Week 5 - Assess an Organization's Structure and Propose Changes

Week 5: Mini Lecture

Dynamic Organizations

Today’s industries exist in a turbulent and competitive landscape resulting from rapid change and increasing international growth. Organizations need strategies, structures, and processes that are agile and responsive in their shifting competitive business environment. Every organization needs to be as dynamic as the business it is in.

According to Felin and Powell, it is certain that old tools of organizational design—hierarchies, chains of command, functional areas, formal reporting, and long-term planning—are not well-suited to success in today’s volatile markets. Instead, today’s dynamic organizations are designed based on rigorous leadership; knowledge management; continuous learning; flexibility; stakeholder and system integration; employee commitment; and change readiness.

A tool often used in organizational design that aids companies in making their design choices is the Galbraith's Star Model framework. The five parts of the framework have a meaningful purpose: strategy determines direction, structure determines the location of decision-making power, processes center on the flow of information, rewards focus on influencing employee motivation, and human resources emphasize affecting and defining employees’ mind-sets and skills.

The Five Star Model adamantly encourages leaders to understand that organizational design is more than just the organizational chart putting the right people in the right positions. The model prevents overlooking important aspects of the organization, and it helps management to understand what in the organizational redesign and change process must be managed.

Included in the design of an organization is a focus on the process of constructing and adjusting an organization's structure to achieve its goals. The organizational structure connects departments, jobs and tasks within the organization. It makes perfect sense that the structure and management of an organization are reflected in the conditions in which it must operate. Organizational structures fall on a spectrum, with “mechanistic” at one end and “organic” at the other. According to researchers Stalker and Burns, mechanistic organizations have a hierarchical, top-down structure, while organic structures use more flexible structures with less clear defined chains of command.