The Effect of Organizational Structures on Performance

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This essay will give the main points of the effect of organizational structures on performance. It will define the term “organizational structure” and present the positive and negative effects of these structures on performance. This essay will address how structures determine procedures and rules by which are regulated human behaviour, its role in determining relationships in hierarchies and the importance of roles and expectations in directing employee behaviour. It will also underline the distinction between formal and informal company structures and discuss different outcomes of bureaucratic structures. Finally it will examine the sustainability of bureaucratic-classical structures in large corporations and the reasons for their existence.

In the early stages of industrialization, the need to plan and administer work was still at the level where it was hardly needed. Once grown, administrative structures expanded and it was thereon necessary to understand the functionality of it. When someone tries to understand the way an organization works, he asks himself three main questions: What? Why? How? That last question is the one that comprises the domain of organization structure. Organizational structure is the way in which the interrelated groups of an organization are constructed in order to make them work together in the sole purpose of achieving organizational goals. From a managerial point of view the main concerns are ensuring effective communication and coordination. The purpose of organization structure is to divide and allocate organizational activities to different categories of workers and to co-ordinate and control theses activities so that they achieve the aims of the organization (Buchanan and Huczynski, 1985, p.461). Organizational structure is present all around us. It matters because it facilitates control, divides responsibilities, enables to achieve tasks and achieve goals. We build on structure even if we are not necessarily aware of it. Let’s say you want to borough a book from the library. There is a specific way of doing so. You first have to look for the book, then get hold of it from a specific bookshelf, then bring it to the librarian to rent it and finally bring it back after a set period of time. The process gone through to borough a book was only possible because of the set structure of the library.

Picture a large organization in your mind. The most common way is by mean of a pyramid. It allows visualising both horizontal and vertical hierarchies. Child (1984) found that the structure of an organization could be summarized under a group of questions concerning five elements: specialization, hierarchy, grouping, integration and control. Specialization concerns whether or not jobs should be broken down to narrow the width of the working and responsibility areas as well as whether or not the degree of specialization should stay minim to allow employees to take on responsibility in their work which would have a greater scope. Hierarchy is to know if a horizontal overall structure of an organization of its levels of management is more beneficial than a vertical control structure. What are the implications of these different overall structures for communication, motivation and overhead costs? Should jobs group together according to their expertise and interests to obtain a more efficient working system? Or should they be grouped according to environmental areas or according to different services and products being offered? Integration is an essential factor for work productivity. Should it be more intensive? What integration mechanisms are to choose from? Control is an issue for management. How does one choose to maintain control? Should it centralize, or delegate decisions? How much of the decisions should it maintain control over? Should work be subject to close supervision?

The way one chooses to answer these questions will have considerable impact on the nature of the jobs of all...
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