ORGANIZATIONAL DESIGN AND STRUCTURE

Phuoc D. Nguyen

Dannar (2014) defines “It is critical to realize that the design process is never completed, only that there may be a short period of equilibrium until a new design is required. (p. 6). The organizational structure follows strategic directions and changes, business processes and the interaction between business processes in the management systems which have always changed to follow organizational structure changes from strategic changes. However, if changes are too fast and constant, these cause disturbances in business processes and instability in human resources.

Ackermann and Eden (2011) propose “Strategy is about agreeing on priorities and then implementing those priorities towards the realization of organizational purpose.” (p. 5). It is now generally accepted that organizational strategy and organizational structure are two aspects that are inseparable from corporate governance. The strategy to be implemented successfully depends on how the activities of the organization are organized and coordinated, it has also depended on the specific organizational structure. There is a causality relationship between strategy and organizational structure when a new strategy is inevitably set in. There will be new governance issues, and if this is not taken into account, then the performance of the business will be decreased. Declining performance is a sign that requires an organizational change to improve the performance of the business. Hence, the organization should plan and implement the new strategy.

Lunenburg (2012) defines the key parts of an organization, including the strategic apex, the operative core, the middle line, the techno-structure, and the support staff. The second basic dimension of an organization is its prime coordinating mechanism. This includes direct supervision, standardization of work process, standardization of skills, standardization of output, and mutual adjustment. The third basic dimension of an organization is the type of decentralization it employs. The three types of decentralization, include vertical decentralization, horizontal decentralization, and selective decentralization.

When the implementation of the strategy cannot wait until the decline of performance of enterprises aims to adjust the organizational structure, it is necessary to consider the need to adjust the organizational structure. The relationship between organizational structure and strategy is the organizational structure must be in line with the strategy. The organizational structure is designed or modified to facilitate the achievement of the strategic objectives of the defined period. It is undeniable that the structure can and will affect the strategy. Strategic outlines must work, so if a new strategy requires too much structural change, it will make the strategy less attractive. In this way, the structure can shape the choice of strategies, but a more important concern is to identify what types of structural changes are needed to implement new strategies and how these changes can be made.