Introduction
Organizational structure and design play an important role in defining the management approach of a firm. This is clearly evident at LPA Group Plc, one of the leading manufacturers of electromechanical, electronic, and LED lighting systems in the world. This firm has been very successful in the recent past following the restructuring of its organizational structure. The top management realized that the firm was expanding very fast, and the traditional structure that was used before could no longer be effective enough to help in the normal operations.
It was considered necessary to come up with a new strategy that would address the issue of geographic expansion following the decision of the board of directors to go global. According to Schein (2010), organizational structure and design largely depend on the nature of the business, geographic coverage, and the control that a firm has over its overseas subsidiaries. LPA Group Plc has embraced a decentralized organizational structure as the best way of dealing with the challenges of global market operations. The diagram below shows the organizational structure of this firm at the top management unit.
Organizational Structure
Implications of the Current Organizational Structure on Organizational Behavior
As shown in the diagram above, the chief executive officer of this firm has four managing directors who help him in the top management unit. Each of the four managing directors heads the four main production units at this firm. The chief executive officer heads the council of the directors, but each of the four managing directors has the power to define how his or her department is run as long as the approval of the chief executive officer is obtained. In this organizational structure, the managing directors have mid-managers who are responsible for various tasks within the units. Although they work towards achieving the overall vision of the organization, each of them has specific strategic objectives in line with their area of operations.
The current organizational structure of this organization has some implications that directly affect organizational behavior. The top management unit has struggled to create an organizational culture that is uniform across all the departments. The organization is finding it difficult to have a uniform organizational behavior for all the employees of the firm. This problem is a direct implication of the semi-autonomous structure embraced by the firm.
Each of the four managing directors has been given the authority to come up with strategies that will make their units successful. For this reason, each of them would formulate policies that they consider appropriate. The organizational behavior that is favored by one director may be abhorred by the other directors. Over the years, the four directors have been working to create a behavioral pattern that they believe would make it easy to manage the employees. Because of this, there has been a consistent drift of the organizational behavior in departments. At first, the top management did not realize that this was happening.
No one suspected that the decentralized organizational structure would decentralize the organizational culture. Even the managing directors themselves did not realize that this was happening. In the meantime, the more they emphasized on the specific behavioral pattern, the more they created a drift in the organizational behavior at the four units. The management realized that this was happening at a time when each of the four units had become unique in their employee management approach.
This brought some pertinent problems to the organization that the management unit had never anticipated. A situation was created where the employees of one unit could not cross over to the other unit very easily. The organizational behavior on each of the units was so distinct that it required some training to make an employee from one department to fit in the other departments. This was a big problem for the firm because some of the engineers were expected to work in all the units based on their demand.
There have been complaints from some of the employees that have led to low morale at this organization. These employees are complaining that the management unit is creating an unhealthy competition among the employees in different units. Each of the units always strives to be at the top when ranking the overall performance by the end of the financial year.
As a result of this, sometimes the employees are forced to work for extra hours in order to meet the specific objectives. This is creating a culture where employees pretend to be committed to their work when they realize that their supervisors are around. This behavioral pattern has reduced the productivity of some of the employees. Others have even considered moving to other companies where they believe their interests will be taken seriously. As Bate (2010) says, losing valuable employees to the competitors can hurt the profitability of a firm.
This organizational structure has some positive implications on organizational behavior. According to Maon, Lindgreen, and Swaen (2010), organizational behavior should be uniquely defined by the nature of the tasks involved within an organization and the industry in which it operates. For instance, the organizational behavior that is expected of a doctor is very different from that of an engineer.
While a doctor should remain positive to regular late-night calls when there is an emergency at the hospital, these calls will be very strange to an engineer. This means that in each industry, and within a particular field of work, it is necessary to have unique organizational behavior that is relevant to the organization. This is what the decentralized system of management offers to the four managing directors. They have the mandate of defining the organizational behavior of their units based on the tasks that the employees need to address.
Implication on the Group and Interpersonal Processes
The organizational structure used in this firm has fundamental implications on the group and interpersonal processes. It has promoted teamwork within the organization. Members of each of the units have realized that they need to work as a team in order to ensure that there is an overall success at their unit. The structure has also impacted on the interpersonal processes. Within each of the units, the employees know that they have to work together in addressing various tasks. This has promoted interpersonal processes. However, there has been a negative impact on individual career development. This structure used at this firm has limited the ability of the employees to explore related fields other than the one assigned to them.
Implication on Communication
Communication is one of the most important processes within an organization. The organizational structure and design that the management of LPA Group Plc has embraced promote effective communication within the system. The bureaucracy that existed before has been eliminated. Initially, there was a strict vertical communication protocol that had to be observed by all the employees. No employee was allowed to pass an official message if not through the immediate supervisor. However, this structure changed this bureaucratic communication approach. It is now possible for the junior employees to communicate directly with the senior managers in order to address issues that affect their normal workplace environment. This new approach has helped in promoting the morale of some employees. It has also promoted innovation in this firm.
Implication on Decision-Making Process
The decentralized management system has helped in promoting an effective decision-making process at this firm. According to Linnenluecke and Griffiths (2010), the decision-making process that follows numerous channels is always detrimental in coming up with effective strategies. The process should be simple, straightforward, and less time-consuming. This is what the structure offers at this firm. The Decision-making process has been decentralized.
The managing directors can easily collect relevant data from the units operations, and with his or her team of mid-managers, come up with decisions on how to address some of the issues affecting their operations. The chief executive officer will only be needed to approve the policy that the department has developed. This approach is good because the decision made always focuses on specific problems within a particular unit of the firm.
Implication on Power
This organizational structure has serious implications on the center of power within the firm. In many organizations, the chief executive officer is the center of power that is expected to define the strategies to be implemented. However, this is not the case at LPA Group Plc. Power in this organization has been decentralized. The chief executive of the firm has delegated some of the powers to the unit managers.
The unit managers now have the power to make important decisions concerning their departments. The mid-managers have also been given the mandate to make operational decisions on the daily operations of the firm. These mid-managers do not need to consult the managing directors when coming up with tactical decisions on how to approach different tasks. The only thing they need to worry about is the need to achieve the goals set by their superiors. This approach eliminates cases where some managers wield excess power, while others are left without any power.
Implication on Political Behavior
According to Dunbar and Starbuck (2006), organizational politics plays a role in defining the organizational behavior within a firm. The organizational structure that a firm uses always defines the political behavior of the employees. When a firm has a system where the power rests with the chief executive, then the top management becomes an easy target by the political units. However, this is not the case at this firm. Power has been devolved, limiting the political window.
Implication on Stress Management
Stress management within a firm is always the role of the human resource unit. Stress management can be affected by organizational structure and design. At LPA Group Plc, management units at lower levels have the mandate to make decisions that are in the best interest of the firm and its employees. This makes stress management an easy process to undertake.
Recommendations
The management should consider the following recommendations in order to address some of the identified challenges.
- There should be an attempt to develop organizational behavior based on the mission and values of the firm.
- The chief executive officer should be more involved in the activities taking place in all the departments.
- The unit managers should make an effort to ensure that employees’ interests are taken care of in order to boost their morale.
References
Bate, S. P. (2010). Strategies for cultural change. London: Routledge.
Dunbar, R. M., & Starbuck, W. H. (2006). Learning to Design Organizations and Learning from Designing Them. Organization Science, 17(2), 171-178.
Linnenluecke, M. K., & Griffiths, A. (2010). Corporate sustainability and organizational culture. Journal of world business, 45(4), 357-366.
Maon, F., Lindgreen, A., &Swaen, V. (2010). Organizational stages and cultural phases: a critical review and a consolidative model of corporate social responsibility development. International Journal of Management Reviews, 12(1), 20-38.
Schein, E. H. (2010). Organizational culture and leadership. New York: John Wiley & Sons.