The traditional organization structure was established in early 20th century and it became popular among business practitioners (Lim et al, 2010). The multi-layered bureaucracy was seen to be more efficient and effective in managing large organizations. There were transportation constraints and the ability to collect, present and spread information was limited. Most workers at that time did not have adequate education levels and the required skills. These factors led to development of a strong management system with centralized powers. All decision s were made by managers and the subordinates were expected to take directions from their seniors without asking any question. Globalization has led to improved communication and transportation services across the world (Jacobides, 2007). Employees are well trained and have diversified skills. Increased competition and changes in the external environment has led to changes in the organizational structures. This essay provides a comparison between traditional organization and organizational structure in modern business economy today.
The traditional organization was generally casual in nature and it was goal oriented (Butler, 1986). Under this system, the organizational objectives and incentives were clearly defined and easily controlled because everything within the business practice was predictable. The traditional organization model establishes managerial control over subordinates and managers provide subordinates with instructions. The organization is run by hierarchy, control, rules and authority. This system was similar to an effective machine that has clearly differentiated functions working in timely and reliable manner to accurately accomplish set goals. On the other hand, the modern organization emphasizes on strategic management (Lim et al, 2010). This model takes into consideration development of a decentralized organization.
The organization undergoes drastic changes due to creativity, motivation, political and power influence. There is increased flow of information in the current organization which moves in both directions. Communication between the organization`s management and employees can take place towards any direction. The modern organization has different variables as opposed to clearly defined objectives under the traditional system. This makes the organization simpler and less structured. The modern organization has few layers which limits the complexity of hierarchy among the staff. The chain of command in the modern organization is not clear making it difficult for managers to regulate and control their subordinates.
The goals and objectives in the modern organization are not as casual as they were under traditional organization. The goals have become more diversified and they are influenced by many factors including, strategic planning, creativity, individual responsibility and teamwork (Lim et al, 2010). The organizational structure is clearly defined and the flow chart together with responsible authorities and job descriptions of all employees are developed in advance. This enables the employees and managers to establish e good working and communication relationship. This structure clearly indicates duties, responsibilities, guidelines and hierarchical structure which enable every employee to know his or her position in the organization. The management and subordinates are able to understand their company and know the place they hold in the organization. This limits problems that might arise as a result of unclear structural proceedings.
Traditional organizations are generally stable. They are closed systems that cannot interact and get influenced by environmental factors. On the other hand, the modern organization structure is an open system which dynamically interacts with the external environment (Jacobides, 2007). The modern organizations take in resources from their environment and transform them into outputs to be distributed back into the environment. The processes and structure in traditional organizations were stable for longer periods. The situation has changed under modern organizations where structures undergo continuous changes. Organizations continuously improve on their competitive advantage which puts them in a state of permanent flux. Employees in modern organizations are required to frequently update their skills and knowledge in order to cope with changing trends in the business world. The employees` job description keeps on changing and the work groups are not permanent as they were under the traditional organization. Employees work in teams that consist of members taken from different sections depending on the requirements of a specific project.
Modern organizations undergo a lot of changes which includes reorganization of divisions, reengineering of business processes, replacement of permanent employees with part-timers or freelancers and outsourcing of non-critical activities (Jacobides, 2007). Managers cannot have pre-determined notions about any issues due to the dynamic nature of business environment and the constant need for change. Instead they have to be flexible and quickly adapt to changes in the environment. The work under traditional organization is individual oriented while in modern organizations the work is team oriented. Managers under traditional structures do all organization work and employees are just required to do what managers tell them to do. However in modern organizations, managers and subordinates have no differences. There is team work between all employees in the organization despites their hierarchical level. The organization works as a group of people who have a common objective and motive reflecting the success image. This increases the efficiency and effectiveness in achieving organizational objectives.
The modern organization has introduced the concept of temporary jobs as opposed to permanent jobs in the traditional system (Lim et al, 2010). Most companies are now offering temporary employment to their employees depending on various internal and external factors. The modern organizations involve workers decision-making as opposed to the traditional system where employees were only expected to take commands from their seniors. Managers encourage employee participation in order to remain competitive under the fast changing economic conditions. Involvement of employees in making organizational decisions helps the company to effectively respond to dynamic product and market demands (Jacobides, 2007). This pools the ideas of individual employees which can help the company to achieve desired results. Modern organizations aim at involving the maximum number of people in decision-making. This leads to ownership and commitment to the company decisions which improves employee retention. Employees are more satisfied when given the opportunity to participate in decision making.
There are four main levels that are followed by organizations in decision making process namely; tell, sell, consult and join (Butler, 1986). In telling leadership, the leader makes decisions without consulting employees and communicates the decision to subordinates. The leader gives complete direction to his or her subordinates. This strategy is important for issues like government legislation, safety concerns and other decisions which do not require employee input. The sell strategy involves making decisions by the company and then attempting to get employee commitment to the decision. This is used in situations where employees do not have a lot of influence over decisions but their commitment is required. The consult strategy involves inviting all employees to give their views about a particular issue but the final decision is made by the leader. Finally, the leaders and employees make decision in consensus under the join strategy. Both managers and subordinates have equal voice on decisions that are made.
The employee involvement system encourages consultation of stakeholders at every level of the organization. Stakeholders are involved in analyzing the problem, developing strategies and implementing solutions. All employees participate in the decision-making process by being involved in setting goals and developing work schedules. Participative management also involves increasing employee responsibilities, establishing self-managed teams and soliciting feedback (Lim et al, 2010). This system of management involves treating suggestions and views of the employees with respect and consideration. Decision making has been pushed down the organizational structure under the modern system. The responsibility of making decisions has been shifted from the executives to the employees.
The traditional organizations were governed by strict rules and regulations. Employees were expected to follow predetermined rules that were formed by the management without consulting them. However, modern organizations give more importance to customer satisfaction which forms the main factor for development of organizations. The organizations have become customer oriented as opposed to rule oriented (Lim et al, 2010). The main organizational aim is to offer exceptional customer services which results in higher customer retention. Customer loyalty greatly contributes to sustainable growth and profitability of the company. There is an increase in competition and any company must provide superior services for it to succeed. Companies are expected to meet current customer needs and prepare for future needs. A company that does not value customer service cannot survive in the modern business environment. The trend is towards improving customer service, increasing customization and providing exceptional customer experience. Research shows that organizational structure hinders customer orientation. Organizational structure affects important factors such as communication patterns, customer ownership, coordination, trust, integration, motivation and power.
Customer expectations have continuously increased and there is no longer brand loyalty. In the current world, customers continuously seek products and services that satisfy their needs better (Jacobides, 2007). Organizations aim at creating and retaining customers. A business that successfully creates and retains customers is able to make profit and continuously grow. However, a company that fails to attract and retain customers will experience heavy losses which may lead to its collapse. Most company today claim to be customer-focused, customer-driven and customer oriented enterprises. They conduct market surveys as well as focus groups to gain understanding about the customer. Modern organizations also invest in awareness programs and developing direct relationship with customers to increase customer satisfaction.
Globalization has led to increased interaction and development of multinational companies. This has led to diversity among the workforce in modern organizations. Companies that have diversified workforce are better placed in understanding the demographics of their customers (Lim et al, 2010). This gives the companies a competitive advantage that helps them to excel as compared to companies that hire from limited backgrounds. Organizations that have a diversified workforce are able to easily address issues related to employee satisfaction and retention. The company with a diversified workforce should take advantage of the broad range experience that exists within the employees to benefit the organization. Issues of diversity changes with time and their implementation are in most cases limited to the human resources department. Diversity enables many companies to reach new markets and is used as a marketing tool which helps to attract new customers.
Diversity can be deep-level or superficial. Superficial diversity involves differences in race, nationality and gender while deep-level diversity is differences in cultural values and knowledge (Jacobides, 2007). Prolonged interaction between diversified employees in a workplace lessens the impact of superficial diversity while increasing the significance of deep-level diversity. Individual employees learn how to work as a group and share information which impacts on their behavior. Diversity in information and knowledge has a positive impact on group performance while differences in values or cultural views may cause a negative impact. Most people in groups tend to share things that they have in common as opposed to their differences. It is important for group members to know unique things that each person has. Debates should be conducted to allow all members of the group to challenge views of their colleagues. Accepting uniqueness and diversity of every employee generates feelings of respect and trust which may lead to increased productivity. Effective handling of diversity also leads to higher employee morale and reduces conflicts.
The traditional organization structure was hierarchical in nature. Every entity under this structure is a subordinate to the other entity. This structure usually comprises of single group of power at the top of the organization and subsequent levels of less powers beneath them (Butler, 1986). Members of such organizations only communicate with their immediate subordinates and superiors. There is no communication overhead under this structure due to limited information flow. This can however be a limitation to the company because there is no free flow of information. Modern organizations have adopted a team-based lateral structure which reduces executive decision-making powers and gives more responsibilities to employees. These organizations have fewer regulations and management levels, allowing the employees to work as a team. This structure has led to improved communication, effective decision-making and employee empowerment.
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