If a goal of an organization is to be reached, then the interaction between members of the organization requires a formal plan of coordination. The design and organization of structure acts to define how the tasks are allocated and conducted, such as reporting procedures, mechanisms of coordination and communication between members, and patterns of interaction that need to be understood. The global market is competitive and unsympathetic to poor performance, and to compete in such a market organizations need to be able to create and develop innovative ways to keep an advantage over competitors, locally and globally.
The theory of Organizational Structure
The theory of Organizational Structure is a discipline which studies and models organizations' structural design. Working with the theory means delving into how the organization is structured right down to the minor details, and based on evidence and research will provide suggestions on structuring to help improve the performance. A theory helps to develop our understanding of organizational structure, and to develop experience (Hatch, M. J., 1997).
A theory will describe something that we wish to pursue, by coming up with concepts, linking them together, and providing evidence to prove relationships. Indeed once understanding is met, identifying causality and what has an effect on what is very important. From Organizational Structure Theory, it is currently known that the most advantageous structure is one that enforces and nurtures effective work and performance, while making things as simple as possible. (Hatch, M. J., 1997).
Much of an organization is defined by its structure, through an established number of relationships, with activities that are ordered and monitored. From this we can see that structure and performance are linked, and intrinsic to a organization's success. In terms of practicality, designing an effective structure requires an astute consideration of the goals and objectives of the organization, from the minor details right up to the overall plan. Adaptation is key in a world where markets evolve very readily, and effective management requires an anticipation of when changing circumstances need a modification of structural development (Robbins, S., 1987).
It is a difficult task to formalize organizational theories because people within these organizations will often utilize theories as tools to diagnose the state of themselves, and use them to improve upon the current situation. In this way, organizational theories will be relevant to the task in hand, but not to pure theory. This means that for most organizations, the theories they use are not built around the premise that they need to offer transparent rules to help quantify and predict organizational behavior. What happens instead is that they will provide a framework to determine how much the performance of their organization differs from an idealistic and perfect state, and come up with modifications and mechanisms to help get closer to this perfect state.
It is often the case that the idea of an effective organization is connected to the conservation of equilibrium (Daft, R. L., 2003), and that the concept of Organizational Design has five distinct elements - division of labor and specialization and departmentalization, unity of command and command chain, authority of the staff chain, scope of control and level of control (centralized, or non-centralized), and contingency strategy.
If we are going to analyze the structure of an organization, then we need to begin by differentiating between different work activities, including the task of task integration, position integration, and the integration of people within the organization.
An example of a perfect organizational structure and design would be one that includes a clear and concise division of responsibilities and labor, in the interests of minimizing conflicts. It is also important to have a well defined authoritative structure and hierarchy based on the rules of the organization. Also, decision making and operations need to be controlled and standardized based on ethical best practice.
Additionally, an organization will need to have a comprehensive and specific set of regulations to deal with any situations in the work-place, with a focus on improving relationships between members of staff, and separating personal matters from professional matters. Promotion, leadership and employment should be based on a well regulated performance criterion, so that when positions of authority are awarded, they are legitimate, and will equate to good future performance (Robbins, S., 1987).
The Marriott organization, which owns a hotel chain, is one example where a good management team is present, and that team has the task of ensuring the company is able to make quick and effective decisions in response to a dynamic industry. Recently, the organization has re-structured itself, with the transformation from six different divisions, into a single division which a higher focus on brand markets and the services of core staff. This decision was wise, since the efficiency of the organization increased thanks to the improvement of the management structure, paving the way for further effective management of operations overseas ("Marriott International, Inc.").
It is presented by Snow and Miles in Organizational Design and Strategy that the perfect organization is one who knows its character, and bases its existence and prosperity upon the role of that character. There are four distinct characters that an organization can be. The first is the prospector, in which the organization has a decentralized structure, and is orientated towards learning, is flexible and adapts readily to change. The second is the defender, which has a centralized structure, and promotes efficiency, and the tight control of any losses. The importance for the defender is thus with increasing efficiency of production, while minimizing costs and overheads, and keeping a close watch over internal activities to ensure of this. Third is the analyzer, which tries to find the balance between the attributes of the defender and the prospector, while being creative to solve problems, and being involved in research and innovation. The fourth is the reactor, which tends to have no clear approach to organization structure, and whose structural design might change abruptly to respond to changing needs and demands.
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