Organization Structure and Design - LO5

Leading-Edge Organization Structures

The development of organizational structures is a way of responding to environmental
changes. Improving a company’s efficiency and effectiveness is one of the goals of
these structures. The two ledge-edge forms are the horizontal structure and the network
structure.

The Horizontal Structure

A horizontal structure allows every work team to take part in accomplishing a process.
This structure allows workers to focus and operate on the company’s goals with an
emphasis on teamwork and collaboration. The horizontal organization is the opposite of
the vertical organization because it focuses more on the process and procedures that
directly affect the product rather than focusing on the product itself.
Business Process Reengineering is one of the approaches in a horizontal
structure. It switches from task to process emphasis. If carried out properly, the
business process reengineering can help save a failing company or even increase the
company’s profit and growth. The goal of reengineering is to eliminate ineffective steps
in the business and recreate the company’s core process by clinging to more innovative
strategies using new technologies.
Business process reengineering is not an easy task to do because it tears down
something people are used to and will enforce organizational change. The people in
charge of the change will guide the team to complete a crucial process. However, this
can be very time-consuming, expensive, and risky. That is why a company needs to
assess first if they have the qualifications to impose change before the reengineering.
An example of process reengineering is how Ford Motors reduce the number of
their clerks in the accounts payable division as it shows that their department is five
times bigger than it should have been. They launched a business process reengineering
initiative to discover why the accounts payable department was so overstaffed, and this
move helps them overcome the American automobile depression in the 1980s.

The Network Structure

A network structure or virtual organizations is a newer type of structure that is less
hierarchical. It uses the latest technology to get access and share expenses, talents,
and markets among the employees. A network structure is like a social network of
interactions in which communications are open for everyone. Outsourcing is an example
of this, except that relationship is more limited.
In network structure, more than one organization or company works together to
produce a product or to accomplish a task. Because of a more interactive phase, many
innovation opportunities ascend, which can lead to a better outcome. After a goal is met
or achieved, alliances that are formed will likely disband. However, some ventures are
relatively permanent.
H&M is one of the examples of a network organization that outsource from
different companies in different countries of the world. They have a product
development company in Australia, a Call center company in New Zealand, and
Accounting company in Australia, a Distribution company in Singapore, and a
Manufacturing company in Malaysia. The reason for this is not solely to outsource but
also to reduce costs. Some other countries have cheap labor, that’s why many
companies move their production to these places.
Interpersonal skills of workers are in demand when it comes to horizontal and
virtual structures, but relationships are only temporary. Although authority structures
have a more stable connection among the workers, it is still likely to be less clear, which
pushes individuals to rely on informal influence tactics.