influence organizational structure. Organizational ‘size’ as a possible

contingent factor has long been a topic of contention.

In practice, managers are usually faced with a need to balance series of divers and

sometimes conflicting considerations. Centrally, there is a need for balance

between differentiation and integration. Formal organizations are notable for the

way in which they divided-up tasks and responsibilities

(differentiation) and yet

also require some mechanisms for co-ordinating and controlling in order to pull

these separate activities together

(integration).

A classic dilemma is between structuring in the basis of management function or

on the basis of products. Under the former, each function

such as production,

marketing, finance, and sales

has its own hierarchy.

It is particularly favoured by small and medium sized enterprises. The emphasis is

upon technical quality and cost control. On the positive side it is the least

complex of structures; it allows economies of scale; enables in depth skill

development, achievement of functional goals and clear accountability.

On the negative side it is slow to respond to environmental change, is poor at

encouraging horizontal co-ordination and communication and is not conducive to

innovation. It also tends to encourage a restricted view of organizational overall

goals.

Product-based structures are more likely to be found in large organizations and in

environments of moderate to high uncertainty. They are more able to respond to

unstable environments, and the units should be better able also to tailor

themselves to client’s needs.

On the other hand, such structures tend to involve some duplication of resources,

they fail to fully exploit economies of scale in functional departments and, if fully

deployed in a pure from may sacrifice in-depth technical competence.

Credit:ivythesis.typepad.com

https://researcharticlebase.blogspot.com/2011/09/organizations-book-b200-chapter-11.html