Organizational Behavior - What are some recommendations for the organization to improve its effectiveness based on your analysis?
Q2. Select an organization (e.g., a company, non-profit organization, government agency) and analyze how the elements of organizational structure
Support your analysis with relevant examples, theories, and concepts from organizational behavior literature. Provide recommendations for the organization to improve its effectiveness based on your analysis.
I will explain the Organization Structure and Different types of organization structures before elaborating the example of Amazon and Netflix Organizational Models as example.
What Is an Organizational Structure?
An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities.
The organizational structure also determines how information flows between levels within the company. For example, in a centralized structure, decisions flow from the top down, while in a decentralized structure, decision-making power is distributed among various levels of the organization. Having an organizational structure in place allows companies to remain efficient and focused.
A successful organizational structure defines each employee's job and how it fits within the overall system. Put simply, the organizational structure lays out who does what so the company can meet its objectives.
Types of organizational structures
There are generally four types of organizational structures. The four types are:
In a functional structure, organizations are divided into specialized groups with specific roles and duties. A functional structure is also known as a bureaucratic organizational structure and is commonly found in small to medium-sized businesses. Most people in the workforce have experience working in this type of organizational structure.
For example, many companies divide their organization into various departments such as finance, marketing and human resources. Each of these departments then has a manager who oversees it. This manager is then supervised by an administrator or executive who oversees multiple departments.
Advantages of this structure may include:
Disadvantages of this structure may include:
In a divisional structure, various teams work alongside each other toward a single, common goal. Each of these divisions has an executive who manages how that branch operates, controls its budgets and allocates its resources. Large companies employ this type of organizational structure.
One example of the divisional structure is a car company that separates its company into SUV, electric or sedan vehicle branches. While each branch has its own function, they all work toward the same goal of making a sale. This is also known as the multi-divisional structure.
Advantages of this structure may include:
Disadvantages of this structure may include:
3. Flatarchy
In a flatarchy, there are little to no levels of management. A company using this structure could have only one manager in between its executive and all other employees. It is called a flatarchy because it is a hybrid of a hierarchy and a flat organization.
This type of organizational structure is used more by smaller companies since they have fewer employees, though it can be used in companies of all sizes. While some companies grow out of this organizational structure, others continue to use it.
Advantages of this structure may include:
Disadvantages of this structure may include:
In the matrix style of organizational structure, employees are divided into teams that report to two managers—a project or product manager along with a functional manager. In essence, a matrix structure is a combination of various organizational structures.
Because these teams have two managers, a matrix structure promotes duality and the sharing of resources. Employees working for companies using the matrix structure have the potential to widen their skill set since they might be assigned to various projects requiring different levels of expertise or skills.
Advantages of this structure may include:
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Disadvantages of this structure may include:
Netflix organizational structure
Netflix's organizational structure has functional groups for the organization’s online and offline operations. The company also implements geographical divisions to oversee regional groups and markets. Finally, Netflix's structure includes product and operational divisions.
Netflix follows a corporate hierarchical structure at the first top few layers of the organisation. At the top, the CEO takes control of the entire organisation and senior executives at the next hierarchical level have to report directly to the CEO. The organisation does not incorporate many layers of hierarchy between the middle level and the bottom level, which makes the organisational structure relatively flat.
Important elements of Netflix's organisational structure
Let's have a closer look at each of these elements in Netflix's organisational structure:
Functional groups are divided into different business functions, and each function has a senior officer responsible for managing it. Even though the corporate headquarters (CEO and senior-level executives) follow a vertical structure, layers at the middle management level are reduced.
In other words, senior executives are responsible for making decisions and giving directions to the functional groups at the middle level, whereas the middle management level follows a flat structure that allows open communication. This structure assists Netflix in improving its response to changing environments.
The key functional groups of Netflix are:
Geographical divisions - This means that the organisational structure allows for strategic decision making in different geographical regions. The geographical divisions remain controlled by the cooperative structure, yet they are allowed to make changes and adjustments to serve a customer base in a particular geographical location.
If Netflix makes an advertising campaign at the corporate level, the geographical segments are allowed to adjust the campaign to customer preferences at the particular geographical region.
The segments' geographical divisions at Netflix are:
Divisions for products and operations - The Netflix organizational structure has divisions responsible for different outputs including original programming and other content. The 'other content' division manages content by working with other content producers and distributors to license their content and make it available on the Netflix platform. The 'original programming' division is responsible for distributing and managing Netflix's original content.
Organization Model of Amazon:
When it comes to companies' success, organizational design plays a major role. Netflix and Amazon are both innovative and successful companies, and organizational design is among the reasons that they have achieved this. It's true that Amazon and Netflix incorporate functional and geographical divisions into their organizational designs, but that's not all.
Amazon follows a tall hierarchical corporate structure. That means the organisation implements top-down control elements used on their workforce, working at different units and levels. There are three key components of Amazon's organisational structure:
Unlike other organizations following rigid hierarchies, Amazon remains flexible and can respond and adapt to the rapidly changing external environment, as well as continue to innovate.
How Organizational Structure Elements Affect Organizational Performance
Five elements create an organizational structure: job design, departmentation, delegation, span of control and chain of command
Job Design:
Defining job roles and responsibilities is very crucial for Organizational performance. Netflix and Amazon well defined all job roles and placed under the appropriate organizational structure.
Departmentalization:
Netflix organization incorporates geographical divisions to manage various regional markets; Netflix incorporates divisions in product and operational types. They have divided the teams into multiple departments based on functions and geography which is essential in the process of departmentalization.
Span of Control:
Both Amazon and Netflix have a flat structure at the bottom level so that they can bring flexibility and creativity in business. They have only adequate number of employees under an individual supervisor or manager in order to maintain leadership effectiveness and cost reduction.
Chain of Command:
Netflix follows a corporate hierarchical structure at the first top few layers of the organization. At the top, the CEO takes control of the entire organization and senior executives at the next hierarchical level have to report directly to the CEO.
The organization does not incorporate many layers of hierarchy between the middle level and the bottom level, which makes the organizational structure relatively flat. Netlfix implemented hierarchical chain of command at the top level and flat structure at the bottom level for flexibility.