Philippine Christian University

Taft Avenue, Manila

Graduate School

Master of Management, major in Educational management

Course: Master 612 – Management

3rd Trimester SY 2021 – 2022

Name : Rino P. Sangarios Date : July 25, 2022

Narrative Report: ORGANIZATIONAL STRUCTURE AND CHANGE

As much as individual and team-level factors affect employee attitudes and

behaviors at work, the organizational structure may have an even greater impact.

Key Terms:

Organizational structure refers to how individual and teamwork within an

organization are coordinated. Individual work needs to be controlled and coordinated

in order to accomplish organizational goals and objectives.

Structure is a useful tool for improving coordination because it identifies reporting

relationships, indicates formal communication channels, and explains how individual

actions are connected.

Organizations can operate under a variety of different structures, each of which has

specific advantages and disadvantages. Some organizational models are better

suited for specific surroundings and jobs, even though any structure with poor

management would be troubled by problems.

Building Blocks of Structure

We shall discuss the centralization, formalization, hierarchical levels, and

departmentalization the four structural characteristics that have been widely

investigated in the literature. We see these four components as the foundation of a

company's structure. Then, we'll look at how these components combine to create

two distinct configurations of structures.

Centralization

Centralization is the degree to which decision-making authority is

concentrated at higher levels in an organization. In centralized organizations, key

choices are frequently taken at the top of the hierarchy, whereas in decentralized

organizations, employees who are closest to the issue at hand make decisions and

address issues at lower levels.

As an employee, where would you feel more comfortable and productive?

Lower-level employees feel more empowered in decentralized organizations

because they have greater authority. Employees frequently assume that

decentralized businesses offer higher levels of procedural justice to employees since

decisions can be made more quickly. Decentralized companies are more likely to

draw in job candidates. That is why CEOs and other high-level managers are subject

to greater demands on their judgment because centralized companies delegate

decision-making authority to higher-level managers.

In the majority of small businesses, all decisions on the company's products,

services, strategic course, and the majority of other important areas are made by the

owner. However, a company can be centralized regardless of its size. An example of

an organization having a centralized management structure is Apple. Tim Cook,

Apple's Chief Executive Officer (CEO), who took over as company president after

Steve Jobs' death, is mostly responsible for making decisions within the company.

They are long regarded as an organization that retains a high level of centralized

control over the business's strategic activities, including the creation of new products,

the selection of target markets, and business acquisitions. In fast evolving technical

contexts, centralized management structures are common in business.

One of its drawbacks is that many businesses discover that centralized

operations result in ineffective decision-making. Nevertheless, there are benefits to

centralization as well. Some workers feel better at ease in a workplace if their

management takes judgments and issues directions with assurance. Additionally,

centralization may result in more effective operations, especially if the business is

running in a stable environment.

Extreme decentralization, however, can be destructive to companies. Hitting

the right balance between decentralization and centralization is a challenge for many

organizations.
Formalization

Formalization is the extent to which an organization’s policies, procedures, job

descriptions, and rules are written and explicitly articulated. There are formalized

systems when there are several written rules and regulations. These systems use

written rules to regulate employee conduct and leaving limited room for employees to

make individual decisions.

Formalization has the benefit of improving employee behavior predictability.

Employees respond to difficulties in a consistent manner across the organization

because they know to consult a handbook or a procedural guideline whenever a

problem at work arises, which promotes consistency in behavior. It clears up

uncertainty and gives workers guidance.

Because employees are accustomed to acting in a certain way, a high level of

formalization may result in less innovation. According to which, strategic decision-

making in these businesses frequently happens only during times of crisis. This

defined framework is linked that decreased motivation, worse job satisfaction, and

delayed decision-making process.

Hierarchical Levels

The amount of levels a company's hierarchy has is another crucial component

of its structure. When the size of the organization is held constant, tall structures

contain several levels of management between the top level and the frontline level,

while flat structures have few layers.

Tall structures typically have fewer employees reporting to each manager,

giving managers more opportunities to oversee and keep an eye on

employee's behavior. In contrast, flat structures have more employees who report to

each management. Managers will be less able to give close oversight in such a

system, giving everyone more opportunity to take initiative.

According to E. E. Ghiselli & D. A. Johnson (1970), their study shows that flat

organizations provide greater levels of self-actualization and employee needs for

satisfaction. Simultaneously, flat structures could present certain difficulties. Modeled

on L. B. Chonko's  study from 1982, managers who are responsible for a larger

workforce report higher degrees of role ambiguity, or the uncertainty that comes from

not knowing exactly what is expected of them in the workplace. This is especially

devastating for workers who require more direct management assistance.

Furthermore, because there are fewer management layers under a flat

structure, promotion chances will be more constrained. While workers in flat

organizational systems must be more adept at meeting their higher-order needs,

such as self-actualization. Tall structures are said to be superior at meeting the

needs of employees in terms of security. Lawler, E. E., and L. W. Porter (1964).

Departmentalization

Organizational structures vary in terms of departmentalization, which is

generally divided into functional and divisional categories. Organizations that use

functional structures organize employment depending on how closely they perform

comparable tasks. Departments including marketing, production, finance,

accounting, human resources, and information technology may be present in such

frameworks. Each member of these structures performs a specific function and

manages a large number of transactions. For instance, in a functional organization, a

marketing person might also act as an event planner, organizing marketing

campaigns for the entire company's line of goods.

 Departments in businesses with divisional structures stand in for the

distinctive goods, services, clients, or geographic location that the business caters

to. Thus, each distinctive good or service the business offers will have a separate

department. Marketing, manufacturing, and other roles are replicated inside each

department. Employees in these organizations behave more like generalists than

specialists. Employees will be responsible for carrying out a variety of duties in

support of the product rather than doing specific jobs. In a company with a divisional

structure, for instance, a marketing person can be in charge of organizing

promotions, managing interactions with advertising agencies, and organizing and

carrying out marketing research, all for the specific product line handled by his or her

division.

In reality, a lot of these companies have a hybrid organizational structure that

combines functional and divisional structures. For instance, departmentalizing by

product may enhance innovation and speed up response time if the organization has

several product lines. Although each of these departments may have specialized

marketing, manufacturing, and customer service personnel serving the relevant

product, the business may also discover that centralizing some operations and

maintaining the functional structure makes sense and is more advantageous

financially for positions like human resources management and information

technology. If the same organization serves several nations or regions, it may also

establish geographic departments.

There are benefits to each departmentalization structure. When a business

does not have a huge number of products and services requiring specific attention,

functional structures frequently work well. It also performs better in a situation that

are more stable and slower to change.

 Each product in a company's diversified product line will have different

requirements, making divisional structures more practical for quickly meeting

consumer wants and foreseeing market developments. Product divisions enable

organizations to be more adaptable and operate more effectively in challenging

conditions.

Two Configurations: Mechanistic and Organic Structures

The many components of organizational systems, such as formalization,

centralization, hierarchy levels, and departmentalization, frequently coexist. As a

result, depending on how these components are arranged, we can discuss two

different configurations of organizational structures.

Mechanistic Structures

They resemble a bureaucracy. A bureaucratic organization is a government

agency or for-profit corporation with strictly adhered-to operating regulations and a

rigid line of command. These organizations are very centralized and formalized.

Employees are provided with detailed job descriptions outlining their specific tasks

and responsibilities, and communication typically occurs through formal channels.

Mechanistic organizations are not suited for innovation and swift action since they

are frequently rigid and resistant to change. The disadvantage of these forms would

be that they inhibit entrepreneurial activity and discourage employees from using

their own initiative. Mechanistic frameworks not only limit human liberty and self-

determination, which will probably result in lower levels of intrinsic motivation at

work, but they also have negative effects on innovation.

 Despite these drawbacks, mechanistic systems provide benefits in more

stable environments. Efficiency is a mechanistic structure's key benefit. In a more

general sense, efficiency is the capacity to accomplish things properly, successfully,

and without waste. Mechanistic structures therefore provide benefits in businesses

that aim to maximize efficiency and reduce expenses. For instance, McDonald's has

a well-known bureaucratic organization with highly formalized staff jobs, distinct lines

of communication, and detailed job descriptions. They benefit from this structure

since it enables McDonald's to provide a consistent product at low cost all over the

world. There models can be helpful for young businesses. Uncertainty, ambiguity,

and a lack of structure are common problems for new companies. It has been

demonstrated that the presence of a mechanistic framework is connected to

business performance in new ventures.

Organic Structures

In contrast to mechanistic structures, organic structures have minimal levels

of formalization and are flexible and decentralized. Communication channels are

more open and flexible in organizations with an organic structure. Job descriptions

for employees are broader, and they are expected to carry out tasks in accordance

with the current demands of the company and their own levels of skill. Employee job

satisfaction is typically higher when organic structures are present. These

institutional settings encourage innovation and entrepreneurial behavior.

The diverse technological corporation 3M is an illustration of a business with

an organic structure. The business firmly supports decentralization. Nearly 100 profit

centers make up 3M, but each division seems like a little business. Each division

manager has complete autonomy and is responsible for all decisions made.
Operations inside each division are spun off to form a different business unit once

they grow too large and a division's product becomes profitable. This is carried out to

preserve the company's agility and the feel of a small business.

Illustration on their comparison:

Contemporary Forms of Organizational Structures

Matrix Organizations

They have a design that combines a traditional functional structure with a

product structure. A corporation may adopt a matrix structure to balance the

advantages of product-based and traditional functional structures rather than

abandoning product-based structures altogether. Employees that report to

department managers are specifically gathered into project or product teams. As a

result, each employee reports to both a project or product manager and a

department manager. In a matrix organization, product managers have authority and

a voice over issues pertaining to their products, whereas department managers have

influence over issues pertaining to company policy. Due to the environment's

dynamism and uncertainty, as well as the requirement to pay close attention to

certain projects or products, matrix structures are developed.

Boundaryless Organizations

It is a term coined by Jack Welch during his tenure as CEO of GE; it refers to

an organization that eliminates traditional barriers between departments as well as

barriers between the organization and the external environment.

Many different types of boundaryless organizations exist. One form is the

modular organization, in which all nonessential functions are outsourced. This

format's goal is to keep only the strategic and value-generating functions in-house,
while numerous suppliers handle the remaining processes. Strategic alliances

constitute another form of boundaryless design. Like a joint venture, in this

arrangement two or more businesses identify a common ground and pool their

resources to forge a win-win cooperation. The established barriers between two

competitors might be crossed in the process.

Learning Organizations

It is one whose design actively seeks to acquire knowledge and change

behavior as a result of the newly acquired knowledge. In learning organizations,

experimenting, learning new things, and reflecting on new knowledge are the norms.

At the same time, there are many procedures and systems in place that facilitate

learning at all organization levels.

Organizational Change

Why Do Organizations Change? Organizational change is the movement of

an organization from one state of affairs to another. A change in the environment

often requires change within the organization operating within that environment.

Change in almost any aspect of a company’s operation can be met with resistance,

and different cultures can have different reactions to both the change and the means

to promote the change.

Various sorts of organizational change are possible. Changes to a company's

structure, strategy, rules, practices, technology, or culture may be necessary. A

change in the environment may force an organization to make the change, or it may

be planned out years in advance. The way an organization functions can change

drastically and quickly, or it can change gradually and slowly. Change requires letting

go of the old methods of doing things and adapting to new ones, regardless of the
type. Consequently, it is primarily a process that requires efficient people

management.

What leads to changes in an organization? Workplace demographics,

technology, globalization, changes in market conditions, growth, and

underperformance are the reasons why change is necessary.

Resistance to Change

An organization must frequently change its organizational structure in order to

remain competitive. Failure to adapt could affect a company's capacity to survive.

However, not all employees are open to method adjustments.

The least favorable response to a suggested change attempt is active

resistance. Actively opposing the change may disrupt the endeavor and be public

critics of the new practices. Passive resistance, on the other hand, entails being

troubled by changes without necessarily stating these beliefs. Instead of voicing their

concerns to decision-makers, passive resisters may dislike the change quietly, feel

anxious and dissatisfied, and even hunt for a new employment. Nevertheless,

compliance entails a lack of excitement for the suggested adjustments. Finally,

individuals who support the change with enthusiasm serve as upholders of the new

approach and inspire others to do the same.

 Any change effort needs to get over employee opposition in order to succeed.

Without it, the business won't be able to respond to environmental changes and

improve the efficiency of its operations, which will cost time and energy. The people

in issue suffer negative effects as a result of resistance to change. Even when the

proposed change is one that obviously offers advantages and benefits over the

present situation, these negative effects may still exist.

Why Do People Resist Change?

People still resist change for a variety of reasons, including disrupted routines,

personality, feelings of uncertainty, fear of failure, personal impact of change,

change's prevalence, and perceived loss of power.

Planning and Executing Change Effectively

One of the most useful frameworks in this area is the three-stage model of

planned change developed in the 1950s by psychologist Kurt Lewin.Lewin K. (1951).

This paradigm assumes that resistance to change will exist. As a result,

implementing change without enough planning is likely to fail. Instead, organizations

should begin by unfreezing, or ensuring that their constituents are open to and

prepared for change. This is followed by change or executing the planned changes.

Last but not least, refreezing is making sure that the new routines, laws, or practices

stick and that change is permanent.

Unfreezing Before Change

Many change efforts fail because people are insufficiently prepared for change.

When employees are not prepared, they are more likely to resist the change effort

and less likely to function effectively under the new system. What can organizations

do before change to prepare employees? There are a number of things that are

important at this stage: communicating a plan for change, develop a sense of

urgency, build a coalition, provide support, and allow employees to participate.

Executing Change

The second stage of Lewin’s three-stage change model is executing change. At

this stage, the organization implements the planned changes on technology,

structure, culture, or procedures. The specifics of how change should be executed

will depend on the type of change. However, there are three tips that may facilitate

the success of a change effort: Continue providing support, Create small wins and

eliminate obstacles.

Refreezing

After the change is implemented, the long-term success of a change effort

depends on the extent to which the change becomes part of the company’s culture.

If the change has been successful, the revised ways of thinking, behaving, and
performing should become routine. To evaluate and reinforce (“refreeze”) the

change, there are a number of things management can do.

Building Your Change Management Skills

There are several steps you can take to help you overcome resistance to

change. Many of them share the common theme of respecting those who are

resistant so you can understand and learn from their concerns. The lists are as

follows: Listen to Naysayers, change revolutionary, Involve your peers, Assess

credibility, Appeal to your audience and Understand reasons for resistance.

Generalization:

Key components of a company's structure include the degree of centralization

and formalization, the number of levels in the hierarchy, and the type of

departmentalization the organization employs. These structural components have an

impact on employee attitudes and behaviors at work as well as how effective and

inventive the organization is. Together, these components give rise to both

mechanical and organic structures. Organic structures are decentralized, adaptable,

and support organizations in being inventive, whereas mechanistic structures are

rigid and bureaucratic and aid businesses in being efficient.

Newer ways of organizing are required due to the shifting environment in

which organizations operate. Functional and product-based divisional structures are

combined to create matrix structures. They speed up information flow and shorten

client response times, but they face difficulties because every employee is subject to

many management levels. Boundaries between departments or between the focal

organization and other organizations in the environment are reduced in boundaryless

organizations. These groups could be self-managing teams, strategic alliances, or

modular organizations. Experimentation and benchmarking are institutionalized in

learning organizations.

Organizations change as a result of environmental changes as well as how

decision-makers interpret those changes. One of the biggest challenge to

organizational change is resistance to change. People oppose change because it

disrupts routines, clashes with certain personality types, instills fear of failure, might

have unfavorable repercussions, lead to the possibility of losing authority, and, if

done too frequently, can wear down workers.

Submitted by:

RINO P. SANGARIOS
Student