Question 1:
Select a company of your choice and describe the organizational structure. Explain why the structure meets its operational needs.
As the company grows and move ahead in the future, propose what kind of changes is needed in the organizational structure.
Organisational Structure refers to the way work and power is divided and the process whereby individuals within an organisation communicate and coordinate in order to direct workflow. It is also divided into four elements, span of control, departmentalization, formalization and centralization.
As a company in the IT trade, Google has to adapt to a fast-paced and ever-changing environment. They have also been expanding into other markets such as making operating systems for cell phones and even making the hardware themselves. Thus, an organic structure is best suited for the needs of Google. The Economist (2010) supports this claim as the two founders, Larry Page and Sergey Brin, mentions Google as not a conventional firm, hinting that Google adopts an organic structure for itself as opposed the traditional mechanistic structure.
Span of control refers to the amount of people directly reporting to the next level. Google works by having many cross-functional teams (Treasure Valley Business, 2013), to handle the various projects and endeavors in which the company undertakes. Levis (2009) talks about Google being a company strictly for Alphas and the founders' tried to hire only the best people possible. Thus, most of the teams are highly self-directed, which allows Google to have a wide span of control over their employees, therefore cutting back on operational cost.
With regards to decision making authority, Google use of cross-functional teams decentralizes power to allow for better response time for potential problems that may arise during the course of work as managers are empowered to make decisions on the ground. This is critical as consumers' needs changes every day and Google, being at the forefront of the industry, needs to be able to keep up with the changes that occur.
Departmentalization is evident in Google through their use of cross-functional teams, effectively splitting up their employees to cater to their various needs. This is effective for Google as it allows managers to effectively measure the performance of employees and also to segregate employees based on their strengths to better utilise their manpower.
Formalization, or the lack of it, is the main point of Google's structure. As a firm that is creative at its core, the lack of formalization encourages employees to think creatively and allows flexibility in the organisation. It increases work efficiency due to the lack of formal reporting requirements and increases the satisfaction of employees and lessen work stress, which is what Google aims to provide for their employees. This can be seen as the Economist (2010) mentions that Google provides many benefits for its employees like free meals, health care and even laundry service etc.
The benefits of organic structures means having cross-functional and cross-hierarchical teams to handle work, there is also free flow of information and wider spans of control within the organisation. Power is also decentralised as managers are empowered to make decisions and formalization of behaviour is low which allows for more rooms of creativity, which as mentioned above is ideal for Google's operational needs.
While the above-mentioned is ideal for Google's operational needs now, as the organization grows and moves ahead, it has to evolve its structure to keep up with the environment.
One of the way in which Google can improves itself is through the use of matrix structure and not their current functional team approach. This structure assigns employees to specific project team while having a permanent function unit. This is beneficial to Google as the matrix approach better utilize resources and expertise effectively, where employees are assigned to the project that best requires their expertise and thus reduce wastages of manpower.
This also allows employees with different technical background to come together and interact with one another, thus improving communication, flexibility and innovation. Not just that but having a permanent function units means employees will bring back knowledge gained within the project and share it with their colleagues within their department.
This also allows Google to optimally assign resource across their various strategic business divisions, therefore ensuring that no one business unit is left behind or forgotten. Switching to a matrix structure also focuses specialists on clients and products, which is in line with one of Google's philosophy of "Focus on the user and all else will follow" (Google 2014).
Baer (2013) mentions Google attempts to create a flatter organisation structure for their organisation, in which the 37,000-employee corporation has 5,000 managers, 1,000 directors, and 100 vice presidents. Should Google continues to grow and adopts the matrix structure, it is imperative that they have to increase the levels of management in order to better control the increasing amount of work influx and to ensure that work efficiency is not compromised. In order to do so, the individual matrix project teams has to be further broken down into self-directed teams and the teams have to be empowered to make day to day or week to week decisions while the managers look at the big picture and direct the flow and progress of the project. Key performance indicators (KPIs) specifically tailored for the various teams have to be created so that there's a benchmark to measure performance and efficiency of the teams.
While it has been mentioned above that Google has a decentralized structure of power, Auletta (2010) mentions Google founders being able to veto staff's proposals at meeting at their whim and only the founders have hiring power at Google. This goes to show that while power within the organisation is decentralised, the two founders inherently have the final say. This is still possible, albeit stretching the limit, at their current manpower but as the organisation continues to grow, the two founders should start to delegate decision making power to the higher management. The reason for this is that if the two founders focus too much on micro-managing the organisation, they would not have the leeway to look at the direction in which the organisation should grow in, which is destructive to a fast-moving organisation like Google.
In conclusion, whilst the organic structure which Google adopts is able to meet its current needs, changes to their structure will be necessary for Google to maintain its competitive edge in the long run.