Understanding Organizational Structures and Processes

Creating a Solid Culture

Despite the temporary or incidental nature of contingent workers, one of the challenges lies in forging a cohesive culture that embraces them. Supervisors need to figure out how to make all employees feel appreciated and a part of the team by creating an environment where they feel included and valued.

Motivation and Engagement

Managers must devise plans to engage and inspire contingent workers, as they may not have the same level of identification or commitment to the company as permanent employees. This can entail opportunities for professional growth, acknowledgment of their efforts, and clear communication of their contributions to the company’s objectives.

Policy and Practice Revisions

In order to account for the special circumstances surrounding working with contingent employees, organizations may need to make revisions to their HR policies and procedures. This covers things like communication, performance management, onboarding, and resource and information access.

Consequences for Workforce Flexibility for Organizations

Using a contingent workforce makes an organization more adaptable, enabling it to more quickly respond to changes in the business environment, workload fluctuations, and project-specific requirements. This adaptability may provide a big competitive advantage.

Cost Considerations

Employers should take into account the possibility of higher short-term rates, management overheads, and the costs related to integrating contingent workers into teams, even though hiring contingent workers can save money in the long run on benefits and long-term compensation commitments.

Talent Management

By using contingent labor, organizations can access a larger pool of specialized skills and knowledge. They must also manage risks related to intellectual property and confidentiality, ensure that knowledge is transferred between contingent and permanent employees, and keep up a strong talent pool.

Legal and Compliance Issues

The classification of workers raises legal questions that have an impact on labor laws, taxes, and benefits. In order to stay out of trouble and make sure that every employee is treated fairly, organizations need to manage these complexities. To sum up, an organization’s structure and management are determined by its size, the technologies it employs, and the environment it works in. Businesses frequently adjust their organizational structures as they expand or encounter new difficulties in order to accommodate a larger workforce, integrate cutting-edge technology, and adapt to shifts in their sector. Today’s most successful businesses are those that can quickly adjust to new circumstances, are adaptable, and ensure that all of their staff members—full- or part-time—feel appreciated and included.

Chapter 8: Departmentalization

Organizational structure refers to how a company arranges its departments, authority, and job roles. It addresses both vertical (reporting relationships) and horizontal (task allocation) aspects. Canadian Tire Corporation (CTC), a conglomerate with 1,700+ outlets across Canada, follows this model. It operates under five retail banners and offers financial services. CTC also divides its operations into key business categories, like Automotive, to oversee different sectors efficiently.

An organizational process is the series of steps that convert inputs into valuable outputs for customers. For example, Ubisoft, a major game developer, gathers feedback from customers through various channels, updates and tests games internally and externally, incorporating feedback to improve them. Finally, they distribute and sell the games. This feedback loop ensures continual improvement. Similarly, Procter & Gamble (P&G), a leading consumer goods company, owns renowned brands like Tide and Pampers. P&G has restructured its operations over time, most recently organizing its business units into four industry sectors. Both organizational structure and process are crucial aspects discussed in this chapter.

Functional Departmentalization

Functional departmentalization is the most common organizational structure, often used by small or new companies. It divides work into separate units, such as accounting, sales, marketing, production, and human resources. While some functions like sales, accounting, and human resources are common across companies, others vary based on the industry. For example, an insurance company might have departments for different types of insurance, while an advertising agency might have departments for artwork, creative work, and advertising mediums like print and radio.

Product Departmentalization

Product departmentalization arranges work and employees into units responsible for specific products or services. For instance, Bombardier, a leading manufacturer of planes and trains, is structured into four product segments: Business Aircraft, Commercial Aircraft, Aerostructures and Engineering Services, and Transportation. This structure allows for specialization within each product area and facilitates assessment of unit performance. However, maintaining separate functional departments for each product may lead to duplication and increased costs. Coordination across different product divisions and standardization of policies may also pose challenges.

Customer Departmentalization

Customer departmentalization arranges work and employees into units serving specific customer types. For example, a distribution company may have departments for small businesses, large businesses, consumers, and government clients. This structure emphasizes meeting customer needs and tailoring products and services accordingly. However, it may result in resource duplication like product departmentalization.

Geographic Departmentalization

Geographic departmentalization organizes work into units responsible for specific geographic areas. This structure helps companies adapt to diverse market demands and external environments. For instance, a Canadian dairy selling in Western Canada might need to adjust its products based on regional preferences. Similarly, it aids in navigating different business environments across countries.

Matrix Departmentalization

Matrix departmentalization grants equal authority to product managers and functional managers, with employees reporting to both. In a matrix structure, employees from manufacturing, design, and marketing collaborate under product managers to serve various markets. This structure suits medium-sized organizations with limited resources and a moderate number of product lines, providing efficient resource allocation. It’s particularly beneficial in complex and changing environments where coordination is crucial. Matrix departmentalization involves employees reporting to two bosses, encourages cross-functional interaction, and demands significant coordination between managers. Its advantages include efficient management of large tasks and access to diverse expertise, while challenges include high coordination requirements and potential conflicts between project bosses. Matrix structures may evolve from simple to complex forms to address management complexities and conflicts.

Chain of Command

The chain of command refers to the line of authority and reporting relationships within an organization. It clarifies who reports to whom and ensures accountability. The chain of command can be depicted in an organizational chart, which visually represents the hierarchical structure of the organization.