Understanding Organizational Models & Structure
Organizational Development Theories
This section examines key approaches to organizing work and structuring companies, focusing on the Taylor system and the Japanese model associated with Ouchi.
Taylor’s Scientific Management
The Taylor-style system features the organization of work based on the division of labor, control of time for each task, and work structured around the assembly line (division of labor, time control, line work).
This company structure is characterized by the following:
- Workers typically work in assembly line environments.
- Activities are broken down into tasks, with a tendency towards increasing fragmentation of these tasks.
- There is a significant division of labor, where some workers design or plan while others execute or produce.
Critics note that Taylor’s model often leads to low worker motivation and job dissatisfaction due to its repetitive and controlled nature.
Ouchi’s Organizational Model (Theory Z)
The Japanese model, often associated with Toyota due to its implementation there, is characterized by the overall quality of its products and by organizing workers into quality control groups. Another important feature is the effort to reduce inventory (both raw materials and finished products), often operating on a just-in-time basis in response to demand.
Organizational Structure & Elements
Organigram: Graphic Representation
An organigram is a graphic representation of a company’s structure.
Hierarchical Relationships
This shows the relationship of authority between different levels within the organization. Typically, there are three main hierarchical levels:
- Top Management
- Middle Management
- Operational Level
Communication Relationships
Communication within an organization can be upward or downward.
The direction of communication often depends on job characteristics. In skilled roles (e.g., technical or professional), communication tends to be mixed (both upward and downward). In contrast, unskilled labor may experience primarily downward communication, as employees may not have sufficient knowledge or autonomy to provide significant upward input or challenge directives.
External Contextual Elements
These are circumstances outside the enterprise that influence it. These elements include:
Environment
External elements that influence the company and are beyond its direct control. Examples include:
- Cultural level
- Competition
- Suppliers
- Raw material prices
- Economic status (corporate taxes, taxes on economic activities)
- Political situation
Understanding the industry and the specific business environment is crucial for an organization to anticipate and respond to changes.
Technology
This refers to the set of material resources and knowledge available to the company to develop its products or services. When technology is simple, the business structure is often highly centralized. As technology becomes more complex, structures tend to become more decentralized.
Globalization
Globalization is the process by which the world becomes a more integrated market for buying and selling. Often associated with neoliberalism, globalization is a complex phenomenon with varying economic perspectives. While trade liberalization brought about by globalization has significantly increased revenues for many companies, these benefits have often been concentrated, potentially leaving a large portion of the global population in poverty.
Demand
Changes in demand make the market context highly variable, requiring companies to continually adapt to the evolving needs of consumers.