The establishment of an organization presents one of the most difficult tasks as there are numerous problems connected with the choice of employees and organizational structure. A successful organization should present a well-developed system that can operate effectively even if there are problems associated with the work of one of its parts. Thus, there is no doubt that the knowledge of coordination mechanisms and structural dimensions of famous organizations is extremely important for anyone interested in business and management.
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The given paper focuses on such an organization as Siemens and analyzes its internal bureaucratic structure. The organization was chosen because it has a great number of employees and its well-developed structure provides an opportunity to apply a range of theoretical concepts related to management and organizational structures. In particular, there are a few important questions discussed in the paper. First, it describes the activities performed by the chosen organization and its key tasks.
Also, the topics discussed within the frame of the assignment include the structure of the organization and signs indicating that it is a bureaucracy. Finally, it analyzes the use of coordination mechanisms in the work of the organization to study the way of how they are used in the working practice of large companies.
The organization studied within the frame of the given assignment is Siemens which is known as one of the largest and the most successful companies in Germany. The organization has a long history as it was established in the middle of the nineteenth century by two German engineers. Since the very beginning of its operation, the organization was related to the production of various products and services; for instance, in the nineteenth century, the creation of telegraph lines and the production of telegraph cable were its primary tasks.
Nowadays, there is a wide range of tasks fulfilled by the employees working for the discussed organization. For example, the organization provides services in six different fields. The tasks related to the first sector (energy engineering) include the production of gas and steam turbines of different types, turbine-driven compressors, power facilities, electrical generating sets, and other equipment (Annual report 2016 2016).
Apart from that, IT specialists from the organization provide energy companies with assistance as they design and improve solutions for their businesses. Also, the organization offers numerous products and services helping to enhance process control in production companies. Thus, Siemens designs and produces the equipment for the automation of production such as PLC systems and provides human-machine interface solutions. Moreover, specialists working in this sector are responsible for the production of sensors used in modern automation systems all over the world and the motor vehicle parts for electro cars.
Siemens also works in the field of healthcare, producing diagnostic equipment of different types such as X-ray machines, tomographic scanners, and mammography devices. Interestingly, its work has an influence on infrastructures and transport systems of numerous cities as Siemens also produces electrical distribution equipment and designs building automation systems. One of the departments also provides financial services to its clients, ensures occupational safety, and deals with problems related to environmental protection.
Therefore, the organization aims to conduct research in the most important spheres of human activity and implement it into practice, designing effective solutions for clients all over the world.
The discussed organization has a very complicated structure as is clear from the materials presented on their official website (Siemens management n.d.). To understand whether Siemens can be regarded as a good example of a bureaucratic structure, it is necessary to refer to the characteristics that such structures possess. Speaking about bureaucratic organizations, we usually mean the systems that are created by specific rules. First, various parts of bureaucratic organizations are supposed to fulfill extremely different tasks as the specialization of labor acts as one of the leading principles of bureaucracy (Van der Voet 2014).
Also, such systems are characterized by the presence of the stiff hierarchy that defines the relationships between employees on different levels. It is obvious from this principle that these relationships are highly formalized and there is a range of rules that all employees must follow to help the organization to remain effective and successful. Also, bureaucratic structures cannot be flexible due to the clear distribution of roles among managers on different levels.
The concepts or formalization, centralization, and complexity are manifested in the structure of Siemens as it follows from the description of the organization provided on their official website. To begin with, there is no doubt that the management system of Siemens is centralized as there is a clear hierarchy of specialists who have the right to make important decisions involving significant changes.
Thus, the CEO of the organization whose name is Joe Kaeser has the strongest decision-making power at Siemens, enabling him to manage global processes taking place in the organization. The next level of the hierarchy is presented by the management board that includes seven members apart from the CEO. According to the vertical of the executive power, these seven specialists are required to consider the CEO’s suggestions as their power allows them to make decisions only in a limited number of areas. Each specialist belonging to the number of members of the management board fulfills his or her tasks; for instance, Roland Busch holds the post of the CTO.
The distribution of duties is strictly interconnected with different geographic areas where Siemens operates; thus, some members are responsible for working processes in Africa, the United States, Europe, etc. It is clear from the description of duties of the members of the management board that the tasks of managers are diversified to strengthen the hierarchical structure in the organization and make sure that there are specialists responsible for each aspect of the working process.
Formalization is another tendency peculiar to bureaucratic systems. About Siemens, this tendency is manifested in the work of the organization because there is a range of rules and values that should be respected by managers and employees in all units. Just like other large organizations, Siemens presents these basic rules in its code of conduct that includes topics related to the most important aspects of the business.
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These formalized rules help to ensure that all employees and managers who are on different levels of the hierarchy work by the same principles. In other circumstances, it would be extremely difficult for executive management to collaborate with clients and manage problems and work-related conflicts as the lack of unity of sentiment are always detrimental to hierarchical structures. Continuing on the topic of bureaucracies, it is necessary to say that such structures should demonstrate the complexity that stems from the division of labor helping to form a hierarchy. In the case of the discussed organization, complexity is manifested in a large number of business units and subdivisions.
The structure of the organization was changed almost ten years ago, and one of the changes was to reduce the number of business units. Nowadays, there are ten business units in the organization. In its turn, each of them presents another hierarchy. Each unit is headed by its CEO, and executive managers of units work under the president of the organization. At the same time, two units are managed separately.
A few major units are presented in the organizational structure of the discussed company. They are energy management, the generation of power, process industries, technologies related to power and gas, construction technologies, wind power, and hardware and software products. The most important subdivisions of the company are depicted in the diagram below.
As can be seen from the organizational division used in this case, Siemens utilizes a functional structure. The latter presents one of the most common types of organizational structures that are often used by international businesses. The reason why the company managers have decided to choose a functional structure lies in the fact that the company organizes its activity and singles out subdivisions based on the type of services provided instead of focusing on specific regions where services are available or other aspects of the business.
As for the advantages of this type of structure, it needs to be said that a functional structure allows managers to preserve the unity of organizations and effectively manage resources. At the same time, the use of such a structure helps to ensure that all employees have vast experience associated with certain tasks. Due to this specialization, the work of employees in companies with a functional structure is more productive. At the same time, this type of structure involves decreased collaboration between units. Another disadvantage is that such companies are easy to be managed when they are not large, but it becomes more and more difficult for managers to coordinate the efforts of units as companies start to grow.
The effective work of large organizations requires the use of special mechanisms aimed at facilitating working processes. In general, modern researchers single out six coordination mechanisms that can be used by organizations to fulfill their primary tasks (Sandberg 2014). It usually happens that companies utilize all six ways to coordinate the efforts of employees. At the same time, the use of mechanisms heavily depends on the size of an organization.
As for Siemens, this organization uses the mechanism that is defined as the standardization of norms; to apply it, the executive management has developed a set of key values and beliefs that all employees have to support. For instance, employees’ actions should not pose a threat to the environment or the safety of other people. Mutual adjustment is manifested on different levels of the hierarchy; thus, specialists participating in production processes communicate to work more effectively as a team.
Also, as is clear from the existence of the stiff hierarchy, direct supervision is widely used in Siemens. Specialists in different subdivisions always have to comply with the requirements of their managers when producing new equipment or introducing new types of client services.
Also, the properties of products and services produced in different subdivisions are standardized. Even though the particular clients can raise their requirements for the final product that they get, the equipment and replacement parts produced for different systems are always standardized, and the deviations from agreed standards result in the production of spoiled units. Similarly, skills and competencies for employees filling different posts are standardized to ensure the financial success of the organization.
In the end, there is no doubt that Siemens presents one of the examples of large bureaucratic organizations. Three important concepts allow us to distinguish a bureaucratic system (formalization, centralization, and complexity), and all of them are manifested in the work of the discussed organization. First, the authority is centralized as there is a clear system of managers. Each of the latter is responsible for the specific range of tasks, but all members of the management board work under the CEO who has the strongest decision-making authority.
The CEOs of the particular units also have the right to make decisions related to their responsibilities, but all changes involving important consequences have to be approved by the president of the organization. The authority vertical in the company has numerous levels, and it demonstrates the complexity of the system each of the ten business units presents a separate hierarchy where duties and responsibilities are distributed. Together with the high degree of formalization, these factors make Siemens a bureaucracy.
Annual report 2016. 2016. Web.
Sandberg, E 2014, ‘Coordination mechanisms in the store opening process’, International Journal of Retail & Distribution Management, vol. 42, no. 6, pp.482-499.
Siemens management. n.d. Web.
Van der Voet, J 2014, ‘The effectiveness and specificity of change management in a public organization: transformational leadership and a bureaucratic organizational structure’, European Management Journal, vol. 32, no. 3, pp.373-382.