The Modification Of An Organizational Structure

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Ruby Travel & Tours was established 1995. It started as a small sized domestic tour operator. The company had just 5 employees at this time. As every other small organization Ruby Travel & Tours' organizational structure was based on a simple structure. This consisted of Ruby as the General Manager, at the head of the organization, followed by three other departments. These departments are, Ticketing & Reservation, Accounting and Sales & Marketing Department. The job specification for the departments were as follows

Ticketing & Reservation Department

They handled all day to day reservations, booking changes as per the customer requirements, cancellations and customer enquiries.

Accounting Department

The accountants department deals with day to day finances of the business. This includes making payments to suppliers and receiving payments from the customers. They also prepare the financial statements of the business.

Sales & Marketing Department

This department is in charge of recording the daily sales. They also develop tour packages to various destinations as well as promoting the packages, making sure that the packages are delivered successfully to the customers, through various mediums.

Overtime they have come to realize the importance of diversification in a challenging industry. So over a 10 year period they broadened their service scope by adding inbound and outbound, thus expanding the company. With this expansion, the company recruited 45 more employees to deal with the incoming demand.

Recently it became apparent that although Ruby Travel & Tour's was making profit the productivity was going down and the employees were becoming inefficient. This has resulted in an increase of customer complaints as they were unable to cope with the demand.

Due to the consequences they have faced with this expansion, Ruby decided to revise the organizational structure for the betterment and growth of the company.

Problem Statements

Even though the company has expanded, the structure still remains the same. Ruby identified several problems with this Organizational Structure which has lead to the decrease in productivity and inefficiency in the job performance of the employees. Below mentioned are the problems.

Low Degree of departmentalization

Lack of work specification

Centralized decision making

Analysis and Discussion

It is of uttermost importance for the company to maintain a good relationship with its client base. This is because the cost of retaining customers is much cheaper compared to that of gaining new customers. Lately though, Ruby Travel & Tours has seen that this factor has been compromised due to the inefficiency of its employees. The services provided by employees to customers are not satisfactory and has resulted in many complaints. Since it has been seen that these problems arised from an incomplete organizational structure, the company has identified these problems.

Low Degree of departmentalization

One of the main problems was that there is an overload of work for the employees as outbound, inbound and domestic tours comes under the ticketing and reservations department. Now they have to deal with three different kinds of products. Due to the pressure in the workload the employees are unable to reach their optimum performance level. Also in the ticketing & Reservations department, many employees are recruited to keep up with the incoming demand for the various products. The problem with this situation is that the manager in charge of this department is unable to monitor the work done by all of the subordinates.

Work Specification

Since the company does not have proper job specification, as a organization with poor organizational structure it may not be able to provide efficient customer services which can eventually lead to loss of business. For instance a customer who calls in with a problem may be handed off from one person to another because no one is sure who the right party is to handle the situation or you have the clear picture of the problem background.

Centralized Decision Making

With the current organizational structure, it is Ms Ruby, the General Manager who makes all the decisions. It is very demanding on the General Manager as she has to make all the vital decisions and at the same time has to oversee the day t day business.

Alternative Actions

Matrix Structure

The figure below shows the matrix structure. It consists of elements from functional structure and product structure.

The departments, inbound, outbound and domestic departments seem to cut across the functional structure. These are departments that must pass through the functional structure of this division but, each department must be allocated its own Ticketing & Reservations Team, Accounting Team and Sales & Marketing Team.

It has two channels of authority. They are performance & responsibility and evaluation & control. The employees are assigned to both a basic functional area and a Department manager. It has both the advantages of functional specialization and department specialization. Also there is a balance between strategic and operating channels. It Increases the number of middle level managers exercising general management responsibilities and exposure to strategic concern. There is a permanent and a flexible structure.

Functional Structure

Consists of a CEO with limited corporate staff, with functional line managers in dominant organizational areas such as production, accounting, marketing & human resources. The central task of CEO is to in integrate the decisions and actions of individual business functions for the benefit of the entire corporation Mostly applicable to firms with low levels of business diversification. There are one or few related Products and activities in each division.

Client Based Structure

Designing an effective organizational structure involves setting up a hierarchy that meets the needs of the business. Therefore by focusing on client or customer satisfaction, Ruby's can ensure that the business processes minimizes unnecessary infrastructure and in order to avoid miscommunication, needless friction over trivial issues, poor coordination and low morale, establish an effective structure that aligns people, processes and technology with established customer requirements.


Matrix Structure


Variety of project oriented activity

Efficient use of functional managers

More creativity from the employees and diversification

Middle management expose to strategic issues


Dual accountability can cause confusion

Leads to higher cost

Multiple projects at the same time may lead to conflicts due to limited staffs

Not very applicable to tourism and hospitality industry

Functional structure


Organization has specialists who may be better equipped to make decisions in their area of specialty

CEO can manager overall interest of the organization without having to worry about mundane problems

If the CEO is unavailable problems can still be solved and opportunities can be exploited

Suitable for Small to Middle size businesses

More efficient due to the specialization

Differentiates and delegates day to day operational decisions


Functional-area managers tend to focus on local versus overall company strategic issues

CEO may not be informed of potential problems or difficulties, thereby catching them by surprise when it may be too late to reverse course.

Vertical communication may be difficult, thereby, causing duplication or rivalry between departments.

Client Based Structure


Customer Focus is about getting all employees to look at their job through the eyes of the customer. Customer Focus involves continually listening to the voice of your customers, obtaining their input and feedback and using this information to make changes, which add value to your products and services. Customer Focus is about adding value at all levels of your organization.

Maintaining a strong customer relationship requires that you manage the customer's expectations. When you understand your customer's expectations, you can build an organization that is able to anticipate what the customer is looking for in your product or service and thereby determine what their future needs might be.

This also helps to get steady supply of customers into the firm as this eliminates the customer's dissatisfaction when the services are customized to meet their needs. Customers who are less than satisfied is harmful to the business as they may not be letting you know what they think of the organization, but they are telling other potential customers about their dissatisfaction.


One of the disadvantages for this structure maybe that communication between the departments may not be that well as each department will be focusing on their particular client base.

Final Decision

After thorough research of the various structures available, the company decided to implement a Client Based Organizational Structure. This is because it can help to create departments according to what the customers require. These departments are inbound, outbound, domestic, accounting and sales & marketing. By doing this, the departments will have their own specific jobs which will help the managers to oversee their departments more easily. This also helps to improve the customer related services as the staff in each of the respective departments will be specialized in their particular job and so will have specific tasks that are allocated to them. The department heads will be responsible for making day to day operational decisions which will in turn improve the productivity and improve efficiency of the staff. This will save time and make it easier for the general manager to make vital decisions related to the company. The organizational structure which has resulted in these improvements can be seen below.

Implementation Plan

Basically client focused organization compete with each other to gain the customer's attention. One of the keys to succeed in such scenario is to develop effective client relationships. Such relationships enhance company's reputation in the eyes of customers and shareholders. This benefits the company in the long run. A strong relationship with clients also proves to be an effective differentiator for the organization from other competing firms. This way the firm can leverage client relationship to gain sustainable competitive advantage.

Step 1

Define leadership, vision, and priorities and identify customer requirements with your executive team and develop a robust set of strategic objectives. Organize business around clients or customers when each customer possesses different types of product or services. A client focus would enable developing a program tailored to specific market needs and ensure accountability for results.

Step 2

Set up a structure for making decisions by establishing clearly the roles and responsibilities as it makes it easy to make decisions quickly. An organization structured around the beneficiaries of its services can respond quickly to client needs. Make hiring, training, financial and other program development decisions based on client-focused criteria.

Step 3

Hire or align your employees with key skills for strategic objectives and customer requirements.

Set up performance measures and incentives to ensure employees know how well they make progress towards achieving strategic goals. Link functions in the organization by establishing committees and liaisons to coordinate process development. Ensure that all departments can integrate their workflows throughout the business.

Step 4

Create and maintain effective work policies, procedures and processes. Evaluate systems on regular basis to make sure that work flows smoothly from branch to another. To focus on the client or customer, ensure that input from support, sales and marketing personnel gets incorporated into engineering product design.

Step 5

Establish a culture that responds to change. Create customer feedback loops that include conducting online surveys or questionnaires as well as running focus groups to learn about customer experiences with your product or service. Ensure that the business policies and procedures support resolving customer satisfaction issues in a timely manner. Empower customer service representatives to handle customer problems from start to finish without the need to transfer calls multiple times as customer loyalty starts with a good product usage experience and reliable customer support when problems arise.

Step 6

Create a document that defines your organizational structure and how it relates to client service. For example, use presentation development tools such as Microsoft PowerPoint 2010, Google Docs or to produce presentation files. Insert a chart and label each level of your hierarchy with the person's name, function and a short description of their client or customer focus or requirements.