Management Help

Running head: ORGNIZATIONAL STRUCTURE 1

ORGANIZATIONAL STRUCTURE 2

Organizational Structure within Companies

Kenyeta Clements

UMUC

MGMT 630

Dr. Todd Kelley

03 March 2019

Organizational Structure within Companies

Organizational structure is an important element for all organizations that are serious about achieving their mission, vision, objectives, and policies. Organization structure defines and determines an organization’s roles and also shapes how power and responsibilities are assigned, coordinated and controlled. The structure not only governs how authority and tasks are controlled, assigned, and synchronized, but also how information is relayed between the diverse functions of management (Bateman & Snell, 2011). Most firms that are global leaders in their respective industries often boast of a robust organization structure characterized by clear and structured hierarchies of authority, an effective division of labor, a common purpose as shared in their vision and mission statements and a coordinated effort towards achieving set goals. Structures can be decentralized or centralized. In a centralized structure, top-level management has the decision-making authority and control over the departments and divisions. In a decentralized structure, departments and divisions have decision-making authority and varying levels of independence.

Like many pursing roles as managers, the goal is to become an organizational manager I for organizations like the international monetary fund, The United Nations, world health organization among others. General Motors has been one of the organizations that has shown a high level of management within their structure, which has shown to be the results of their exemplary performance when compared to other motor vehicle companies and organizations. The organizational theory that is applied in General Motors is the scientific management approach, which is the idea of having work that is efficient, simple, specialized, and standard. This theoretical approach leads to workers and management having increased trust and productivity. (Williams, C. 2017)

General Motors, an American multinational corporation that designs, manufactures, markets and distributes vehicles and vehicle parts is an example of a public firm. In terms of leadership, the president and an executive committee were required to report to a Board of Directors at the apex of the leadership pyramid headed General Motors. Below the president were, the financial staff, (GM) Acceptance Corporation, the Legal Department, and the General Advisory staff, which were all headed by their respective departmental heads. Further down, were the various business unit heads categorized into divisions based on the different automobile models and geographical areas of operation such as the division of Chevrolet, Sheridan, Buick, Cadillac, Canadian, and the Export (Klein, 1988). Specialized divisions are created under the different brands to include GM truck Division, Oakland truck Division, Intercompany parts Division, and the Samson Truck division.

Eventually, the organization realized that to achieve high levels of productivity, it required high levels of specialization in coordination for it to be effective and corporation. General Motors thus adopted an organic organization structure and system that permitted specialization and facilitated coordination by grouping individuals and linking groups with better systems of communication, decision-making and control as evidenced. Besides, to help in aligning the organization and group goals, General Motors saw the need to formalize administrative acts, decisions, and rules. The organization was able to incorporate Max Webber’s principles of bureaucracy to achieve its goals. The rational-legal authority in GM’s CEO and President, specialization of labor under the different divisions and the elaborate hierarchical structure helped the company emerge as a global leader in the automotive industry.

Since 2008, the company has witnessed a significant change in its organization structure especially after the recession within the same year. They have taken a nosedive and declared bankruptcy in 2009. This changed caused a great organizational change by 2010 with the government intervention to bail it out of recession. Despite the resistance by the leadership at GM, an individual from outside, Ed Whiteacre, a leader in telecommunications, had to be brought on board. The company faced significant changes in production, employee relations, and branding (Barker, J. R.). New leadership, on the production side, focused on lean production and cost-cutting at all levels by reducing the number of car models it made. Employee relations improved significantly due to Whiteacre involving them in more decision-making and established a work/life balance for his subordinates.

The company had to rebrand by venturing into new products and technologies to keep up with global competition. The changes set the company on the right path to recovery, for GM not only increased production to 9,958,000 vehicles by 2015, but also achieved a net income of US$9.687 billion by the same year. The company’s workforce stood at 216,000 employees as of 2015. As companies grow, they may restructure into a divisional organization. Divisions may have the independence to perform as separate businesses and work separately to accomplish the goals of the organization (Bateman and Snell, 2011). Advantages are higher morale and a stronger company culture than that of a functional organization. Divisions focus on a single product, with the support of a director or president of that department, who has the ability to locate all needed resources.

Matrix organizational structures have a dual line of command, a functional manager and a divisional manager (Bateman and Snell, 2011). Departments may overlap when working on a project. Advantages of this structure are effective communication and increased motivation. With departments overlapping, communication moves freely, solving problems efficiently. Motivation is increased because input from team members is encouraged resulting in employees feeling valued. Disadvantages are confusion and fiscal responsibility. Employees can become confused with the different levels of management and whom they should report to. Additionally, by not grouping like specialists, as in the functional organization structure, the company may pay for additional employees and management personnel (“Smallbusiness.com”, 2015). Employees in each particular department become subject matter experts in their function, and the organization benefits from that experience. With the knowledge comes maximum efficiency, leading to greater productivity. Several disadvantages with this are structure, lack of teamwork, and communication. Employees develop apathy for the companies mission as a whole and tend to concentrate solely on their own department. Communication through the organization falls short as coordination between departments fail (Bateman and Snell, 2011).

Management coordinates relationships that are vital to the organization. (Johnson, 2018) states that management must decide what organizational structure will make the company efficient and productive. The choice is important because it will determine which departments and personnel will be incorporated into the structure. From what has been witnessed over decades, lack of structure has led to a company’s ultimate demise. The key is to create structure from the beginning to avoid hardship in the end.

References

Bateman, T.S., & Snell, S. A. (2011). Management: Leading and Collaborating in a Competitive World (10th ed.). : McGraw-Hill.

Barker, J. R. "The Struggle For Control Of The Modern Corporation: Organizational Change At General Motors, 1924-1970.". Academy Of Management Review, vol 32, no. 1, 2007, pp. 309-312. The Academy Of Management, doi:10.5465/amr.2007.23468520.

Johnson, S. (2018, April 13). Advantages & Disadvantages of Different Organizational Structure

Types. Retrieved March 02, 2019, from http://yourbusiness.azcentral.com/advantages-

disadvantages-different-organizational-structure-types-7077.html

Klein, B. (1988). Vertical Integration as Organizational Ownership: The Fisher Body-General

Motors Relationship Revisited. The Journal of Law, Economics, and Organization.

doi:10.1093/oxfordjournals.jleo.a036945

Williams, C. (2017). MGMT⁹: Principles of Management. Boston, MA: Cengage Learning.

Gillikin, J. (2019, January 25). Advantages & Disadvantages of Divisional Organizational

Structure. Retrieved March 02, 2019, from http://smallbusiness.chron.com/advantages-

disadvantages-divisional-organizational-structure-611.html