Good Organisational Structure Enhances Infrastructure

A person who has a lazy, slow-moving gait tends to look less commanding than someone
who walks with a good posture that exudes confidence. Likewise, the way the company
is organised can help it position for future growth.

The world has changed dramatically. These days, being internationally competitive is the
name of the game. With the dissolution of the international trade barriers and the
evolution of a new global economy, many companies have gone through a continuum of
transition from being international (stressing an export-import orientation), to being
multinational (having major operations abroad that are concentrated on specific,
relatively protected markets) to being global (looking at the entire world as a market).
The new and total global economy has come of age.

There are three organisational structures:

Multi-local
The overseas affiliates are given full autonomy with little interference from the
headquarters. This structure is suitable for organisations that require high customisation,
flexibility and speed to respond to the market place. Examples of industries requiring
such structures include the retailing, auditing and consulting businesses etc. The
downside is that there are wasteful duplications and low cost efficiency. However, in
industries that require ground knowledge, the trade-off for economy of scale and
duplications is speed and flexibility.

Global
The overseas affiliates are given little autonomy. The headquarters make all the major
decisions. The organisational structure is by functions, with each function such as the
sales and marketing, financial heads of the subsidiaries reporting to the headquarters
functional heads. In some companies, the functions are grouped by product lines and
major customer accounts reporting back to the heads for the product lines and multinational
accounts. If worldwide efficiency is required, then this structure is more
appropriate. Examples of industries requiring such structure include electronic chips,
consumer electronics etc. The disadvantage of this structure is the erosion of local
responsiveness as it entails very centralized control.

Transnational
In some cases where both local and global know-how are important, the transnational
structure may be appropriate. The organisational structure is based on a matrix with dual
reporting and the achievement of consensus as the key driver.
Depending on the nature of your business, you should adopt an organisational structure
that enables you to meet with your business objectives, and which will provide flexibility
and room for future growth. The common thread in the above three structures is the
concept of flat organisation.

The phrase flat organisation is now overworked and misunderstood. It is an oxymoron,
a contradiction in terms. Any organisation that exists for a purpose needs a spine of
decision-making accountability. This applies to private corporations, public institutions,
voluntary organisations and cooperatives.

A good organisation structure is one with the optimal number of layers of leadership,
which demonstrably add value to the work of the others. This includes the design and
delivery of mission and strategy. It provides space and challenge for individuals to
achieve, continue to learn, grow and enjoy their work and be duly rewarded for their
performance.

The theory is clear. The problem for managers is how to design it in practice. How many
vertebrae should there be in this spine of accountability? What are the key functions?
How are they identified? What is the impact of removing a function from this spine?
What impact will this have on the development and motivation of the incumbents?
Surprisingly, at the beginning of the 21st century this is still an area of guesswork and
fashion in most organisations

http://www.corporateturnaroundexpert.com

http://www.corporateturnaroundcentre

Dr Mike Teng (DBA, MBA, BEng, FIMechE, FIEE, CEng, PEng, FCMI, FCIM, SMCS) is the author of the best-selling business book Corporate Turnaround: Nursing a sick company back to health, in 2002. In 2006, he authored another book entitled, Corporate Wellness: 101 Principles in Turnaround and Transformation. Dr Teng is widely recognized as a turnaround CEO in Asia by the news media. He has 27 years of experience in corporate responsibilities in the Asia Pacific region. Of these, he held Chief Executive Officers positions for 17 years in multi-national, local and publicly listed companies. He led in the successful turnaround of several troubled companies. He is currently the Managing Director of a business advisory firm, Corporate Turnaround Centre Pte Ltd. Dr Teng was the President of the Marketing Institute of Singapore (2000 2004), the national body representing some 5000 individual and corporate marketing professionals in Singapore.

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