2.

2 CHANGES IN
ORGANIZATIONAL
STRUCTURE
CHANGES IN ORGANIZATIONAL STRUCTURE

• Organizational structures are not static due to the dynamic nature of the global
business environment. Hence, in reality, organizational structures are more
flexible and adaptable to change. Two examples of flexible organizational
structures are:
• project-based organization, and
• the Shamrock organization.
• Both internal and external factors may cause changes in a firm’s organizational
structure. For example, inorganic growth such as mergers and acquisitions are
likely to cause a restructuring of the organization. Other examples include
decisions to outsource, offshore, reshore, or inshore.
PROJECT BASED ORGANIZATION

• Project-based organization is a
flexible organizational structure based
on the specific needs of a particular
project or business venture. It is
suitable for getting experts together
for short-term or temporary projects,
such as construction projects or
teams of suitably experienced
employees to work on a new business
venture or product. It is suitable for
highly critical projects, especially
when time is of the essence such as
marketing campaigns for an upcoming
blockbuster movie.
PROJECT BASED ORGANIZATION
• Each project is run by a project
manager (PM), who oversees the
team involved in the project. Unlike a
departmental manager who has
responsibility over a specific functional
area of the business, a project
manager is someone who holds
responsibility for an entire project.
• Once the project is completed, the
team members disband and
reassemble to begin another project
or revert back to their own
departments or functional areas of the
organization.
SHAMROCK ORGANIZATION
• Professor Charles Handy’s Shamrock
organization (1991) is another type
of flexible organizational structure.
Handy argued that organizations must
adapt to changes in the business
environment in order to survive and
thrive.
• The professional core (or core workers)
• The contingent workforce (or peripheral
workers), and
• outsourced vendors (or outsourced
workers).