Understanding Organizational Structures, Essay Example

Chapter 11 discusses the different forms of organizational structures. It is evident that the structure the company selects depends on the size of the organization. Further, the more mechanistic the operation is the more formal the structure will be and the higher the level of formalization is. As an example: a company that manufactures microchips of standards performance will have a set of rules for processes and quality check. On the other hand, rules for a personal wedding planner (organic organization) will be less visible, as the end product is influenced by customer preferences.

The organizational structure is determined by work specialization, chain of command, span of control, level of centralization, and formalization. Company structures can be simple (for smaller organizations), bureaucratic (mostly for mechanistic organizations), functional (for companies focusing on processes and roles). Further, more complicated company structures include multidivisional, product, geographic, client based, or matrix structures. In the case study of IBM, it is evident that restructuring of the processes and the entire organization was needed to maintain the company’s competitive advantage. Customers’ need for experts in certain locations called for the creation of “competency centers”.

Restructuring can have a negative impact on job performance. Employees often forget about the organization’s mission and their role to serve this mission, and motivation often hits all time low. As a consequence, restructuring also negatively impacts organizational commitment. In some cases, however, restructuring is necessary, as external market conditions or competitors’ actions, regulations call for the creation of new roles or departments, while others would need to be merged to make operation more effective within the organization. In case a company expands its operations overseas, it needs to create regional management teams that focus on local challenges.

The main takeaway from this chapter is that companies’ structure does not only define individual roles, but also the chain of command, rules, standards, and interactions. While the chapter does not cover this in detail, it is likely that the way how companies communicate restructuring with employees has an influence on the impact on performance and organizational commitment. The chapter also states that it is the management’s responsibility to work on reducing the stress level of employees and providing them with a sense of control.