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Many of the big organizations have failed to understand the importance of effect of good organizational design on their company's effectiveness and performance. Select any one organization which experienced enormous adjusting problem due to the poor organizational design and explain in detail its structure and consequences of that organizational structure.
Organizational Structure: An Overview
What is organizational structure?
By structure, we mean the framework around which the group is organized, the underpinnings which keep the coalition functioning. It's the operating manual that tells members how the organization is put together and how it works. More specifically, structure describes how members are accepted, how leadership is chosen, and how decisions are made.
Why should you develop a structure for your organization?
Structure gives members clear guidelines for how to proceed: A clearly-established structure gives the group a means to maintain order and resolve disagreements.
Structure binds members together: It gives meaning and identity to the people who join the group, as well as to the group itself.
Structure in any organization is inevitable: An organization,Â by definition, implies a structure. Your group is going to have some structure whether it chooses to or not. It might as well be the structure which best matches up with what kind of organization you have, what kind of people are in it, and what you see yourself doing.
When should you develop a structure for your organization?
It is important to deal with structure early in the organization's development. Structural development can occurÂ in proportionÂ to other work the organization is doing, so that it does not crowd out that work. And it can occurÂ in parallelÂ with, at the same time as, your organization's growing accomplishments, so they take place in tandem, side by side. This means that you should think about structure from the beginning of your organization's life. As your group grows and changes, so should your thinking on the group's structure.
Elements of Structure
While the need for structure is clear, the best structure for a particular coalition is harder to determine. The best structure for any organization will depend upon who its members are, what the setting is, and how far the organization has come in its development.
Regardless of what type of structure your organization decides upon, three elements will always be there. They are inherent in the very idea of an organizational structure.
Some kind of governance
Rules by which the organization operates
A distribution of work
The first element of structure is governance - some person or group has to make the decisions within the organization.Â
Rules by which the organization operates
Another important part of structure is having rules by which the organization operates. Many of these rules may be explicitly stated, while others may be implicit and unstated, though not necessarily any less powerful.
Distribution of work
Inherent in any organizational structure also is a distribution of work. The distribution can be formal or informal, temporary or enduring, but every organization will have some type of division of labor.
There are four tasks that are key to any group:
Envisioning desired changes: The group needs someone who looks at the world in a slightly different way and believes he or she can make others look at things from the same point of view.
Transforming the community: The group needs people who will go out and do the work that has been envisioned.
Planning for integration: Someone needs to take the vision and figure out how to accomplish it by breaking it up into strategies and goals.
Supporting the efforts of those working to promote change: The group needs support from the community to raise money for the organization, champion the initiative in the state legislature, and ensure that they continue working towards their vision.
Examples of Structure
So how can all of these pieces be put together? Again, the form a community group takes should be based on what itÂ does, and not the other way around. The structures given are simply meant to serve as examples that have been found to be effective for some community-based organizations; they can and should be adapted and modified for your own group's purposes.
I. A relatively complex structure
The Ste. Genevieve's Children's Coalition is a relatively large community-based group. They have a coordinating council, a media committee, and three task forces, dealing with adolescent pregnancy, immunization, and child hunger. Each of the task forces has action committees as well. For example, the adolescent pregnancy reduction task force has a schools committee that focuses on keeping teen parents in school and modifying the human sexuality curriculum. A health organizations committee focuses on increasing access and use of the youth clinic. The media committee works to keep children's issues in the news, and includes professionals from the local television stations, radio stations, newspaper, and a marketing professional. The coordinating council is composed of the executive director, her assistant, the media committee chair, and the chairs of each of the three task forces. A board of directors has been invaluable in helping keep the coalition financially viableÂ
In diagram form, a complex organization might look like this:
TheÂ coordinating committeeÂ is at the center of the project. Its members develop a vision and broad goals based on comments from the action committees or other members of the community.
Task forcesÂ develop broad strategic approaches to solve the problem. Usually, several task forces are created from priorities set through a community assessment process. Task force members are chosen for their interest in a particular issue. They are actively involved in supporting and participating in theÂ action committees.
The action committees, which are organized around community sectors such as those listed above, develop specific steps to carry out broad strategic approaches. Each action committee focuses on specific actions in its sector.
TheÂ communities' trusteesÂ serve as a shield, helping make sure the members don't come up against barriers such as a lack of money. An organization of this size will usually have paid staff. This generally means they'll have an executive director and possibly project directors, community mobilizers, and administrative assistants.
The biggest advantage to this type of structure is that it allows active participation by all members.
II. A mid-size structure
The coordinating council of Safe House, an organization for the homeless, is made up of six people, including one couple who were once homeless themselves. Membership on the coordinating council is open to anyone willing to accept its leadership responsibilities. The group has no task forces: its mission (reducing the city's homeless population) is targeted enough that they were deemed unnecessary, and the work usually done by task forces is carried out by the coordinating council. It does have three action committees: a social services committee, a business committee which deals primarily with job training, and a government/law enforcement committee.
With advice it receives from members of the group's action committees and other community members, the coordinating council discusses and debates every decision. It then acts as a united front, and takes the decisions back to the action committees to be carried out. If group members have any questions or problems with the decisions made, they can bring their concerns to an individual member, or to the council as a whole.
In diagram form, a mid size structure might look like this:
A mid-sized organization may or may not have paid staff members, and generally will have a more targeted mission, leading to fewer task forces.
III. Small action groups that are not part of a larger organization
A group of neighbors got together because they were worried about the possibility of traffic accidents in their area. They decided that the worst problem was an unmarked intersection in the neighborhood and asked the city to put up four-way stop signs there, which the city readily agreed to do. Pleased with its success, the group started meeting on a monthly basis over dinner, to keep in touch and deal with problems as they arose. The group's structure remained very loose. A retired gentleman did become the unofficial leader, because he had more free time to arrange things, but decisions continued to be carried out by general consensus.Â
As smaller size means fewer people, these groups are usually less complex, as they have less need for a formal hierarchy and instead have governance that is consensus-based. A diagram of such a small group might look something like this, with each of the circles representing an individual member:
Â In diagram form, a small action group might look like this:
Choosing Your Organization's Structure
What type of structure should you choose?
First, decide upon the formality your organization will have. The following table, adapted fromÂ The Spirit of Coalition BuildingÂ can help you make this first decision.
Conditions favoring more or less formality in organizational structures
A looser, less formal, less rule bound structure would be favored when
A tighter, more formal, more rule-bound structure would be favored when
Stage of organization development
The organization is just starting
The organization is in later stages of development
Prior relationships among members
Many such relationships already exist
Few such relationships already exist
Prior member experience in working together
Many such experiences have occurred
Few such experiences have occurred
Member motivation to be part of the organization
Motivation is high
Motivation is low
Number of organization tasks or issues (broadness of purpose)
There is a single task or issue
There are multiple tasks or issues
The organization is small
The organization is large
The leadership is experienced
The leadership is inexperienced
Urgency for action
There is no particular urgency to take action now
There is strong urgency to take action now
Organizational structure is something that is best decided upon internally, through a process of critical thinking and discussion by members of the group. Structure is what ensures that your organization will function smoothly and as you intended. You should think about structure early in the development of your organization, but be aware that the type that fits best may change as your organization grows.
Organisation Structure with respect to a company, Coca Cola
The Coca-Cola Company realizes that it needs to be able to meet the ever changing demands of its customers. This is why the company pushed towards decentralization in the nineties, and even more so recently. The organization has two operating groups called Bottling Investments and Corporate. There are also operating groups divided by different regions such as: Africa, Eurasia, European Union, Latin America, North America, and Pacific. Each of these divisions is again divided into geographic regions. By allowing decisions to be made on a more local level, the organization can quickly respond to changing market demands, and higher-level management can focus more on long-term planning. Certain divisions of the company, such as finance, human resources, innovation, marketing, and strategy and planning are centrally located within the corporate division of the company. Some of these functions take place at lower levels in each of the regions of the company; however, most decisions are made at the top of the hierarchy. For example, in 2002 the decision to sponsor the World Cup was done at the corporate level. Corporate headquarters, however, allowed the local divisions to make the advertising decisions. This allowed each division to specifically design commercials and ads that would appeal to the local market. When Neville Isdell took over as CEO and chairmen of The Coca-Cola Company in 2004, he began to using more complex integrating mechanisms. In order to deal with organization's extremely low growth rate, Isdell used teams of top managers to create solutions to the organization's most pressing problems. Face-to-face meetings were held regularly at the local levels so employees could remain informed. Besides the use of teams and meetings, the intranet was overhauled to provide a source of real-time sharing of information. The use of complex integrating mechanisms is important in such a tall and wide organization. It is important that each function of the company is able to share up-to-date information quickly with each other. The organization seems to be doing an excellent job of balancing standardization and mutual adjustment. The Code of Conduct for the organization is a guidebook for how every employee should act. Should an employee act improperly, they are subject to disciplinary actions. Due to the changes implemented by Isdell, mutual adjustment has started to play a larger role in the organization. Employees feel more engaged and turnover has been reduced. Isdell's changes have led to increased growth rates for the organization, and return on equity for stockholders went from a negative return to a 20percent return. This balance is essential, because it allows employees some flexibility, but also gives the organization some predictability. The Coca-Cola Company's structure is a hybrid of both mechanistic and organic models. The focal point of The Coca-Cola Company is on responsiveness. The complex integrating mechanisms previously discussed are characteristic of an organic structure. The surveys and interviews used by the company allowed information to flow from the bottom-up, and the intranet allows for information to be exchanged laterally. The surveys have also caused The Coca-Cola Company to pursue simplification and standardization. Centralization and high standardization are associated with a mechanistic structure. The blending of both types of structures seems to be ideal for the organization. Flexibility is essential when trying to appeal to such a vast number of independent markets, however, high standardization is important to remain efficient in production. The use of complex integrating mechanisms allows for easier coordination for the global company. Centralization keeps organizational choices aligned with organizational goals. Now that information in the company is flowing in every direction, upper-management will have access to information more quickly, adding to the organization's flexibility and responsiveness. The recent shift towards a more decentralized and organic structure corresponds with the uncertainty of the organization's environment.
Designing Organizational Structure: Authority and Control
The Coca-Cola Company currently employs approximately 94,800 employees. According to a general organizational chart obtained from the company's website, there are more than 5hierarchical levels at the corporate level. For example: the head of the Canadian division reports to the president and COO of the North American Group. That president reports to the CFO, who reports to the Office of the General Counsel. The General Counsel then reports to the CEO. It is fair to assume that there are at least a few more steps in the hierarchy at the local level. Due to its tall structure, the organization has experienced communication problems. One of the problems discovered through a survey, was that the people and the company lacked clear goals. Tall hierarchies also cause motivation problems, which is why the organization is attempting to get employees more engaged. The increased usefulness of the company's intranet will greatly increase the communication between every level of employees, and allow upper management to effectively communicate to the front line employees. Based on information from Report 2006 this span of control seems somewhat slim for the CEO of such a large organization. The CEO is also a member of the Senior Leadership Team. This team consists of each head of the eight operating groups aforementioned, and also has other top executives in areas like innovation and technology and marketing. Although there are only six people that answer directly to the CEO, the CEO is able to receive input from a wide variety of divisions because of this leadership team. Since the team is comprised of members from various divisions, the CEO is able to obtain a wide variety of information. The move to decentralization has caused structural changes for The Coca-Cola Company. New offices have been opened to facilitate decisions being made closer to the local markets. The organization has also undergone centralization of some of the company's departments. In 2006, the Bottling Investments division was created to "establish internal organization for our consolidated bottling operations and our unconsolidated bottling investments." It appears that the organization is striving for a hybrid structure, which allows them to have advantages of both mechanistic and organic structures, while trying to minimize the negative consequences of each. The strategic structural changes that the organization has gone through in recent years have created a much needed positive impact on the company. Sales growth increased and employees are much more satisfied. The organization is trying to create a more innovative culture by pushing towards decentralization.
Designing Organizational Structure: Specialization and Coordination
The Coca-Cola Company realizes that a divisional structure gives the organization the best opportunity to react to the changes in its uncertain environment, but also allow it to maintain a level of stability. The multidivisional structure is beneficial for the organization for a variety of reasons. The division based on geographic region allows certain aspects of the company's operations to be tailored to the individual market. One advertising campaign or slogan may not be appropriate for another market, so decisions about specific ads are made closer to the individual markets. Multidivisional structures allow divisional managers to handle daily operations while corporate managers are free to focus on long-term planning. There are also problems associated with this type of structure. If the company creates divisional competition, coordination may decrease because each division wants to have an advantage over everyone else. Communication problems may also exist because information can become distorted when it has to travel up and down tall hierarchies. A multidivisional matrix structure may be better suited for The Coca-Cola Company. This would increase coordination between corporate and divisional levels, and managers at each level would work together to create solutions to problems. While such a structure may be too complex for a global organization, the company may want to look into it.
Organizational Design and Strategy
The core competences that give the organization its best competitive advantages are its strong brand name and its network of bottlers and distributors. Along with its marketing capabilities and broad portfolio of products, The Coca-Cola Company has core competences which are extremely difficult, if not impossible to duplicate. The strong Coca-Cola brand name gives the company a great deal of bargaining power and leverage. In 1999, PepsiCo and The Coca-Cola Company were fighting to become the supplier of beverages for the Wendy's restaurant chain. Wendy's opted to partner with The Coca-Cola Company even though PepsiCo was offering much more money. The brand name recognition that the company enjoys is a powerful bargaining tool. The Coca-Cola name even has an influence on consumer tastes. When The Coca-Cola Company was looking to launch Diet Coke, they performed some blind taste tests with consumers. The consumers preferred a glass labeled Diet Coke over a glass labeled Tab by 12 percent, even though the liquids in each glass were identical. It has taken the organization over 120 years to build such a strong brand preference, and this cannot be imitated by competitors. The relationships that the organization has with its distributors are another competitive advantage that cannot easily be imitated. The contracts and relationships between the two groups create symbiotic interdependencies, which mean that the success of both companies has a direct impact on each other. The Coca-Cola Company agrees not to sell to other parties in the local market, and the bottler agrees to only purchase the syrup and concentrate from the company's authorized dealers. The Coca-Cola Company at times provides the retailers and distributors with promotions, and capital at times. Because the organization does not have to worry about the distribution in the local markets, it allows the company to focus on more important issues. The Coca-Cola Company's business-level strategy is one of differentiation. This is evident in the previous example of consumers preferring identical beverages just because the Coke brand name was attached. They have been successful pursuing differentiation because the focus of the company has always been on marketing. The Coca-Cola Company is "known for innovative marketing that constantly promotes their brand names and protects their domains from competitors. The hybrid structure of The Coca-Cola Company is ideal for its differentiation strategy. The centralization of the marketing and innovation functions allows the company to retain control over development, marketing and production. By performing extensive market research and creating more local offices, the company is always looking for new ways to serve new customers. The use of complex integrating mechanisms allows coordination between all levels and divisions of the company.