Organizational structures in the early till late 20th century were mostly vertically integrated. Large organizations like Ford, GM produced almost all components that went into their product. The later part of the century witnessed a significant change in organizational structures owing to increase in competition, differing consumer taste, globalization, technological changes and a host of other factors but mostly to compete effectively against rivals.
Globalization
Disintegration of trade barriers coupled with liberalization of trade and finance provided a platform for corporations to go beyond national borders. In today’s business mergers and acquisitions are common activities seen worldwide. Multinational companies have set up business units in different countries to benefit from economy of scale and improved quality of international transportation and communication. Global sales have increased; manufacturing is done in one country and sales in another to exploit differences in regional cost and expertise. Companies are also seen undertaking research jointly or independently in search for unsaturated markets. Moving from direct marketing to indirect form, more customer oriented services and products.
Diversity
Workforce of this generation is more heterogeneous in terms of sex, race, culture and individuals. With globalization there is a need to cope with different styles of interaction, dress, presentation and physical appearances. Diversity of workforce is a source of innovation and learning. But also this has led to problems regarding communication among divisions and within mainly due to demographic, social and ethical forces.
Flexibility
Due to differentiated customer needs increasing diversity in workplace and increased pace of change in technology and markets organizations require structures, processes and people that can respond differently to different situations. Organizations have fewer detailed rules and procedures to make functions more flexible. There is greater autonomy of individuals and encouragement for initiative. Employees are cross trained to handle more than one job. The motive is gain a competitive advantage over others. Features of flexibility include customizable employment relationships like telecommuting, job sharing, mommy tracks, pay for skills, lifetime employability and not lifetime employment. TPS is an important example of flexibility in operation also commonly known as Lean Manufacturing in general.
Flat
A flat organizational structure is characterized by fewer levels of management in the hierarchy. There are fewer differences in responsibility (not in pay) across levels. One very important implication of a flat structure is that workers are empowered to make decisions irrespective of responsibility. This facilitates communication from bottom to top and not only from top to bottom. Due to fewer levels communication is quick and accurate. Necessities of a flat structure are due to need for speed, which makes it helpful to empower employees to make decisions, which in turn means fewer managers are needed. Changes in information technology mean less need for the communication and control functions of middle managers. This helps cut costs in operations and manufacture as globalization intensifies competition, which increases the need to cut costs.
Networked
Today’s businesses are entirely built upon networks of people, technology and infrastructure. How efficient a network is determines the efficiency of an organization to respond quickly to changes in demand and threats. Information is shared instantly across unit & firm boundaries, ignoring chain of command. Teams are not confined only to their domain. Networking is important due to the following reasons:
Globalization
Disintegration of trade barriers coupled with liberalization of trade and finance provided a platform for corporations to go beyond national borders. In today’s business mergers and acquisitions are common activities seen worldwide. Multinational companies have set up business units in different countries to benefit from economy of scale and improved quality of international transportation and communication. Global sales have increased; manufacturing is done in one country and sales in another to exploit differences in regional cost and expertise. Companies are also seen undertaking research jointly or independently in search for unsaturated markets. Moving from direct marketing to indirect form, more customer oriented services and products.
Diversity
Workforce of this generation is more heterogeneous in terms of sex, race, culture and individuals. With globalization there is a need to cope with different styles of interaction, dress, presentation and physical appearances. Diversity of workforce is a source of innovation and learning. But also this has led to problems regarding communication among divisions and within mainly due to demographic, social and ethical forces.
Flexibility
Due to differentiated customer needs increasing diversity in workplace and increased pace of change in technology and markets organizations require structures, processes and people that can respond differently to different situations. Organizations have fewer detailed rules and procedures to make functions more flexible. There is greater autonomy of individuals and encouragement for initiative. Employees are cross trained to handle more than one job. The motive is gain a competitive advantage over others. Features of flexibility include customizable employment relationships like telecommuting, job sharing, mommy tracks, pay for skills, lifetime employability and not lifetime employment. TPS is an important example of flexibility in operation also commonly known as Lean Manufacturing in general.
Flat
A flat organizational structure is characterized by fewer levels of management in the hierarchy. There are fewer differences in responsibility (not in pay) across levels. One very important implication of a flat structure is that workers are empowered to make decisions irrespective of responsibility. This facilitates communication from bottom to top and not only from top to bottom. Due to fewer levels communication is quick and accurate. Necessities of a flat structure are due to need for speed, which makes it helpful to empower employees to make decisions, which in turn means fewer managers are needed. Changes in information technology mean less need for the communication and control functions of middle managers. This helps cut costs in operations and manufacture as globalization intensifies competition, which increases the need to cut costs.
Networked
Today’s businesses are entirely built upon networks of people, technology and infrastructure. How efficient a network is determines the efficiency of an organization to respond quickly to changes in demand and threats. Information is shared instantly across unit & firm boundaries, ignoring chain of command. Teams are not confined only to their domain. Networking is important due to the following reasons:
- With globalization began outsourcing & downsizing and these unit needs to be networked.
- Strategic alliances with competitors and others also create the need to have a network in order for strategies to be effective.
- Companies have competitors, customers and collaborators all at the same time. Close coordination among firms (e.g., JIT systems) are required.
- To stay close to customers
- Customization and decentralization of operations
- New information technologies, especially groupware, client-server, distributed computing fast changing customer needs and competitor offerings more complicated products require better integration of manufacturing, design, and marketing functions
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