Organization Theory and Design: The Differences in the Design Models - Assignment Example

? Organization theory and design Task: Organization theory and design Topic What are the differences in the design models?According to the article published by McKinsey, the functional model is not split into various business units like the hybrid structure, which is divided into many business units. The split segments are managed differently in terms of profitability unlike the functional model where the top management is responsible for the profitability of the whole business without segmentation. For this reason, using the functional model makes it hard to manage the business since the management only focuses of the mainstream of the entity and ignores the small consumer segments. Additionally, in the functional model, decision-making is usually made at the top and this makes it difficult to react to the altering competition (McKinsey, 2006). In the hybrid structure, decision-making it not difficult since the manager in each unit is able to make decisions autonomously. The unit leaders are accountable for the outcome of their decisions and this motivates them to have more entrepreneurial strength. The separate unit management enables the leaders to react to alteration in the market faster than in the functional model. Splitting of business into units enhances proper communication, which is difficult in the functional model. Lack of proper communication can lead to the difficulties in cooperation and supervision in a corporate. Furthermore, the splitting enables the CEO to concentrates on the business strategies instead of the daily business operations. Hybrid business structure promotes the development of the young leaders in the organization. The functional model can work best in the aviation groups that contract out many support functions, those that do not have the sophisticated communication system that are required to manage complex structures, or the ones that serve few uniform customers sections. To avoid the problems associated with the functional model, especially since the airline business is very complex the business should shift to Hybrid model (McKinsey, 2006). In businesses, there are many tasks, which should be completed in time in order to realize the organizational goals. The can be made easier through differentiation. Differentiation is a process, which a corporate assigns people to different tasks. The process also involves the allocation of resources to the businesses’ tasks. Differentiation in corporate ensures that the workers are given tasks according to their areas of interest. From my observation, Hybrid structure gives more differentiation compared to the functional model. This is because in the hybrid, the managers are assigned to each unit according to their areas of specialization. Additionally, the managers in each unit are responsible for decision-making and the model is mostly used in customer segments that are not homogenous. Differentiation promotes the business’s transparency. Since the hybrid structure provides more differentiation, it makes the firm to be more transparent unlike the functional model. The transparency ensures there is easy accountability for the corporate outputs and the appropriate distribution of resources and proficient leaders in each unit. Differentiation enables the firm to lower expenses too. Since the hybrid structure is more differentiated, it enables the managers in each unit to negotiate labor contract. This ensures that the work conditions and wages of the workforce correspond to the ones for the direct rivals (McKinsey, 2006). Support structure needs to be the same if the changes made can result to the problems associated with duplication of efforts. Example of a support structure that should not change is the airline branding. All the units should use the parent name of the company to attract the consumers. Minor support functioning like the services offered to consumers and delivery can change depending on the unit level. Some support functions can be bought with other corporate units while others can be bought separately (McKinsey, 2006). The functional model is mechanical while hybrid structure is more organic. This is because, the functional model serves homogenous customers while the hybrid model serves customers segments that are not homogenous and can change from time to time. In functional model the decisions are made by the top management and do not involve the lower business units in decision-making. Additionally hybrid is organic because it ensures that leaders at all levels partake in decision-making and this encourages innovation in the airline business. Topic 2: What effect does the choice of a model have on managerial authority and control? In the functional model, the CEO and the top corporate managers are responsible for the control of the business. Decision-making is made by the top managers and does not involve the workers in the business units. This restricts the employees from making choices regarding their tasks can does not encourage innovativeness. In the hybrid model, the workers at the lower level of the organizations are given chances to partake in decision-making. The manager in each unit is responsible for the control of the business. The managers are assigned to control the units according to their areas of specialization. Even though the CEO is responsible for the ultimate control of the business, the hybrid structure is more flexible and this encourages creativity. The form of management in hybrid structure is more transparent than the functional model. This ensures easier accountability since the unit managers are closer to the final products and hence, are responsible for the corporate outputs. Because of the division of the company into units and each unit has a manager in the hybrid structure, hence there would be higher number of managers compared to the functional model. The functional model cannot have a large number of managers because of its centralized nature. In a business, there can be greater span of control when there is proper coordination. Since in hybrid there is proper coordination, which promotes transparency, there is a greater span of control compared to functional model (McKinsey, 2006). The principal of minimum chain of command recommends that, for easier management of a corporate, there should not be many levels of hierarchy. Some organizations use the functional model because of reduction of expenses. Some firms use the hybrid model in order to have a flat hierarchy, which encourages innovativeness and flexibility. Both models maintain the principle which suggest the organizational leaders should be responsible for the control of the business and proper communication within the firm (McKinsey, 2006). Differentiation is the process of allocating resources and labor to different organizational tasks. Vertical differentiation is the organization levels, and the approach that leaders use when controlling each unit. Horizontal differentiation is the way work is separate and not the way managers control each unit. In a functional structure, authority or the control of the business is maintained at the top level while in the Hybrid structure, authority is distributed in every level equally (McKinsey, 2006). Rational legal authority is the positional influence of a person and is made powerful by a formalistic idea in the regulation content. The functional structure creates the highest positional authority since only a CEO or the top managers manage the organization. In hybrid structure, the positional authority is practiced at each unit. Unlike the functional model, the managers control one aspects and not the whole organization (McKinsey, 2006). Topic 3: Which model is better from the standpoint of work specialization and coordination? In the aspects of specialization and proper coordination, functional unit is better. This is because the workers are grouped according to their tasks. This encourages specialization since workers can focus in areas that they are good at. Working in an area that one is comfortable with can encourage improvement and commitment to the firm. Coordination will be easier in the functional structure because the workforce is working under the same unit and this ensures easy communication. Additionally, everyone in the firm aims at realizing the same goal. In the model, there is no rivalry among units and uneconomical replication of support functions (McKinsey, 2006). In hybrid, there is also work segmentation but unlike in the functional model, each area is controlled independently and do not have the same goals. Hence, coordination is harder in this model since each unit has a manager and all the managers have dissimilar principles. Improper coordination can affect negatively the strategic function of a firm. For instance, it can affect the arrangement of flight network and aircraft fleet. In hybrid too, work specialization may not be easy because there is no clear definition of jobs and all employees within a unit can be trained on different areas and not their areas of specialization. For proper running of hybrid model, there should clear allocations of tasks according to the employees’ areas of specialization in each unit. Hybrid model can benefit the firm because it encourages creativity and transparency, which augments accountability in the business. Moreover, it helps in the development of the company’s future leaders (McKinsey, 2006). To improve coordination in the hybrid model, there should be the creation of reasonable economic incentives. For instance, the units should establish transfer of prices for the main products that are dealt with internally. The pricing should be reasonable and thorough enough, so that airlines can make smart trade-offs between the quality of services they offer and their expenses. The corporate needs a thorough process that can harmonize all the activities in all the business units. For instance, there should be regular exchange of information between units. Proper and constant exchange of information will ensure the sharing of knowledge and information in the entire organization. Additionally, office services such as budgeting and delivery should be decentralized so that each unit can focus on their specialized customers. The business should formalize their predicted outcome of products and services that are dealt with internally. They should make agreements, which focus the most significant factors like the quality, penalties, and delivery times (McKinsey, 2006). Since functional model is managed centrally and all the instructions come from the top management, there should be easy coordination. This is because workers operate under a single management and the workforce struggle to realize common goals. However, it can be disadvantageous to use the models since communication can be strained because of the complex nature of the hierarchy. In hybrid structure, the issue of coordination is less because of there is a centralized control in each unit and the managers concentrate on their specialized areas. By having, specialized control there can be easier coordination within the units and hence, information can be exchanged faster and easier. Moreover, the managers in the hybrid units can easily reach their network partners compare to the top managers or the CEO in the functional model (McKinsey, 2006). It is not difficult to align the company strategy in the functional model since only the top managers manage the entire business. If the managers require, certain employees, they can easily find them within the single unit. However, networking can also be difficult in the functional structure because the top management may fail to know what is taking place at the lower levels. In hybrid structure, the unit managers at all levels report the happenings at their units, and this makes it easier for the top managers to be always updated on what is happening at the lower levels. Additionally since the top mangers do not focus on the daily operations of the business, they can easily focus on the coordinating efforts. However, coordinating and networking can be hard in hybrid structure because the segments can compete and there can be dissimilarities in performance measurements. Furthermore, networking may not be easy due to the independent management of the firm. In the current business environment that is constantly altering, hybrid model can be more effective since it can relieve the top managers so that they can major on developing the ancillary firm (McKinsey, 2006). References McKinsey. (2006). McKinsey on Travel & Logistics. The McKinsey Quarterly. Read More