comparison between traditional and new organization
Content
PRINCIPLES AND PRACTICE OF MODERN BUSINESS
ASSIGNMENT -1
COMPARISON BETWEEN TRADITIONAL AND NEW ORGANIZATION
INTRODUCTION
The traditional organizational structure was established and became popular in the first part of the 20th century, a time, where multilayered bureaucracies were seen as the most effective and efficient approach to manage large, complex corporations. Constraints on transportation, modest education levels among the workforce, and the limited technical ability to collect, display, and transmit information were but some of the factors that led to the creation of a strong, centralized management system where managers did the thinking and workers were expected to do the assigned work without a question. The traditional organization was therefore causal and goal orientated. This means that the incentives and objectives could be clearly defined and the controlling was easy, since everything in the business process was predictable. The traditional model of an organization serves to establish managerial control, provide workers with job instructions and enables managers to gather information for planning. Managers run the organization by hierarchy, authority, control and rules. We could compare the traditional model to effective, well-built machines, with clearly differentiated functional components working reliably and timely accurate to accomplish predetermined goals, for example efficiency and productivity. The modern organization on the other hand emphasis on strategic management and takes the growth of the decentralized organization into perspective. Motivation and creativity as well as the influence of politics and power, force organizations to undergo a drastic structural change. The informational flow in the modern organization is not directed in just one way. This means that a communication between the management and the workforce can take place. In contrast to the traditional organization, the modern organization has variables instead of defined objectives that lead to more complex and diverse structures. The modern organization also has fewer layers than the traditional structure. This means that the hierarchy is not so complex and therefore not so specifically defined. This makes it more difficult for the management and for department managers to control and regulate their departments, since the chain of command is not as clear as in the traditional organization. In modern organization the goals are not as causal as in traditional organization that means that they are more diverse and are influenced by a lot of factors, such as strategic planning, teamwork, creativity and individual responsibility towards the incentive of the organization itself. By clearly defining the organizational structure of an organization managers have the ability to plan
strategic maneuvers. Companies who clearly define their organizational structure and post their Organizational flow chart, along with the job descriptions and responsible authorities in each department of the corporation, can be sure that the employees and therefore also the management can establish a better communication and working relationship. This enables a clearly defined structure, where the duties an, guidelines, responsibilities and hierarchical structure, and therefore the own position in the company, are easy to see. This helps the management and also the workforce to understand the company and to know what place they hold in the corporation. Problems will always occur when managers don't know their competences or aren't sure what the structural proceedings expect from them regarding their function and authority. This has great impact on the productivity of an organization and should therefore be clear.
STABILITY TO DYNAMIC
Traditional organizations are stable in nature which has so many demerits. Traditional organization is a closed system which are not influenced by and do not interact with their environment. In contrast, open systems dynamically interact with their environment. Today when we call organization from open systems, we mean open systems, that is, an organization that constantly interacts with its environment. An organization takes in inputs (resources) from the environment and transforms or processes these resources into outputs that are distributed into the environment. The organization is ³open´ to its environment and continually interacts with that environment.
ENVIRONMENT
Systems INPUTS
Raw Materials Human Resources Capital Technology Information
TRANSFORMATION
Employees work activities Management activities Technology and operations method
OUTPUTS
Products and services Financial results Information Human results
Feedback
ENVIRONMENT
Functioning of open system
INFLEXIBLE TO FLEXIBLE
Earlier the structure and processes in organizations were stable for a long period of time and change took place only occasionally. So, there were long periods of stability punctuated by transitory changes. On the contrary, in the present times, change is a continuous process. Organizations are required to continuously improve upon their competitive advantage and are therefore in a permanent state of flux. Periods of stability are quite rare. Employees are required to constantly update their knowledge and skills to cope with the changing business trends. For example, companies like ABN Amro, Caterpillar and Chrysler are training their production employees to operate computerized production equipment. The job description of an employee does not remain the same as it was at the time of his recruitment. Earlier, an employee remained in the same work group that he was assigned at the time he joined the organization. However, in modern organizations, there are no permanent work groups. They consist of teams which are formed by taking members from different departments depending on the project requirements. Thus, as the job assignments of employees change from time to time, they have to mould themselves to get attuned to the new work culture. Organizations themselves are undergoing various changes - divisions are being reorganized, businesses processes are being reengineered, non-critical activities are being outsourced, and permanent employees are being replaced with part-timers and freelancers Because of the dynamic business environment and the need for constant change in organizations, managers can no longer afford to have pre-set notions on any matter. They have to be spontaneous, and flexible enough to quickly adapt themselves to change and help others .to change too. OB equips managers with understanding of intricacies of change in a better way that in the long run enables them to shape the organizational culture.
INDIVIDUAL ORIENTED ± TEAM ORIENTED
In traditional organization it is individual oriented wok. The manager itself will do all the work in the organization and the employees are just doing what manager says to them. But in modern organization it¶s a team oriented work, here managers and employees doesn¶t have differences. This team work has lot of advantages which helps to achieve the organizational objectives effectively and efficiently.
Advantages of Teamwork in Business
There are numerous advantages of teamwork in business. Some of the genuine advantages of teamwork have been discussed below. The following advantages of teamwork are not only applicable for businesses but they can also be noticed in departments that function with the help of united efforts. United Effort Teamwork in any business ensures that the task at hand is executed with the help of a united effort. The significance of the united effort is that the business organization that is concerned, functions like a single person, thereby enhancing the quality of the operations. There are, also, some other related factors, such as ensuring equality in profit sharing and division of work. It also helps the members/owners of the organization to maintain a very good system that designates appropriate authority and responsibility. A united effort, also, reflects good team building and team spirit. Division of Work Teamwork ensures that there is an equal and fair distribution of work within the
organization. A fair work distribution ensures that every person or every working unit executes any task at hand, with the best possible efficiency. The division of work, also, ensures that the work is done on time and deadlines are not extended. Reduction of Risk when the task at hand is executed with the maximum possible efficiency, there is a reduction in risk. The best advantage of teamwork in business is that the burden of failure is borne by all the members of the team and it does not fall on the shoulders of just one person. Specialization in Work Another very good advantage of teamwork in business is that a person is able to specialize in one specific field. That is, he can optimize the quality of the work that he does, and can also work with the maximum possible efficiency. This ensures a high quality output from all individuals and the whole team. Subordination of Personal Interest to Organizational Interest. One of the biggest advantages of teamwork is that personal interest is subordinate to organizational interest. This ensures that all the team members put in the maximum possible efforts into their work, thereby ensuring a high quality and timely output. You must have noticed that the list of advantages points out to two basic facts that work when distributed reduces one person's workload and a reduced amount of work ensures optimization and efficiency. The following points emphasize the importance of teamwork in business. Let's go over them. Timely Completion Teamwork is one of the best ways to ensure the timely completion of any work, with the maximum possible efficiency. This ensures that the clients of the company are bound to come back to your organization with a new project or contract. High Quality Output Teamwork, by default, ensures high quality output that makes the client happy. It also reflects the sincerity of the team members. Goodwill and Reputation Teamwork, also, increases the goodwill and reputation of a business. The goodwill, in fact, is a tangible asset of any business that plays a highly instrumental role in bringing in more customers and public trust.
Unification of Merits. The indirect advantage of an effective teamwork is that there is unification of the merits of the team members, and on the whole, the business organization, as a team, does not depict any demerit.
In today's world, the importance of teamwork in business is always felt because of demand for efficiency and timely execution or work. It is, thus, very important for any business organization to work, not as a group of people with different motives and objectives, but as a group of people with one motive and objective, and a soul that reflects the image of success!
PERMANENT JOBS ± TEMPORARY JOBS
Temporary jobs are a new concept which introduced along with the new organizations. To many people, a temporary position does not sound very appealing. Some consider temporary jobs to be unskilled labor, tedious work, or just a waste of time. People with this negative attitude towards temporary positions all share one common characteristic: THEY ARE WRONG. Temporary jobs are not a waste of time. Besides providing income, temporary jobs can be used as valuable career tools. This article discusses the many benefits of temporary positions. Once you recognize the advantages of temp jobs, you can then begin to use them to enhance or build your career. These four topics that will be covered: 1. Money Matters 2. Resume Reinforcement 3. Temp to Impress 4. Career Sampling 1. MONEY MATTERS Let's be realistic, money is important. No matter how many times you say, "Money isn't everything," you can't change the fact that money matters. There is no shame in taking on a job to obtain needed cash. No matter how negative your attitude towards temp jobs is, it is impossible to deny that they are often a good source of income.
Good jobs don't just grow on trees so that people can come and pick the one they like best. When no viable alternatives exist, temporary positions are a fantastic Way to earn money. Temp jobs are ideal for students. When you have class during the week a steady job can be hard to get, but a temp job might only be for a day. Also, temp jobs often fit In well with an evening or weekend class schedule. 2. RESUME REINFORCEMENT If you are currently out of work, chances are you suffer from a disease that often strikes the unemployed: resume decay. When out of work for an extended period of time, people often concentrate their efforts solely on finding a new job. Unfortunately these people fail to recognize that their free time should also be used for strengthening their resumes. Temporary positions give a person the opportunity to strengthen his/her resume through experience and education while also providing a source of income. Temporary positions are a fantastic way to gain experience within a particular industry. When full time positions are tight, a temp job may be your best chance at learning industry basics. Moreover, you will already be an experienced worker when a full time position becomes available. Temp jobs are a quick way to pick-up new skills or to heighten skills you already possess (typing, filing, book-keeping, etc.). More importantly, as a temporary you may be required to use various professional software. Proficiency in current software applications looks great on a resume! If you are not working full time or are not in school, your resume may look sparse. A recruiter evaluating your resume may assume you did nothing during this time. Temporary positions are good for filling these time gaps in your resume. 3. TEMP TO IMPRESS Despite what many people think, a temporary position is NEVER a carefree, zero responsibility job. Though things may be slightly more relaxed as a temp, there is a secret that most people don't realize: a temp job may lead to much more. If you are working with others or report to a manager, you are being evaluated. People all around you are making mental notes about your knowledge, skills, personality, friendliness, diligence, and behavior. Use this to your advantage: Occasionally, a temporary position turns into a position that needs to be filled permanently. Even if you are not explicitly told that your job is temp-to-hire, You may have shot at the permanent position if you impress the right people.
Temp jobs give you the opportunity to meet and rub elbows with individuals in a particular industry. You never know if a co- worker might someday be in charge of recruiting or make a recommendation for a new employee. Often times, as a person develops their career map he or she realizes that they are far off course. This perfectly normal, but it also means that getting on the right road will require a change of direction. 4. CAREER SAMPLING It may seem obvious, but never lose sight of the fact that a temporary job is temporary. This gives a person much more flexibility than one would have in a permanent position. No matter how horrible the job may seem, you can rest easy knowing you are not stuck in one place. More importantly, people often don't know what industry or career they would like to pursue. Temping gives an individual the option to sample a wide array of jobs. It is the perfect way to gain insight into a job or field
COMMAND ORIENTED TO INVOLVEMENT ORIENTED
Sociologists, industrial relations researches, organizational scientists, and policymakers who have studied this trend agree that leaders and managers of U.S. companies are climbing abroad the bandwagon of worker participation in their urgent attempts to maintain competitiveness under changing economic circumstances. Employers believe that when workers participate in making decisions, when they gain opportunities to apply their tacit knowledge to problem solving, and when they acquire responsibility for designing and directing production processes, they feed into an infrastructure enabling firms to respond to shifting market and product demands in a rapid and timely way. The introduction of management-initiated employee involvement programs (EIPs) has inspired a significant body of research by sociologists who study work, the labour process, organizations, and industrial relations. By and large, these researches have been skeptical about workers¶ commitments and consent to such participative
programs, suggesting that demand for participation thinly veil a reality of hard work with fever resources, leaving workers themselves suspicious of such reform.
Other advantages of employee involvement
Effective Decision Making Working together in a team environment can create more than one solution to a problem. Making an informed decision is based on considering several possible scenarios, and a team-based organizational structure can provide multiple opinions and insights. Teams include individuals with different personalities and backgrounds which can produce ideas and solutions that one person could not do alone. All employees have their own strengths and weaknesses, so they can take those qualities to create the best outcome possible. Organizations have discovered this advantage and have found this structure to be extremely effective when it comes to making important decisions. Empowers Employees In a team structure, employees have more influence when it comes to planning and completing various projects. Many times the executive will assign a specific goal based on collected data; the teams are responsible for using the resources available to them and working together to achieve that goal. When employees find success by working as a team, they become more confident in their abilities and become more productive and satisfied in their role. Empowerment also produces more innovative ideas and higher quality work. Employee involvement involves the creation of an environment wherein people are involved in the decision making process that have an impact on the decisions and the actions that have a bearing on the jobs. Employee involvement is management and the leadership philosophy of how the people are involved in the functioning of the organization, it is not a goal or a tool which is used it is just mode by which the employees are engaged to have a role to play in the decision making process. In short it is an effort to pool in the ideas of the employees that can help in the achievement of the desired results. The aim of the organizations is to involve maximum number of the people in the decision making process of all the work aspects of the organization. The benefits of
employee involvement are increase in ownership and commitment, retention of the employees; it creates a harmonial environment, helps to achieve the employee satisfaction. It is one of the most factors that help to promote team building. However there is a big question mark on the fact as to how the process of employee engagement can be inculcated, the answer can be suggestion systems, manufacturing cells, work teams dedicated towards the involvement of employees in the decision making process, continuous improvement meetings, discussions about the improvement requirements, discussions between the supervisor and the immediate assistant within a team. However the effective working of the employee involvement process is the effective training of the teams in proper communication and even the problem solving. There is a good flow of ideas even when there are some of the motivational rewards involved, when the gains that have been achieved through the decisions are shared can also act as motivating effect. The employee involvement model developed by Tannenbaum and Schmidt in the year 1958 acts as an effective guide for the accomplishment of the employee involvement. The model provides the method which the organization is involved in the decision making process. There are four levels which the organizations follow depending on the mode of operation.
*Tell:
In the telling kind of the leadership the leader makes the decision without the consultation of the leader and informs the decision to the staff. The leader provides complete direction to the employee. The tell kind of strategy is useful on strategies like the safety concerns, government legislations and for the decisions that do not require any employee input. *Sell: In the sell strategy the decision is taken by the company and then an attempt is made to communicate the decision so as to gain commitment from the staff. This strategy is used when the employees do not have much influence over the decision, but there is a requirement of complete employee commitment. *Consult: In the employees are invited to pool in their opinions about the decision however the final decision authority rests with the supervisor himself. *Join: In this the employee and the supervisors take the decision in consensus. Both of them have an equal voice in the decision making process.
MANAGERS TO EMPLOYEES IN DECISION MAKING
Participative (or participatory) management, otherwise known as employee involvement or participative decision making, encourages the involvement of stakeholders at all levels of an organization in the analysis of problems, development of strategies, and implementation of solutions. Employees are invited to share in the decision-making process of the firm by participating in activities such as setting goals, determining work schedules, and making suggestions. Other forms of participative management include increasing the responsibility of employees (job enrichment); forming self-managed teams, quality circles, or quality-of-work-life committees; and soliciting survey feedback. Participative management, however,
involves more than allowing employees to take part in making decisions. It also involves management treating the ideas and suggestions of employees with consideration and respect. The most extensive form of participative management is direct employee ownership of a company. Four processes influence participation. These processes create employee involvement as they are pushed down to the lowest levels in an organization. The farther down these processes move, the higher the level of involvement by employees. The four processes include: 1. Information sharing, which is concerned with keeping employees informed about the economic status of the company. 2. Training, which involves raising the skill levels of employees and offering development opportunities that allow them to apply new skills to make effective decisions regarding the organization as a whole? 3. Employee decision making, which can take many forms, from determining work schedules to deciding on budgets or processes. 4. Rewards, which should be tied to suggestions and ideas as well as performance.
There is much discussion in modern management, and in Extension, about "pushing decisions down to the lowest level." However, there is also much cynicism among employees in Extension about executive decisions and how employees are involved in decisions. A "ladder of decision making" is offered as a typology of seven levels of decisions. From highest to lowest, the ladder incrementally shifts the responsibility to make the decision from the executive to employees. Potential benefits of the ladder include improving the quality of Extension employee¶s participation and reducing their cynicism.
Level 1. Executive Decision Level 2. Executive Decision with Report Level 3. Consultative Decision Level 4. Employee Recommendation Level 5. Delegated Decision (with Veto) Level 6. Delegated decision (w/o Veto) Level 7. Employee Decision Responsibility for the Decision
Description of Levels Level 1. Executive Decision. The executive makes the decision and does not inform employees, except possibly through a future meeting or conference or in a periodic report or newsletter. Level 2. Executive Decision with Report. The executive makes the decision and reports, in the near future, to employees. The timely report is significant as (whether as a courtesy or warning). It provides some opportunity for employee feedback prior to implementation of the decision. Level 3. Consultative Decision. The executive asks employees for their ideas, at least in a general way. At best, the employees are engaged explicitly in the steps in the decision-making process (Gallagher, 2000) and can influence the decision with the strength of their statement of values, their information, and their alternatives. The decision, however, rests with the executive. Level 4. Employee Recommendation. The executive assigns or delegates the responsibility to conduct the decision-making process, the four steps, to the employees. The employees offer their recommendation(s) to the executive who makes the decision. Level 5. Delegated Decision with Veto. The executive delegates the authority to the employees to make the decision but retains the authority to exercise veto power if
necessary. (Such a veto could indicate a flawed problem-solving process that failed to engage the executive in interim reviews.) Level 6. Delegated Decision without Veto. This is the same process as above; however, the employees make the decision and the executive supports the decision through to a future evaluation period, perhaps a year or two for most programs. Level 7. Employee Decision. The employees make the decision and do not inform the executive, except perhaps as part of the normal reporting protocols, such as in periodic meetings or annual report.
RULE ORIENTED TO CUSTOMER ORIENTED
Modern business has given more importance for customer satisfaction which is a main factor for the development of the organization. Only with the rules an organization cannot establish, than rule oriented, customer orientation have more importance.
Exceptional customer service results in greater customer retention which in turn results in higher profitability. Customer loyalty is a major contributor to sustainable profit growth. To achieve success, you must make superior service second nature of your organization. A seamless integration of all components in the service-profit chain ± satisfaction, value, customer satisfaction, customer loyalty, and profit and growth ± links all the critical dynamics of top customer service. In today¶s markets characterized by harsh competition companies must not only be well prepared to answer to customers current needs, they also need to be prepared for the future ones. A company that once was market leader of its industry can quickly become a market follower if the management team is unaware of how customers value the offering. The trend of today towards increasing the service to customers, raising the level of customization, and providing an experience for the customer has been called a paradigm shift toward customer orientation. The purpose with the thesis is to investigate how the organizational structure of a company hinders the customer orientation of a global marketing and sales organization expressed in symptoms and causes. In order to study the subject a case study was conducted on a large Swedish industrial company. 20 individual semi-constructed interviews were conducted with the top management team of the company. The result from the empirical study was that the organizational structure hindered the customer orientation of a company and that there is interplay between the organizational structure of the company, the current business situation of the company, and the customer orientation of company. Communication patterns, trust, customer ownership and responsibility, integration, coordination, power, and motivation can be mentioned as important organizational factors that were affected by the organizational structure. Customer Expectations Customer is defined as anyone who receives that which is produced by the individual or organization that has value. Customer expectations are continuously increasing. Brand loyalty is a thing of the past. Customers seek out products and producers that are best able to satisfy their requirements. A product does not need to be rated highest by customers on all dimensions, only on those they think are important.
The purpose of a business is to create and keep a customer. If a business successfully creates and keeps customers in a cost-effective way, it will make a profit while continuing to survive and thrive. If, for any reason, a business fails to attract or sustain a sufficient number of customers, it will experience losses. Too many losses will lead to the demise of the enterprise. According to Dun and Bradstreet, the single, most important reason for the failure of businesses in America is lack of sales. And, of course, this refers to resale¶s as well as initial sales. So your company¶s job is to create and keep a customer, and your job is exactly the same. Today, "it would be difficult to find a company that doesn't proudly claim to be a customer-oriented, customer-focused, or even-customer driven enterprise. But look closer at how these companies put their assertions into practice, and often you discover an array of notions and assumptions that range from superficial and incomplete to misguide.´Some examples of customer satisfaction illusion include: y believing that by conducting market surveys and focus groups you know all there is to know about your customers y believing that investing in awareness programs for employees and putting customers' pictures on the cover of your annual report is enough to achieve customer satisfaction y believing that the job of CEO is done by giving his or her direct phone number to some valued customers
HOMOGENEOUS TO DIVERSE WORKFORCE
Diversity in the workplace is an important issue in business. A diverse workforce actually offers a number of benefits to the company. Benefits of a Diverse Workforce It is believed that companies employing a diverse workforce would be in a better position to understand the demographics of the customers they serve much better making them better able to thrive in the market place that companies that hire only a limited group of employee demographics. Also, a company that supports diversity of workforce is better able to address employee satisfaction and retention issues. An important part of diversity in the workplace is how a company uses its diversities. This is called inclusion. If the company has a diverse workforce yet the employer does not take advantage of the wide range of experience within the organization, then it could not enjoy the advantages offered by background diversity. Diversity issues change with time. Implementation of diversity is more often than not limited to the human resources department. UK companies see it as a tool to a good economic case that enables them to reach new markets. Diversity then becomes an extra marketing tool to bring in new customers. Difference between Superficial and Deep-level Diversity Diversity could either be superficial or deep-level. Superficial diversity refers to differences in gender, race and nationality. Deep-level refers to differences brought about by knowledge and cultural values. It is often noted that in a company setting, increased interaction among a diverse workforce lessens the significance of superficial diversity and increases the importance of deep-level as the team learns how to function as a unit. According to studies, in deep-level diversity, the informational diversity or the differences in knowledge contribute positive results to the performance while value diversity or differences in cultural views could lead to negative results. In a group setting though, members tend to discuss what they have in common rather than their differences. In order to encourage sharing of unique knowledge, it is important to let the group know who has knowledge on certain things. Also, instead of group information sharing, debate should be encouraged so as to allow members
to challenge the ideas of other members. Processing deep information that way could lead to positive results. Learning to accept the diversity and uniqueness of each employee will in turn generate feelings of trust and respect that could further lead to more productivity among employees, higher morale in the workplace and less conflicts and the time involve resolving them. Diversity is a fact of life. Learning to deal with it effectively and not fight it is the best way to advance the causes of business. Here are 13 Benefits of a Diverse Workforce: 1. Improves corporate culture 2. Improves employee morale 3. Leads to a higher retention of employees 4. Leads to an easier recruitment of new employees 5. Decreases complaints and litigation 6. Increases creativity 7. Decreases interpersonal conflict between employees 8. Enables the organization to move into emerging markets 9. Improves client relations 10. Increases productivity 11. Improves the bottom line 12. Maximizes brand identity 13. Reduces training costs
HIERARCHICAL-LATERAL RELATIONSHIPS
A hierarchical organization is an organizational structure where every entity in the organization, except one, is subordinates to a single other entity. This arrangement is a form of a hierarchy. In an organization, the hierarchy usually consists of a singular/group of power at the top with subsequent levels of power beneath them. This is the dominant mode of organization among large organizations; most corporations, governments, and organized religions are hierarchical organizations with different levels of management, power or authority. For example, the broad, top-level overview of the general organization of the Catholic Church consists of the Pope, then the Cardinals, then the Archbishops, and so on. Members of hierarchical organizational structures chiefly communicate with their immediate superior and with their immediate subordinates. Structuring organizations in this way is useful partly because it can reduce the communication overhead by limiting information flow; this is also its major limitation. In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other. At each stage in the chain, one person has a number of workers directly under them, within their span of control. A tall hierarchical organisation has many levels and a flat hierarchical organisation will only have a few. A traditional hierarchical structure clearly defines each employee¶s role within the organisation and defines the nature of their relationship with other employees. Hierarchical organisations are often tall with narrow spans of control, which gets wider as we move down the structure. They are often centralised with the most important decisions being taken by senior management. In the twentieth century as organisations grow bigger, hierarchical organisations were popular because they could ensure command and control of the organisation. However with the advent of globalisation and widespread use of technology, in the 1990¶s tall hierarchical organisations began to downsize and reduce their workforce. Technology was able to carry out many of the functions previously carried out by humans.
Disadvantages of Hierarchical Organisations y The organisation can be bureaucratic and respond slowly to changing customer needs and the market within which the organisation operates.
y
Communication across various sections can be poor especially horizontal communication. Departments can make decisions which benefit them rather than the business as a whole especially if there is Inter-departmental rivalry.
y
A team-based lateral organizational structure is a relatively new concept that gives less decision-making power to executives and more responsibility to employees. Companies that choose this type of structure have fewer management levels and fewer regulations, allowing the employees to work together toward the success of the business. Advantages to this structure include improved communication, employee empowerment and effective decision making. Team-based lateral organizational structures benefit both the organization and the employees. Improved Communication This structure also helps to improve communication and cooperation between the different levels of power. With less management involved and employees working together in groups, there is more direct communication that reduces the chances of mistakes due to a misunderstanding. This type of structure also requires companies to invest in quality training to ensure quality communication and team-building skills. This training educates employees on various topics including conflict management, diversity training and virtual communication ethics. One of the newest forms of business organization is the team-based lateral organizational structure. A team based lateral structure is an organizational chart that
groups employees on the same employment level into teams that perform specific job functions. This structure combines the low-overhead, minimal management structure of a lateral structure with the team efforts common to a hybrid structure. There are numerous advantages to a team-based lateral organizational structure. Less Overhead Management A team-based lateral organizational structure is similar to a traditional lateral structure, in carrying less overhead management to cause delays in decision-making and implementation of best practices or new ideas. With no need to climb a lengthy chain of command to receive approval for ideas or changes to the business model, a team-based lateral structure can make necessary changes on the fly and allow for rapid response to different market conditions. This is especially important in today's digital economy. Teamwork By spreading the responsibility among team members rather than having a single individual in charge of decision-making or management of a business area, decisions can be reached by a quorum and can take place rapidly as team members can be assigned to research areas of need, implement changes, or work on other problems while other team members continue to focus on the current situation or business practice. Decisions made by a team are sometimes better thought out and more effectively implemented than decisions made by a single individual. Eliminate Delays A team-based lateral organizational structure can eliminate traditional scalar chains of command, which can cause delays and worker frustration with cumbersome communication lines. A team can more effectively raise concerns to management without appearing to be disgruntled or unnecessarily upset, and without opening themselves as individuals to repercussions by management for the issues raised by their team. This can make individuals more willing to speak out about problems or inefficiency in the workplace.
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ASSIGNMENT -1
COMPARISON BETWEEN TRADITIONAL AND NEW ORGANIZATION
INTRODUCTION
The traditional organizational structure was established and became popular in the first part of the 20th century, a time, where multilayered bureaucracies were seen as the most effective and efficient approach to manage large, complex corporations. Constraints on transportation, modest education levels among the workforce, and the limited technical ability to collect, display, and transmit information were but some of the factors that led to the creation of a strong, centralized management system where managers did the thinking and workers were expected to do the assigned work without a question. The traditional organization was therefore causal and goal orientated. This means that the incentives and objectives could be clearly defined and the controlling was easy, since everything in the business process was predictable. The traditional model of an organization serves to establish managerial control, provide workers with job instructions and enables managers to gather information for planning. Managers run the organization by hierarchy, authority, control and rules. We could compare the traditional model to effective, well-built machines, with clearly differentiated functional components working reliably and timely accurate to accomplish predetermined goals, for example efficiency and productivity. The modern organization on the other hand emphasis on strategic management and takes the growth of the decentralized organization into perspective. Motivation and creativity as well as the influence of politics and power, force organizations to undergo a drastic structural change. The informational flow in the modern organization is not directed in just one way. This means that a communication between the management and the workforce can take place. In contrast to the traditional organization, the modern organization has variables instead of defined objectives that lead to more complex and diverse structures. The modern organization also has fewer layers than the traditional structure. This means that the hierarchy is not so complex and therefore not so specifically defined. This makes it more difficult for the management and for department managers to control and regulate their departments, since the chain of command is not as clear as in the traditional organization. In modern organization the goals are not as causal as in traditional organization that means that they are more diverse and are influenced by a lot of factors, such as strategic planning, teamwork, creativity and individual responsibility towards the incentive of the organization itself. By clearly defining the organizational structure of an organization managers have the ability to plan
strategic maneuvers. Companies who clearly define their organizational structure and post their Organizational flow chart, along with the job descriptions and responsible authorities in each department of the corporation, can be sure that the employees and therefore also the management can establish a better communication and working relationship. This enables a clearly defined structure, where the duties an, guidelines, responsibilities and hierarchical structure, and therefore the own position in the company, are easy to see. This helps the management and also the workforce to understand the company and to know what place they hold in the corporation. Problems will always occur when managers don't know their competences or aren't sure what the structural proceedings expect from them regarding their function and authority. This has great impact on the productivity of an organization and should therefore be clear.
STABILITY TO DYNAMIC
Traditional organizations are stable in nature which has so many demerits. Traditional organization is a closed system which are not influenced by and do not interact with their environment. In contrast, open systems dynamically interact with their environment. Today when we call organization from open systems, we mean open systems, that is, an organization that constantly interacts with its environment. An organization takes in inputs (resources) from the environment and transforms or processes these resources into outputs that are distributed into the environment. The organization is ³open´ to its environment and continually interacts with that environment.
ENVIRONMENT
Systems INPUTS
Raw Materials Human Resources Capital Technology Information
TRANSFORMATION
Employees work activities Management activities Technology and operations method
OUTPUTS
Products and services Financial results Information Human results
Feedback
ENVIRONMENT
Functioning of open system
INFLEXIBLE TO FLEXIBLE
Earlier the structure and processes in organizations were stable for a long period of time and change took place only occasionally. So, there were long periods of stability punctuated by transitory changes. On the contrary, in the present times, change is a continuous process. Organizations are required to continuously improve upon their competitive advantage and are therefore in a permanent state of flux. Periods of stability are quite rare. Employees are required to constantly update their knowledge and skills to cope with the changing business trends. For example, companies like ABN Amro, Caterpillar and Chrysler are training their production employees to operate computerized production equipment. The job description of an employee does not remain the same as it was at the time of his recruitment. Earlier, an employee remained in the same work group that he was assigned at the time he joined the organization. However, in modern organizations, there are no permanent work groups. They consist of teams which are formed by taking members from different departments depending on the project requirements. Thus, as the job assignments of employees change from time to time, they have to mould themselves to get attuned to the new work culture. Organizations themselves are undergoing various changes - divisions are being reorganized, businesses processes are being reengineered, non-critical activities are being outsourced, and permanent employees are being replaced with part-timers and freelancers Because of the dynamic business environment and the need for constant change in organizations, managers can no longer afford to have pre-set notions on any matter. They have to be spontaneous, and flexible enough to quickly adapt themselves to change and help others .to change too. OB equips managers with understanding of intricacies of change in a better way that in the long run enables them to shape the organizational culture.
INDIVIDUAL ORIENTED ± TEAM ORIENTED
In traditional organization it is individual oriented wok. The manager itself will do all the work in the organization and the employees are just doing what manager says to them. But in modern organization it¶s a team oriented work, here managers and employees doesn¶t have differences. This team work has lot of advantages which helps to achieve the organizational objectives effectively and efficiently.
Advantages of Teamwork in Business
There are numerous advantages of teamwork in business. Some of the genuine advantages of teamwork have been discussed below. The following advantages of teamwork are not only applicable for businesses but they can also be noticed in departments that function with the help of united efforts. United Effort Teamwork in any business ensures that the task at hand is executed with the help of a united effort. The significance of the united effort is that the business organization that is concerned, functions like a single person, thereby enhancing the quality of the operations. There are, also, some other related factors, such as ensuring equality in profit sharing and division of work. It also helps the members/owners of the organization to maintain a very good system that designates appropriate authority and responsibility. A united effort, also, reflects good team building and team spirit. Division of Work Teamwork ensures that there is an equal and fair distribution of work within the
organization. A fair work distribution ensures that every person or every working unit executes any task at hand, with the best possible efficiency. The division of work, also, ensures that the work is done on time and deadlines are not extended. Reduction of Risk when the task at hand is executed with the maximum possible efficiency, there is a reduction in risk. The best advantage of teamwork in business is that the burden of failure is borne by all the members of the team and it does not fall on the shoulders of just one person. Specialization in Work Another very good advantage of teamwork in business is that a person is able to specialize in one specific field. That is, he can optimize the quality of the work that he does, and can also work with the maximum possible efficiency. This ensures a high quality output from all individuals and the whole team. Subordination of Personal Interest to Organizational Interest. One of the biggest advantages of teamwork is that personal interest is subordinate to organizational interest. This ensures that all the team members put in the maximum possible efforts into their work, thereby ensuring a high quality and timely output. You must have noticed that the list of advantages points out to two basic facts that work when distributed reduces one person's workload and a reduced amount of work ensures optimization and efficiency. The following points emphasize the importance of teamwork in business. Let's go over them. Timely Completion Teamwork is one of the best ways to ensure the timely completion of any work, with the maximum possible efficiency. This ensures that the clients of the company are bound to come back to your organization with a new project or contract. High Quality Output Teamwork, by default, ensures high quality output that makes the client happy. It also reflects the sincerity of the team members. Goodwill and Reputation Teamwork, also, increases the goodwill and reputation of a business. The goodwill, in fact, is a tangible asset of any business that plays a highly instrumental role in bringing in more customers and public trust.
Unification of Merits. The indirect advantage of an effective teamwork is that there is unification of the merits of the team members, and on the whole, the business organization, as a team, does not depict any demerit.
In today's world, the importance of teamwork in business is always felt because of demand for efficiency and timely execution or work. It is, thus, very important for any business organization to work, not as a group of people with different motives and objectives, but as a group of people with one motive and objective, and a soul that reflects the image of success!
PERMANENT JOBS ± TEMPORARY JOBS
Temporary jobs are a new concept which introduced along with the new organizations. To many people, a temporary position does not sound very appealing. Some consider temporary jobs to be unskilled labor, tedious work, or just a waste of time. People with this negative attitude towards temporary positions all share one common characteristic: THEY ARE WRONG. Temporary jobs are not a waste of time. Besides providing income, temporary jobs can be used as valuable career tools. This article discusses the many benefits of temporary positions. Once you recognize the advantages of temp jobs, you can then begin to use them to enhance or build your career. These four topics that will be covered: 1. Money Matters 2. Resume Reinforcement 3. Temp to Impress 4. Career Sampling 1. MONEY MATTERS Let's be realistic, money is important. No matter how many times you say, "Money isn't everything," you can't change the fact that money matters. There is no shame in taking on a job to obtain needed cash. No matter how negative your attitude towards temp jobs is, it is impossible to deny that they are often a good source of income.
Good jobs don't just grow on trees so that people can come and pick the one they like best. When no viable alternatives exist, temporary positions are a fantastic Way to earn money. Temp jobs are ideal for students. When you have class during the week a steady job can be hard to get, but a temp job might only be for a day. Also, temp jobs often fit In well with an evening or weekend class schedule. 2. RESUME REINFORCEMENT If you are currently out of work, chances are you suffer from a disease that often strikes the unemployed: resume decay. When out of work for an extended period of time, people often concentrate their efforts solely on finding a new job. Unfortunately these people fail to recognize that their free time should also be used for strengthening their resumes. Temporary positions give a person the opportunity to strengthen his/her resume through experience and education while also providing a source of income. Temporary positions are a fantastic way to gain experience within a particular industry. When full time positions are tight, a temp job may be your best chance at learning industry basics. Moreover, you will already be an experienced worker when a full time position becomes available. Temp jobs are a quick way to pick-up new skills or to heighten skills you already possess (typing, filing, book-keeping, etc.). More importantly, as a temporary you may be required to use various professional software. Proficiency in current software applications looks great on a resume! If you are not working full time or are not in school, your resume may look sparse. A recruiter evaluating your resume may assume you did nothing during this time. Temporary positions are good for filling these time gaps in your resume. 3. TEMP TO IMPRESS Despite what many people think, a temporary position is NEVER a carefree, zero responsibility job. Though things may be slightly more relaxed as a temp, there is a secret that most people don't realize: a temp job may lead to much more. If you are working with others or report to a manager, you are being evaluated. People all around you are making mental notes about your knowledge, skills, personality, friendliness, diligence, and behavior. Use this to your advantage: Occasionally, a temporary position turns into a position that needs to be filled permanently. Even if you are not explicitly told that your job is temp-to-hire, You may have shot at the permanent position if you impress the right people.
Temp jobs give you the opportunity to meet and rub elbows with individuals in a particular industry. You never know if a co- worker might someday be in charge of recruiting or make a recommendation for a new employee. Often times, as a person develops their career map he or she realizes that they are far off course. This perfectly normal, but it also means that getting on the right road will require a change of direction. 4. CAREER SAMPLING It may seem obvious, but never lose sight of the fact that a temporary job is temporary. This gives a person much more flexibility than one would have in a permanent position. No matter how horrible the job may seem, you can rest easy knowing you are not stuck in one place. More importantly, people often don't know what industry or career they would like to pursue. Temping gives an individual the option to sample a wide array of jobs. It is the perfect way to gain insight into a job or field
COMMAND ORIENTED TO INVOLVEMENT ORIENTED
Sociologists, industrial relations researches, organizational scientists, and policymakers who have studied this trend agree that leaders and managers of U.S. companies are climbing abroad the bandwagon of worker participation in their urgent attempts to maintain competitiveness under changing economic circumstances. Employers believe that when workers participate in making decisions, when they gain opportunities to apply their tacit knowledge to problem solving, and when they acquire responsibility for designing and directing production processes, they feed into an infrastructure enabling firms to respond to shifting market and product demands in a rapid and timely way. The introduction of management-initiated employee involvement programs (EIPs) has inspired a significant body of research by sociologists who study work, the labour process, organizations, and industrial relations. By and large, these researches have been skeptical about workers¶ commitments and consent to such participative
programs, suggesting that demand for participation thinly veil a reality of hard work with fever resources, leaving workers themselves suspicious of such reform.
Other advantages of employee involvement
Effective Decision Making Working together in a team environment can create more than one solution to a problem. Making an informed decision is based on considering several possible scenarios, and a team-based organizational structure can provide multiple opinions and insights. Teams include individuals with different personalities and backgrounds which can produce ideas and solutions that one person could not do alone. All employees have their own strengths and weaknesses, so they can take those qualities to create the best outcome possible. Organizations have discovered this advantage and have found this structure to be extremely effective when it comes to making important decisions. Empowers Employees In a team structure, employees have more influence when it comes to planning and completing various projects. Many times the executive will assign a specific goal based on collected data; the teams are responsible for using the resources available to them and working together to achieve that goal. When employees find success by working as a team, they become more confident in their abilities and become more productive and satisfied in their role. Empowerment also produces more innovative ideas and higher quality work. Employee involvement involves the creation of an environment wherein people are involved in the decision making process that have an impact on the decisions and the actions that have a bearing on the jobs. Employee involvement is management and the leadership philosophy of how the people are involved in the functioning of the organization, it is not a goal or a tool which is used it is just mode by which the employees are engaged to have a role to play in the decision making process. In short it is an effort to pool in the ideas of the employees that can help in the achievement of the desired results. The aim of the organizations is to involve maximum number of the people in the decision making process of all the work aspects of the organization. The benefits of
employee involvement are increase in ownership and commitment, retention of the employees; it creates a harmonial environment, helps to achieve the employee satisfaction. It is one of the most factors that help to promote team building. However there is a big question mark on the fact as to how the process of employee engagement can be inculcated, the answer can be suggestion systems, manufacturing cells, work teams dedicated towards the involvement of employees in the decision making process, continuous improvement meetings, discussions about the improvement requirements, discussions between the supervisor and the immediate assistant within a team. However the effective working of the employee involvement process is the effective training of the teams in proper communication and even the problem solving. There is a good flow of ideas even when there are some of the motivational rewards involved, when the gains that have been achieved through the decisions are shared can also act as motivating effect. The employee involvement model developed by Tannenbaum and Schmidt in the year 1958 acts as an effective guide for the accomplishment of the employee involvement. The model provides the method which the organization is involved in the decision making process. There are four levels which the organizations follow depending on the mode of operation.
*Tell:
In the telling kind of the leadership the leader makes the decision without the consultation of the leader and informs the decision to the staff. The leader provides complete direction to the employee. The tell kind of strategy is useful on strategies like the safety concerns, government legislations and for the decisions that do not require any employee input. *Sell: In the sell strategy the decision is taken by the company and then an attempt is made to communicate the decision so as to gain commitment from the staff. This strategy is used when the employees do not have much influence over the decision, but there is a requirement of complete employee commitment. *Consult: In the employees are invited to pool in their opinions about the decision however the final decision authority rests with the supervisor himself. *Join: In this the employee and the supervisors take the decision in consensus. Both of them have an equal voice in the decision making process.
MANAGERS TO EMPLOYEES IN DECISION MAKING
Participative (or participatory) management, otherwise known as employee involvement or participative decision making, encourages the involvement of stakeholders at all levels of an organization in the analysis of problems, development of strategies, and implementation of solutions. Employees are invited to share in the decision-making process of the firm by participating in activities such as setting goals, determining work schedules, and making suggestions. Other forms of participative management include increasing the responsibility of employees (job enrichment); forming self-managed teams, quality circles, or quality-of-work-life committees; and soliciting survey feedback. Participative management, however,
involves more than allowing employees to take part in making decisions. It also involves management treating the ideas and suggestions of employees with consideration and respect. The most extensive form of participative management is direct employee ownership of a company. Four processes influence participation. These processes create employee involvement as they are pushed down to the lowest levels in an organization. The farther down these processes move, the higher the level of involvement by employees. The four processes include: 1. Information sharing, which is concerned with keeping employees informed about the economic status of the company. 2. Training, which involves raising the skill levels of employees and offering development opportunities that allow them to apply new skills to make effective decisions regarding the organization as a whole? 3. Employee decision making, which can take many forms, from determining work schedules to deciding on budgets or processes. 4. Rewards, which should be tied to suggestions and ideas as well as performance.
There is much discussion in modern management, and in Extension, about "pushing decisions down to the lowest level." However, there is also much cynicism among employees in Extension about executive decisions and how employees are involved in decisions. A "ladder of decision making" is offered as a typology of seven levels of decisions. From highest to lowest, the ladder incrementally shifts the responsibility to make the decision from the executive to employees. Potential benefits of the ladder include improving the quality of Extension employee¶s participation and reducing their cynicism.
Level 1. Executive Decision Level 2. Executive Decision with Report Level 3. Consultative Decision Level 4. Employee Recommendation Level 5. Delegated Decision (with Veto) Level 6. Delegated decision (w/o Veto) Level 7. Employee Decision Responsibility for the Decision
Description of Levels Level 1. Executive Decision. The executive makes the decision and does not inform employees, except possibly through a future meeting or conference or in a periodic report or newsletter. Level 2. Executive Decision with Report. The executive makes the decision and reports, in the near future, to employees. The timely report is significant as (whether as a courtesy or warning). It provides some opportunity for employee feedback prior to implementation of the decision. Level 3. Consultative Decision. The executive asks employees for their ideas, at least in a general way. At best, the employees are engaged explicitly in the steps in the decision-making process (Gallagher, 2000) and can influence the decision with the strength of their statement of values, their information, and their alternatives. The decision, however, rests with the executive. Level 4. Employee Recommendation. The executive assigns or delegates the responsibility to conduct the decision-making process, the four steps, to the employees. The employees offer their recommendation(s) to the executive who makes the decision. Level 5. Delegated Decision with Veto. The executive delegates the authority to the employees to make the decision but retains the authority to exercise veto power if
necessary. (Such a veto could indicate a flawed problem-solving process that failed to engage the executive in interim reviews.) Level 6. Delegated Decision without Veto. This is the same process as above; however, the employees make the decision and the executive supports the decision through to a future evaluation period, perhaps a year or two for most programs. Level 7. Employee Decision. The employees make the decision and do not inform the executive, except perhaps as part of the normal reporting protocols, such as in periodic meetings or annual report.
RULE ORIENTED TO CUSTOMER ORIENTED
Modern business has given more importance for customer satisfaction which is a main factor for the development of the organization. Only with the rules an organization cannot establish, than rule oriented, customer orientation have more importance.
Exceptional customer service results in greater customer retention which in turn results in higher profitability. Customer loyalty is a major contributor to sustainable profit growth. To achieve success, you must make superior service second nature of your organization. A seamless integration of all components in the service-profit chain ± satisfaction, value, customer satisfaction, customer loyalty, and profit and growth ± links all the critical dynamics of top customer service. In today¶s markets characterized by harsh competition companies must not only be well prepared to answer to customers current needs, they also need to be prepared for the future ones. A company that once was market leader of its industry can quickly become a market follower if the management team is unaware of how customers value the offering. The trend of today towards increasing the service to customers, raising the level of customization, and providing an experience for the customer has been called a paradigm shift toward customer orientation. The purpose with the thesis is to investigate how the organizational structure of a company hinders the customer orientation of a global marketing and sales organization expressed in symptoms and causes. In order to study the subject a case study was conducted on a large Swedish industrial company. 20 individual semi-constructed interviews were conducted with the top management team of the company. The result from the empirical study was that the organizational structure hindered the customer orientation of a company and that there is interplay between the organizational structure of the company, the current business situation of the company, and the customer orientation of company. Communication patterns, trust, customer ownership and responsibility, integration, coordination, power, and motivation can be mentioned as important organizational factors that were affected by the organizational structure. Customer Expectations Customer is defined as anyone who receives that which is produced by the individual or organization that has value. Customer expectations are continuously increasing. Brand loyalty is a thing of the past. Customers seek out products and producers that are best able to satisfy their requirements. A product does not need to be rated highest by customers on all dimensions, only on those they think are important.
The purpose of a business is to create and keep a customer. If a business successfully creates and keeps customers in a cost-effective way, it will make a profit while continuing to survive and thrive. If, for any reason, a business fails to attract or sustain a sufficient number of customers, it will experience losses. Too many losses will lead to the demise of the enterprise. According to Dun and Bradstreet, the single, most important reason for the failure of businesses in America is lack of sales. And, of course, this refers to resale¶s as well as initial sales. So your company¶s job is to create and keep a customer, and your job is exactly the same. Today, "it would be difficult to find a company that doesn't proudly claim to be a customer-oriented, customer-focused, or even-customer driven enterprise. But look closer at how these companies put their assertions into practice, and often you discover an array of notions and assumptions that range from superficial and incomplete to misguide.´Some examples of customer satisfaction illusion include: y believing that by conducting market surveys and focus groups you know all there is to know about your customers y believing that investing in awareness programs for employees and putting customers' pictures on the cover of your annual report is enough to achieve customer satisfaction y believing that the job of CEO is done by giving his or her direct phone number to some valued customers
HOMOGENEOUS TO DIVERSE WORKFORCE
Diversity in the workplace is an important issue in business. A diverse workforce actually offers a number of benefits to the company. Benefits of a Diverse Workforce It is believed that companies employing a diverse workforce would be in a better position to understand the demographics of the customers they serve much better making them better able to thrive in the market place that companies that hire only a limited group of employee demographics. Also, a company that supports diversity of workforce is better able to address employee satisfaction and retention issues. An important part of diversity in the workplace is how a company uses its diversities. This is called inclusion. If the company has a diverse workforce yet the employer does not take advantage of the wide range of experience within the organization, then it could not enjoy the advantages offered by background diversity. Diversity issues change with time. Implementation of diversity is more often than not limited to the human resources department. UK companies see it as a tool to a good economic case that enables them to reach new markets. Diversity then becomes an extra marketing tool to bring in new customers. Difference between Superficial and Deep-level Diversity Diversity could either be superficial or deep-level. Superficial diversity refers to differences in gender, race and nationality. Deep-level refers to differences brought about by knowledge and cultural values. It is often noted that in a company setting, increased interaction among a diverse workforce lessens the significance of superficial diversity and increases the importance of deep-level as the team learns how to function as a unit. According to studies, in deep-level diversity, the informational diversity or the differences in knowledge contribute positive results to the performance while value diversity or differences in cultural views could lead to negative results. In a group setting though, members tend to discuss what they have in common rather than their differences. In order to encourage sharing of unique knowledge, it is important to let the group know who has knowledge on certain things. Also, instead of group information sharing, debate should be encouraged so as to allow members
to challenge the ideas of other members. Processing deep information that way could lead to positive results. Learning to accept the diversity and uniqueness of each employee will in turn generate feelings of trust and respect that could further lead to more productivity among employees, higher morale in the workplace and less conflicts and the time involve resolving them. Diversity is a fact of life. Learning to deal with it effectively and not fight it is the best way to advance the causes of business. Here are 13 Benefits of a Diverse Workforce: 1. Improves corporate culture 2. Improves employee morale 3. Leads to a higher retention of employees 4. Leads to an easier recruitment of new employees 5. Decreases complaints and litigation 6. Increases creativity 7. Decreases interpersonal conflict between employees 8. Enables the organization to move into emerging markets 9. Improves client relations 10. Increases productivity 11. Improves the bottom line 12. Maximizes brand identity 13. Reduces training costs
HIERARCHICAL-LATERAL RELATIONSHIPS
A hierarchical organization is an organizational structure where every entity in the organization, except one, is subordinates to a single other entity. This arrangement is a form of a hierarchy. In an organization, the hierarchy usually consists of a singular/group of power at the top with subsequent levels of power beneath them. This is the dominant mode of organization among large organizations; most corporations, governments, and organized religions are hierarchical organizations with different levels of management, power or authority. For example, the broad, top-level overview of the general organization of the Catholic Church consists of the Pope, then the Cardinals, then the Archbishops, and so on. Members of hierarchical organizational structures chiefly communicate with their immediate superior and with their immediate subordinates. Structuring organizations in this way is useful partly because it can reduce the communication overhead by limiting information flow; this is also its major limitation. In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other. At each stage in the chain, one person has a number of workers directly under them, within their span of control. A tall hierarchical organisation has many levels and a flat hierarchical organisation will only have a few. A traditional hierarchical structure clearly defines each employee¶s role within the organisation and defines the nature of their relationship with other employees. Hierarchical organisations are often tall with narrow spans of control, which gets wider as we move down the structure. They are often centralised with the most important decisions being taken by senior management. In the twentieth century as organisations grow bigger, hierarchical organisations were popular because they could ensure command and control of the organisation. However with the advent of globalisation and widespread use of technology, in the 1990¶s tall hierarchical organisations began to downsize and reduce their workforce. Technology was able to carry out many of the functions previously carried out by humans.
Disadvantages of Hierarchical Organisations y The organisation can be bureaucratic and respond slowly to changing customer needs and the market within which the organisation operates.
y
Communication across various sections can be poor especially horizontal communication. Departments can make decisions which benefit them rather than the business as a whole especially if there is Inter-departmental rivalry.
y
A team-based lateral organizational structure is a relatively new concept that gives less decision-making power to executives and more responsibility to employees. Companies that choose this type of structure have fewer management levels and fewer regulations, allowing the employees to work together toward the success of the business. Advantages to this structure include improved communication, employee empowerment and effective decision making. Team-based lateral organizational structures benefit both the organization and the employees. Improved Communication This structure also helps to improve communication and cooperation between the different levels of power. With less management involved and employees working together in groups, there is more direct communication that reduces the chances of mistakes due to a misunderstanding. This type of structure also requires companies to invest in quality training to ensure quality communication and team-building skills. This training educates employees on various topics including conflict management, diversity training and virtual communication ethics. One of the newest forms of business organization is the team-based lateral organizational structure. A team based lateral structure is an organizational chart that
groups employees on the same employment level into teams that perform specific job functions. This structure combines the low-overhead, minimal management structure of a lateral structure with the team efforts common to a hybrid structure. There are numerous advantages to a team-based lateral organizational structure. Less Overhead Management A team-based lateral organizational structure is similar to a traditional lateral structure, in carrying less overhead management to cause delays in decision-making and implementation of best practices or new ideas. With no need to climb a lengthy chain of command to receive approval for ideas or changes to the business model, a team-based lateral structure can make necessary changes on the fly and allow for rapid response to different market conditions. This is especially important in today's digital economy. Teamwork By spreading the responsibility among team members rather than having a single individual in charge of decision-making or management of a business area, decisions can be reached by a quorum and can take place rapidly as team members can be assigned to research areas of need, implement changes, or work on other problems while other team members continue to focus on the current situation or business practice. Decisions made by a team are sometimes better thought out and more effectively implemented than decisions made by a single individual. Eliminate Delays A team-based lateral organizational structure can eliminate traditional scalar chains of command, which can cause delays and worker frustration with cumbersome communication lines. A team can more effectively raise concerns to management without appearing to be disgruntled or unnecessarily upset, and without opening themselves as individuals to repercussions by management for the issues raised by their team. This can make individuals more willing to speak out about problems or inefficiency in the workplace.
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